Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 50
PETITIONER:
STATE OF KARNATAKA AND ANR ETC.
Vs.
RESPONDENT:
SHRI RANGANATHA REDDY & ANR. ETC.
DATE OF JUDGMENT11/10/1977
BENCH:
UNTWALIA, N.L.
BENCH:
UNTWALIA, N.L.
BEG, M. HAMEEDULLAH (CJ)
CHANDRACHUD, Y.V.
BHAGWATI, P.N.
KRISHNAIYER, V.R.
SINGH, JASWANT
KAILASAM, P.S.
CITATION:
1978 AIR 215 1978 SCR (1) 641
1977 SCC (4) 471
CITATOR INFO :
R 1980 SC1955 (12)
F 1981 SC 234 (100)
RF 1981 SC1597 (3)
F 1983 SC 239 (19,20)
F 1983 SC 937 (33)
F 1984 SC 326 (6,24,25,33,57,61,64,66,71,73,
F 1984 SC 374 (18)
R 1984 SC 981 (8)
RF 1984 SC1130 (52)
RF 1986 SC 468 (26,31,34)
RF 1986 SC1466 (13)
RF 1988 SC1487 (32)
RF 1989 SC 509 (7)
F 1990 SC 123 (37)
C 1990 SC 781 (72)
R 1990 SC1277 (29)
R 1990 SC2072 (24,29,37,47)
RF 1992 SC 938 (22,31)
ACT:
Constitution of India. Article 31(2)-"Public purpose" Scope
of, Whether includes compulsory acquisition for Road
Transport Corporation-Part acquisition of undertaking,
validity of-"Amount" in lieu of acquired property, quantum
and principles of evaluation, whether questionable under
Art. 31(2).
Karnataka Contract Carriages (Acquisition) Act, 1976, vis-a-
vis Constitution of India, Articles 31(2) and 39(b) and (c)
and Schedule List 1 Entry 42-Whether on acquisition the
State Govt. can transfer counter signed portions of Inter-
State permits to Road Transport Corporation-S.4(3),
"deemed", whether introduces legal fiction-S.6(1), fixation
of amount by arbitrator S. 6(1) Schedule, Para 1(1),
Explanation-Interpretation of "acquisition cost".
HEADNOTE:
The Karnataka State Road Transport Corporation published in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 50
the Karnataka Gazette dated May 16. 1974 a draft scheme for
nationalisation of contract carriages in the State. under
Chapter IV-A of the Motor Vehicles Act, 1939. Objections
were preferred by some of the respondents, but the State
Government and the Corporation dropped the idea of
proceeding with the scheme without concluding the hearing.
Later, on January 30, 1976 the State Government promulgated
an ordinance followed by a number of notifications by which
all contract carriages operating in Karnataka, and the
permits specified in the notifications, vested in the State.
Under Clause 20(1) of the Ordinance, the State Government
transferred them to the Corporation which seized the
vehicles and the relative permits. The High Court stayed
the seizure of six vehicles operating tinder Inter State
permits, and quashed some of the notifications, holding that
the ordinance did not empower the acquisition of the
vehicles not covered by valid contract permits. The
ordinance was replaced by the Karnataka contract carriages
(Acquisition) Act, 1976, published in the Karnataka Gazette
dated March 12. 1976. The Act was made effective
retrospectively from January 30. 1976. and everything done
under the Ordinance was deemed to have been done trade the
Act. Writ Petitions were filed by various contract carriage
operators, fanciers and others including those who had
successfully filed the earlier Writ Petitions. The High
Court allowed the writ petitions, struck down the Act as
unconstitutional, and quashed the notifications. (Judgment
reported in K.Jayaraj Ballal and Ors. v. State of Karnataka
and Ors. I.L.R. Karnataka 1976, Vol. 26, P. 1478).
Allowing the appeals and upholding the constitutional
validity of the Act on merits, the Court
HELD : Per Untwatia, J. (Also on behalf of M. H. Be-,, C.J.,
V. Y. Chandrachud, and P. S. Kailasam, JJ.)
1. Whether the law of ocquisition is for public purpose or
not has to be gathered mainly from the statement of Objects
and Reasons of the Act and its preamble. The matter has to
be examined with reference to the various provisions of the
Act its context and set up and then it has to be judged
whether the acquisition is for a public purpose within the
meaning of Article 31(2) and the law providing for such
acquisition while establishing a Road Transport Corporation,
the State Government is obliged to keep in mind primarily
the public interest. The acquisition for the purpose of the
Corporation was, therefore, in public interest. [648 C-E]
H. H. Keshavananda Bharathi Sripadagalavaru v. State of
Kerala [1973] Suppl. S.C.R. 1, Applied.
642
The court observed :
There may be many circumstances and facts to justify the
acquisition of even a movable property for a public purpose.
A particular commercial activity of the State may itself be
for a public purpose. In a larger sense one can say that
augmentation of the coffers of the State is also for a
public purpose. Acquisition of property either movable or
immovable, may in such a situation be for a public purpose.
[651 C-D]
The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of
Darbhanga and Ors. [1952] SCR 889, referred to.
(2) The scheme for the compulsory acquisition may be for a
part of the undertaking also and that would mean a part of
the property of the under taking or a branch of the
undertaking [651 F-G]
(3) The amount payable for the acquired property either
fixed by the legislature or determined on the basis of the
principles engrafted in the law of acquisition cannot be
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 50
wholly arbitrary and illusory. In some respects it may be
inadequate but that cannot be a ground for challenge of the
constitutionality of the law under Article 31(2). [653 B-C]
H. H. Keshavananda Bharati Sripadagalavaru v. State of
Kerala, [1973] Suppl. SCR 1, applied.
The State of West Bengal v. Mrs. Bala Banerjee and Ors.
[1954] SCR 558, P. Vajravelu Mudaliar v. The Special Deputy
Collector, Madras [1965] 1 SCR 614, Union of India v. The
Metal Corporation of India Ltd. &- Anr. [1967] 1 SCR 255,
State of Gujarat v. Shri Shantilal Mangaldas and Ors. [1969]
3 SCR 341 and Rusto covarjee Cooper v. Union of India [1970]
3 SCR 530, referred to.
(4) The Karnataka Contract Carriages (Acquisition) Act,
1976 does not seek to legislate in regard to any Inter-State
trade and commerce. In pith and substance it is an Act to
provide for the acquisition of contract carriage, the Inter-
State permits and the other properties situated in the State
of Karnataka. Any incidental encroachment on the topic of
Inter-State trade and commerce cannot invalidate the Act.
[661 D-E]
Prafulla Kumar Mukherjee & Ors. and Bank of Commerce Ltd.,
Khulna v. Advocate Genera,’ of Bengal [1947] Federal Court
Reports 28, Kerala State Electricity Board v. Indian
Aluminium Co., [1976] 1 S.C.R. 552 S. K. Peseri V. Abdul
Ghafoor and Ors., Civil Appeal No. 306/1964 decided on 4-5-
1964, Narayanappa v. State of Mysore [1960] 3 S.C.R. 742,
and Tansukh Rai Jain v. Nilratan Prasad Shaw and Ors.,
[1965] 2 S.C.R. 6 applied.
A. S. Krishna v. State of Madras [1957] S.C.R. 399,
U.S.A., Plff. in Crr. v. Can Hill 63 Law Ed. 337, Claude R.
Wickard, Secy. of Agriculture of the United States etal v.
Roscoe C. Filburn 87 Law Ed. 122 and the Steamer Denial
Ball, Bayron D. Ball and Jessie Ganoe, Claimants, Aptt. v.
United States 19 Law Ed. 999 referred to.
(5) The acquisition of permits of the vehicles kept and
registered in the State of Karnataka, in respect of which
initially Inter-State Permits had been granted by the State,
would be an acquisition of the permit operative within the
territory of the State. Permits granted by one regional
Authority and counter-signed by another Regional Authority
either in the same state or in different states are really
different permits rolled into one. The counter-signed
portion of the permit is in substance and in effect a
separate permit authorising the permit holder to ply the bus
in another State, and cannot be acquired. Such an
acquisition would fall within the extra-territorial
operation of the law. The State Govt. on acquisition and
the vesting of acquired permits, therefore, cannot transfer
their counter-signed portions to the Road Transport Corpora-
tion. Any particular vehicle which is kept and registered,
or is plying, on an initial permit granted by another State,
also could not be acquired under the Act and the
notification issued, thereunder. [662 C-D, 663 B, C-D]
M/s Bundelkhand Motor Transport Company, Nowgaon v. Behari
Lal Chaurasia and Anr. [1966] 1 S.C.R. 485, and Punjab Sikh
Regular Motor Service, Mondhapara v. The Regional Transport
Authority, Raipur and Anr. [1966] 2 S.C.R. 221; applied.
643
The Bengal Immunity Co. Ltd. v. The State of Bihar and Ors.
[1955] S.C.R. 603, R.M.D. Chamarbaugwala v. Union of India
and Ors. [1957] S.C.R. 930, Gulabhai Vallabhbhai Desai etc.
v. Union of India and Ors., [1967] 1 S.C.R. 602; and lit re.
a Special Reference under Section 213 of the Govt. of India
Act, 1935 [1941] Federal Court Reports 12; referred to.
(6) Section 4(3) of the Karnataka contract carriages
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 50
(Acquisition) Act, 1976, is worded with the object of
putting the challenge to the factum of public purpose beyond
the pale of any attack. The use of the word "deemed" does
not invariably and necessarily imply an introduction of a
legal fiction, but it has to be read and understood in the
context of the whole statute. [651 A-B]
(7) In the absence of an agreement, the State Government
shall appoint an arbitrator for fixing the amount payable in
lieu of the acquired property. The arbitrator, reading
section 6(1) of the Karnataka Contract Carriages (Acquisi-
tion) Act, as a whole, is not obliged to fix the amount as
specified in the Schedule, but he has to fix an amount which
appears to him just and reasonable on the totality of the
facts and circumstances keeping primarily in mind the amount
mentioned in the Schedule occurring in Sec. 6(1). [657 E-F,
658 D-E]
Saraswati Industrial Syndicate Ltd., etc. v. Union of India
[1975], 1 S.C.R. 956, Illingworth v. Walnsley (1900) 2 Q.B.
142 and Perry v. Wright (1908) 1 K. B. 441; referred to.
(8) The correct meaning of "acquisition cost", used in the
Explanation in the light of Para 1 (1) of the Schedule of
Sec. 6 (1) of the Karnataka Act, would mean, the cost of the
chassis fixed by the manufacturers for their dealers to
charge from the purchasers. The acquisition cost qua the
purchaser is the price which he pays to the manufacturer’s
dealer from whom he purchases and not the manufacturer’s
actual cost of manufacturing the chassis. The acquisition
cost of the body of a schedule would be the actual cost
charged by the body builder. [659 B--C]
Per Iyer. J. (Also on behalf of P. N. Bhagwati and Jaswant
Singh, JJ.)
(1) The purpose of a public body to run a public transport
service for the benefit of the, people, operating it in a
responsible manner through exercise of public power which is
controlled and controllable by society through its organs
like the legislature and, at times, even the court, is
manifestly a public purpose. If the purpose subserves some
public use or interest, or produces some public good or
utility then everything considered for subserving such
public purpose falls under the broad and expanding rubric.
If the purpose is a private or nonpublic one, the mere fact
that the hand that acquires or requires is Government or a
public corporation, does not make the purpose automatically
a public purpose. The acquisition of road transport
undertakings by the State will undoubtedly be a public
purpose, and it is a fallacy to deny the presence of public
purpose merely because its satisfaction by readily available
private purchase is possible. [672 D-E, 673 B, 676 D]
Black’s Legal Dictionary, ’The Supreme Court of India’ by
Rajeev Dhavan (Tripathi Publications), ’Words and Phrases
Legally defined’ II Edn. P. 229; Sir Alladi Krishnaswami
Ayyar’s speech in the Constituent Assembly; Mr. Justice
Mathew’s speech in the second Kerala. State Lawyer’s
Conference; H. F. Peti v. Secy. of State for India, 42 I.A.
44; The State of Bihar v. Maharjadhiraja Sir Kameshwar Singh
of Darbhanga & Ors. [1952] SCR 889; The State of Bombay v.
Ali Gulshan, AIR 1955 SC 810; A. K. Gopalan v. State of
Madras, AIR 1950 SC 27; The State of West Bengal v. Anwar
Ali Sarkar [1952] SCR 284 and The State of West Bengal v. S.
B. Bose & Ors. [1954] SCR 587, referred to.
(2) The amount Payable when private property is taken by
the State is a matter of legislative policy and not of
judicial fixation. The 25th, Amendment of the Constitution,
while restructuring Article 31 and bringing in Article 31C,
has excluded judicial examination even of the principles of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 50
evaluation.The Court can only satisfy itself about the
amount not being a monstrousor unprincipled undervalue.
The payment may be substantially less thanthe
644
market value and the principles may not be all-inclusive,
but the court can upset the taking only where the principles
of computation are too arbitrary and illusory to be
unconscionably shocking. The quantum of the amount or the
reasonableness of the principles are out of bounds for the
court. [680 B, 682 C, 685 A, C, G, H.]
H. H. Kesavanand Bharati Sripadagalavaru v. Stale of
Kerala (supra) followed. Speech by Mahatma Gandhi at the
Round Table Conference; Fundamental Rights & Socio-Economic
Justice by K. P. Krishna Shetty pp. 123 and 127-128; The
46th Report of the Law Commission and R. S. Cooper v. Union
of India (supra), referred to.
(3) Article 39(b) fulfils the basic purpose of re-
structuring the economic order and undertakes to distribute
the entire material resources of the community, as best to
subserve the common good. To exclude ownership of private
resources from its coils, is to cipherise its very purpose
of redistribution the socialist way. Article 39(b) is ample
enough to rope in buses, as motor vehicles, are part of the
material resources of the operators. Socially conscious
economists will find little difficulty in treating
nationalisation of transport as a distributive progress for
the good of the community. [689 C-D, E-.F. 690 0]
The Court observed :
(1) The State symbolises, represents and acts for the good
of society. Its concerns are the ways of meeting the wants
of the community, directly or otherwise, and the public
sector in our constitutional system, is a strategic tool in’
the national plan for transformation from stark Poverty to
social justice, transcending administrative and judicial
allergies. [672 D-E]
(2) Serious constitutional problems cannot be studied in a
socioeconomic vacuum, since socio-cultural changes are the
source of new values. Our emphasis is on abandoning formal
legalistic or sterile logomachy in assessing the vires of
statutes regulating vital economic areas, and adopting
instead, a dynamic, goal-based approach to problems of
constitutionality. Our nation has, as its dynamic
doctrine, economic democracy sans which political democracy
is chimerical. The Constitution ensouls such a value system
in Parts III and IV and elsewhere, and the dialectics of
social justice should not be missed if their synthesis is to
influence State action and Court pronouncement. Illusory
compensation, nexus doctrine and ’distributed to subserve
the common good, should not reduce lofty constitutional
considerations into hollow concepts. [666 F, 667 A]
R. S. Cooper v. Union of India (Supra); Towne v. Eigner
245 U.S. 418= 62 L. ed. 372, 376; Dias Jurisprudence 4th
Edn. p. 625 H. H. Kesavananda Bharati Sripadagalavaru v.
State of Kerala (supra); Legal Theory and Social Evolution
5th Edn. P. 81 and Dr. Ambedkar’s speech in the Constituent
Assembly, referred to.
(3) Bills without sufficient study of their economic.
project, occasionally result in incomprehensibility and
incongruity of the law for the lay and the legal. A
radicalisation of the methodology and, philosophy of legal
drafting, and ability for the legislative manpower to
express themselves in streamlined, simple, project-oriented
fashion is, therefore, essential. [667 C-E]
’Laws are not for laymen’-Guardian Miscellany dated May 29.
1975 referred to.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 50
(4) Sheer legalism cannot lightly upset legislative wisdom
or efficiency while passing on the constitutionality of
economic legislation based on national planning, public
finance, private investments, cost accounting, policy
decisions historical factors and a host of complex social
variables. Raw realities like poverty id stark inequalities
to abolish which, Article 31(2), 31C. 38 and 39 have been
enacted, must inform legal interpretation. The Courts must
be circumspect not to rush in where serious reflection will
make them fear to tread, not to resort to adroit
circumvention because of economic allergy to a particular
policy. [669 F, 670 A-B]
645
Burton v. Honan 1952, 86 CLR 169. 179; Preface to the
English Leg Aid System by Seton Pollck (Orient Longmans);
referred to.
(5) Part IV of the Constitution, especially Article 39(b)
and (c) is futuristic mandate to the State with the message
of transformation of the economic and social order. Such
change calls for collaborative effort from a the legal
institutions of the system: the legislature, the judiciary
and the administrative machinery. The Court and counsel
have a justice constituency with economic overtones, the
manifesto being the constitution designed to uphold the
humanist values of life, liberty and the equal pursuit of
happiness, material and spiritual. [690 D-E]
Lawyers for Social Change; Perspectives on Public Interest
Law’ by Robert L. Rabin, Standord Law Review Vol. 28, No.
2 January 1976; Law in America p. 34 by Bernard Schwartz;
The nature of judicial Process by Cardozo, 1932. p. 170;
The Indian Constitution-by Granville Austin; British Coal
Corporation v. The Kind 1935 AC 500; Attorney General of
Ontario v. Attorney General of Canada 1947 AC 503; 1
Constituent Assembly Debates, p. 61. referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1085 and
1522 1894/76.
From the Judgment and Order dt. 20th September 1976 of the
Karnataka High Court in W. P. Nos. 817 and 818-826/76 etc.
etc.
L. N. Sinha, R. N. Byra Reddy, Adv. Genl., Narayan
Nettar, K., S. Puttawany (For A. 2 in CA. Nos. 1085 & 1522)
and Mr. Aruneshwar Gupta, Advs. for the appellants :
A. K. Sen, K. N. Bhatt, and M. R. V. Achar, for the Res-
pondents in Civil Appeals Nos. 1537, 1538-48, 1549, 1551-
52, 1555, 1557-69. 1562, 1564-66 1967-68, 1569-72, 1574,
1576-80, 1586-89 1593-9 1597-1611, 1612-1613, 1618-24 1628-
29, 1631-329 1635-36 1638-42-, 1644, 1646-48 1660, 1662-
63, 1664-65, 1668, 1670-74, 1676, 1684-85, 1689 1695, 1697,
1700, 1701, 1703-4, 1710, 171216, 1724-27 1729-30, 1732,
1734-37, 1738-39, 1741, 1746, 1748-50, 1753, 1-59-60, 1761,
1763, 1765-66, 1768-69, 1771. 1774-76, 1786, 1785, 1803,
1805 (R-1) 1806-7, 1809, 1814-17, 1825, 1828, 1832, 1836-37
1840-41, 1844-46, 1850, 1858-59, 1863. 1865-66, 1868-71,
1873-77, 1879, 1882, 1884, 1887 & 1889/76
A.K.C. Sen. A. T. M. Sampath, and M. R. V. Achar, for the
Respondents in Civil Appeals Nos. 1677, 1758 & 1778/76 :
G. L. Sanghi, S. K. Mehta, K. R. Nagraja & P. N. Puri and A.
K. Sanghi, for the Respondents in Civil Appeals Nos. 1523-24
1528, 1530, 1532-33 1575, 1581. 1583, 1595-96, 1626. 1678-
83, 1686-88, 1691-94, 1996 (R-1) 1717, 1720, 1723, 1742.
1747, 1755-56, 1779-80, 1782-83, 1785, 1787-90 1792, 1798.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 50
1810 1823, 1830, 1861 & 1878/76.
S. S. Javali, A. K. Srivastava, and B. P. Singh, for the
Respondents In Civil Appeals Nos. 1630, 1656, 1657 & 1854/76
CA. 1085/76.
Girish Chandra, (Not present) for Respondent No. 2 in CA
1085/76,.
S. Narayana Bhat (In persons) for Respondent in CA. No.
1804/ 76:
N. Byra Reddy, Adv, Gnl. Narayan Nettar. for the Adv.
Genl/Karnataka.
646
The following Judgment were delivered
UNTWALIA, J. This batch of 374 appeals by certificate is
from the decision of the High Court of Karnataka given in
374 Writ Petition filed by different persons having various
kinds of interest in the Contract Carriages which were taken
over by the State of Karnataka Contract Carriages
(Acquisition) Ordinance, 1976 (Karnataka Ordinance No. 7 of
1976) (for brevity, hereinafter, the Ordinance) followed by
the Karnataka Contract Carriages (Acquisition) Act, 1976
(Karnataka Act No. 21 of 1976) (hereinafter to be referred
to as the Act). The judgment of the High Court is reported
in K. Jayaraj Ballal, and others v. State of Karnataka and
others.(1) For the sake of convenience hereinafter in this
judgment, reference to the High Court judgment wherever
necessary will be made from the said report.
FACTS
The broad and the, common facts of the various cases are in
a narrow compass and not in dispute. At the outset, we
shall state them mostly from the High Court judgment. We
were not concerned to go into the special facts of some
cases in these appeals. They may have to be looked into, if
necessary, by the, High Court in the light of this judgment.
The Karnataka State Road Transport Corporation (hereinafter
called the Corporation) was established by the State
Government of Karnataka on August 1, 1961 under section 3 of
the Road Transport Corporations Act, (Central Act 64 of
1950). The Corporation was a party respondent to the writ
petitions aid is an appellant before us alongwith the State
of Karnataka. We are stating the facts mostly from Civil
Appeal No. 1985 of 1976 arising out of Writ Petition No. 817
of 1976. The Corporation published in the Karnataka Gazette
dated May 16, 1974 a draft scheme for nationalisation of
Contract Carriages in the State under Chapter IV-A of the
Motor Vehicles Act, 1939 (Central Act 4 of 1939).
Objections were invited. Some of the writ-petitioners
preferred their objections. it appears the State, Government
and the Corporation dropped the idea of proceeding with the
scheme and without concluding the and the disposal of the
objections and the finalization of their scheme the
Government came out with the Ordinance which was promulgated
on January 30, 1976. As per clause 1(3) of the Ordinance,
it applied to "all contract carriage(s) operating in the
State of Karnataka By a number of notifications issued under
the Ordinance almost all the contract carriages and the
permits specified in the notifications vested in the State.
They were transferred to the Corporation under clause 20(1)
of the Ordinance. The officers of the Corporation seized
the vehicles and the relative permits pursuant to the
notifications aforesaid except six vehicles which were
operating under Inter-State permits belonging to some of the
writ petitioners. The seizure of the said six vehicles was
stayed by the Order of the High Court made on 5th April,
1976 in some of the earlier writ petitions. The earlier
writ petitions were decided on February 26, 1976 and March
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 50
3, 1976 by a learned
(1) The Indian Law Reports (Karnataka) 1976 (Vol. 26).
1478.
647
single Judge of the High Court who field that the Ordinance
did not empower the acquisition of the vehicles not covered
by valid contract permits and consequently quashed some of
the notifications. The Ordinance with some changes was
replaced by the Act which received the assent of the
President on March 11, 1976 and was published in the;
Karnataka Gazette dated the 12th March, 1976. The,
operation of the Act was, however, made retrospective from
the 30th January, 1976-the day when the Ordinance had been
promulgated and come into force. The Ordinance was repealed
by section 31 of the Act and the saving clause in sub-
section (2) says
"Notwithstanding such repeal
(i) anything done or any action taken under
the said Ordinance, shall be deemed to have
been done or taken under the corresponding
provisions of this Act;"
Fresh notifications were also issued under the Act. ’The
combined effect of all these actions was that whatever was
done on and from the 30th January, 1976 either under the
Ordinance or under the Act was all deemed to have been done
or done under the Act. Fresh writ petitions numbering 374
were filed in the High Court by the various contract
carriages operators, financiers and others including those
who, had filed or succeeded in the earlier writ petitions.
The High Court has allowed all the writ petitions, struck
down the Act as unconstitutional and has declared it null
and void. The notifications have been quashed. The
respondents in the writ petitions, namely the appellants
before us, were directed to restore, the vehicles with the
relative, permits and all other assets to the operators from
whom they were taken over. Some consequential directives
for determination of damages in some later proceedings were
also given.
We now proceed to state the findings of the High Court on
the various points argued before it not in the order as
finally recorded in para 98 of its judgment at page 1530 but
in the order the points were urged before us by Mr. Lal
Narayan Singh, learned counsel for the appellants. They are
as follows
(1) The acquisition is not for a public
purpose.
(2) The compensation or the amount provided
for or the principles laid down in the Act for
payment in lieu of the various vehicles,
permits and other assets is wholly illusory
and arbitrary.
For the two reasons aforesaid, the Act is
violative of Article 31 (2) of the
Constitution and is a fraud on it. It is,
therefore, null and void.
(3) The acquisition of contract carriages
with Inter-State permits and other assets
pertaining to such operators is ultra vires
the legislative power and the competence of
the State Legislature.
648
Article 31 C does not bar the challenge to the
Act as being violative of Article 31(2) of the
Constitution as there is no reasonable and
substantial nexus between the purpose of the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 50
acquisitions and securing the principles
specified in clauses (b) and (c) of Article
39.
We now proceed to deal with the points aforesaid seriatim in
the above order.
PUBLIC PURPOSE
It is indisputable and beyond the pale of any controversy
now as held by this Court in several decisions including the
decision in the case of His Holiness Kesavananda Bharati
Sripadagalaveru v. State of Kerala(1) popularly known as
Fundamental Rights case-that any law providing for
acquisition of property must be, for a public purpose.
Whether the law of acquisition is for public purpose, or not
is a justiciable issue. But the decision in that regard is
not to be given by any detailed inquiry or investigation of
facts. The intention of the legislature has to be gathered
mainly from the Statement of Objects and Reasons of the Act
and its Preamble. The matter has to be examined with
reference to the various provisions of the, Act, its context
and set up, the purpose of acquisition has to be culled out
therefrom and then, it has to be judged whether the
acquisition is for a public purpose within the meaning of
Article 31(2) and the law providing for such acquisition.
The acquisition of the vehicles namely the contract
carriages. their permits and other assets for running them
for the purposes, of the Corporation could not be challenged
as being not for a public purpose merely because it was for
the purposes of transferring them to the Corporation.
Statement of Objects and Reasons for the impugned law as
follows :
"A large number of contract carriages were
being operated in the State to the detriment
of public interest and were also functioning
stealthily as stage carriages. This had to,
be prevented. Article 39(b) and (c) enjoins
upon the State to see that the ownership and
control of the material resources of the
community are so distributed as best to
subserve the common good and that the
operation of the economic system does not
result in the concentration of wealth to the
common detriment.
In view of the aforesaid it was considered
necessary acquire the contract carriages run
by private operators."
Accordingly the Karnataka Contract Carriages
(Acquisition) Ordinance, 1976 was promulgated.
The Bill seeks to replace the Ordinance."
The title of the Act- indicates that it is "An Act to
provide for the acquisition of contract carriages and for
matters incidental, ancillary or
(1) [1973] Suppl. S.C.R.1
649
subservient thereto." In the Preamble it is stated :-
"Whereas contract carriages and certain other
categories of public service vehicles are
being operated in the State in a manner highly
detrimental and prejudicial to public
interest;
And whereas with a view to, prevent such
misuse and also to provide better facilities
for the transport of passengers by road and to
give effect to the policy of the State towards
securing that the ownership and control of the
material resources of the community are so
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 50
distributed as best to subserve the common
good and that the operation of the economic
system does not result in the, concentration
of wealth and means of production to the
common detriment;
And whereas for the aforesaid purposes it is
considered necessary to provide for the
acquisition of contract carriages and certain
other categories of public service vehicles in
the State and for matters incidental,
ancillary or subservient thereto:
A declaration was also made in section 2 that the Act is for
giving effect to the policy of the State towards securing
the principles specified in clauses (b) and (c) of Article
39. A deep probe into and investigation of the facts stated
in the Statement of Objects and Reasons and the Preamble of
the Act was neither permissible nor was it gone into by the
High Court. Mr. A. K. Sen advanced the leading argument on
behalf of the respondents followed by some other Advocates
and one of the respondents in person. The main plank of the
argument advanced on behalf of the respondents was that
acquisition of vehicles which are available for sale in the
market cannot be said to be for a public purpose. Counsel
submitted that the scheme of nationalisation in Chapter IV-A
of the Motor Vehicles Act was given up, whole Undertaking of
the various operators was not acquired but what was acquired
was certain assets most of which were available in the
market. Acquisition of chattels or movables can never be
for a public purpose. The High Court. in support of its
view, also refers to the wordings of sub-section (3) of
section 4 of the Act wherein it has been provided that the
contract carriage and other property vesting in the State,
Government shall "be deemed to have been acquired for a
public purpose". We are of the opinion that neither the
argument nor the decision of the High Court that the
acquisition is not for a public purpose is correct.
On the fact of the Statement of Objects and Reasons of the
Act as also from its Preamble it is clear, apart from
further facts which were stated in the various affidavits
filed on behalf of the State, that the operators were
misusing their permits granted to them as contract carriages
permits. In many cases the vehicles were used as stage
carriages picking up and dropping passengers in the way.
The Legislature thought that to prevent such misuse and to
provide for better facilities to transport passengers and to
the general public it is necessary to acquire the vehicles,
permits and all rights, title and interest of the contract
carriage operators in or over lands, buildings, workshops
and other places and
650
all stores, instruments, machinery, tools, plants etc. as
mentioned in sub-section (2) of Section 4 of the Act. It
was not a case where some chattels or movables were merely
acquired for augmenting the revenue of the State or for its
commercial purposes. Mr. Sen heavily relied upon some
passages in the judgment of this Court in The State of Bihar
v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga and
others(1) to strengthen his submission. The, said decision
was concerned with the vires of the Bihar Land Reforms Act,
1950 by which the Zamindaries or intermediaries’ interest
were acquired by the State. One of the provisions in the
Act was for acquisition of arrears of rent due to the inter-
mediaries from their respective, tenants. This provision
was struck down as being unconstitutional. And in that
connection, Mahajan, J, as he, then was, said at page 944 :
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 50
"It has no connection with land reform or with
any public purpose. It stands on the same
footing as other debts due to zamindars or
their other movable properties, which it was
not the object of the Act to acquire. As
already stated, the only purpose to support
this acquisition is to raise revenue to pay
compensation to some of the zamindars whose
estates are being taken. This purpose does
not fall within any definition, however wide,
of the phrase "public purpose" and the law
therefore to this extent is unconstitutional."
Mukherjee J., as he then was agreed with this view at page
957. Das J.,as he then was and Chandrasekhara Aiyar J.,
also concurred in the same. But the said decision given in
respect of the debts due to the Zamindars from their
tenants, which were merely chooses in action is of no’ help
to the respondents.
In these appeals we are not called upon to. decide and
express any final opinion as to whether an acquisition of
chattels or movables can be for a public purpose or not.
What may only add that the preposition so broadly but is not
quite correct. There may be many circumstances and facts to
justify the acquisition of even a movable property for a
public purpose. It may not be universally so but the
converse is also not correct. In the instant cases what has
been acquired under the Act is not only movables and
chattels namely the vehicles but also the permits, the
workshops, land and buildings etc. Although the whole
transport undertaking of any carriage operator was not
acquired, the acquisition in no sense was of more movable
properties available easily for purchase in the market.
Several hundred vehicles were acquired by the various
notifications. In substance it was a nationalisation of the
contract transport service in the State of Karnataka.
Undoubtedly it was for a public purpose. We may just quote
a few lines from the judgment of Mahajan J., in the case of
The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh
of Darbhanga and others (supra) occurring at page 941
"In other words, shortly put, the purpose
behind the Act is to bring about a reform in
the land distribution system of Bihar for the
general benefit of the community as advised.
The
(1) [1952] 3 S.C.R. 889
651
Legislature is the best judge of what is good
for the community, by whose suffrage it comes
into existence and it is not possible for this
Court to say that there was no public purpose
behind the acquisition contemplated by the
impugned statute."
The language of section 4(3) of the Act is not for the
purpose of introducing a legal fiction as observed by the
High Court but with the object of putting the challenge to
the factum of public purpose beyond the pale of any attack.
Tile use of the word ’.’deemed" does not invariably and
necessarily implies an introduction of a legal fiction but
it has to be read and understood in the context of the whole
statute. it may well be that the State is not authorised to
compulsorily acquire any property merely to augment its
revenue although in a larger sense one can say that
augmentation of the coffers of the State is also for a
public purpose. But it is not always correct to say that a
property cannot be acquired merely for a commercial need of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 50
the Government. Under the Land Acquisition Act, 1894 land
can be acquired for commercial purposes of the Government a
Public Corporation or a Company. Why can’t movables be
acquired for commercial purposes if the exigencies of the
situation so require ? A particular commercial activity of
the State may itself be for a public purpose. Acquisition
of property either movable or immovable may in such a
situation be for a public purpose.
Mr. Sen referred to section 19 of the Road Transport
Corporations Act and specially to clause (c) of sub-section
(2) to lend support to his argument that without acquiring
the whole undertaking only a portion of its assets leaving
out the liabilities could not be acquired. For this pur-
pose, he relied upon the provisions of Chapter IV-A of the
Motor Vehicles Act also. The nationalisation of routes
under the said Chapter of the Motor Vehicles Act does not
necessarily imply the acquisition of the transport
undertakings of the various operators, their vehicles or
properties. That is a separate and distinct method
altogether. In section 19 of the Road Transport
Corporations Act are enumerated the powers of the
Corporation. Sub-section (2) (c) gives a power to the
Constitution "to prepare schemes for the acquisition of, and
to acquire, either by agreement or compulsorily in
accordance with the law of acquisition for the time being in
force the state concerned and with such procedure as may be
prescribed, whether absolutely or for any period, the whole
or any part of any undertaking of any other person to the
extent to which the activities thereof consist of the
operation of road transport services in that State or in any
area". It is plain that the scheme for the compulsory
acquisition may be for a part of the undertaking also and
that would mean a part of the property of the undertaking or
a branch of the undertaking. Of course, the Corporation can
purchase vehicles as provided for in clauses (a) and (g) of
sub-section (2) of section 19. But it does not follow
therefrom that in all cases it is obliged to do so.
Compulsory acquisition is also provided for in clause (c).
Under section 3 of Act 64 of 1950 while establishing a Road
Transport Corporation the State Government is obliged to
keep in mind primarily the public interest as provided for
in clauses (a) to (c) thereof. The acquisition in question
for the purpose of the Corporation was, therefore, in public
interest.
5-951SCI/77
652
In our judgment, therefore, the decision of the High Court
on the question of public purpose is erroneous. We hold
that the impugned law of acquisition and the acquisitions
are for public purpose.
AMOUNT TO BE PAID FOR THE PROPERTY ACQUIRED.
The High Court in paragraph 92 at page 1527 has come to the
conclusion........ the scheme for payment for the property
acquired under the Act is wholly illusory and therefore the
Act violates the fundamental rights of the petitioners
secured under Article 31 (2)."
The history in relation to the provision of payment of
compensation or the amount in Article 31(2) of the
Constitution is interesting and clearly points out the
difference in the approach to the question by this Court and
the Parliament resulting in the amendments in the provisions
from time to time as and when some important and leading
judgment were banded down by this Court which according to
the Constituent Body did not correctly lay down the law as
it intended the Article to mean. The word used in the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 50
original Article 31(2) was ’compensation’. In The State of
West Bengal v. Mrs. Bela Banerjee and others(1) compensation
was held to mean a just equivalent of what the owner has
been deprived of. Then came an amendment in the Article by
the Constitution (4th Amendment), Act, 1955 stating in
clause (2) of Article 31........ no such law shall be called
in question in any court on the ground that the compensation
provided by that law is not adequate." In spite of the
amendment, this Court in some decisions-to with P. Yajravelu
Mudaliar v. The Special Deputy Collector, Madras (2) and
Union of India v. The Metal Corporation of India Ltd. and
Another (3) largely, if not fully, stuck to its view in Mrs.
Bela Banerjee’s case (supra). Then came the decision in
State of Gujarat v. Shri Shantilal MangaldaS N Ors (4) where
Shah J., as he then was in his leading judgment to which was
appended a short concurring note by Hidayatullah C. J., made
a conspicuous departure from the views expressed in
Vajravalu’s case and the case of The Metal Corporation
(supra) and the said decisions were over-ruled. Thereafter
came the decision of 11 Judges of this Court the, leading
judgment being of Shah J., on behalf of himself and 9 others
in what is known as the Bank Nationalisation , case in
Rustom Cavasjee Cooper v. Union of India(5). Although in
terms the decision of this Court in the case of Shantilal
Mangaldas (supra) was merely explained, in substance it was
over-ruled. Thereafter, by the Constitution (25th
Amendment) Act the word ’compensation was substituted by the
word ’amount? in Article 31(2), which, as in the case of
’compensation’, may be fixed by the law of acquisition or be
determined in accordance with such principles and given in
such manner as may be specified in such law. law was sought
to be kept beyond the pale of challenge in any Court by
reiterating in a slightly different form that it cannot be
assailed on the ground "that the amount
(1) [1954] S.C.R. 558.
(2) [1965] 1 S.C.R. 614.
(3) [1967] 1 S.C.R. 255.
(4) [1969] 3 S.C.R. 341.
(5) [1970] 3 S.C.R. 530.
653
so fixed or determined is not adequate or that the whole or
any part ,of such amount is to be given otherwise than in
cash". In the Fundamental Rights case (supra) the change in
the phraseology of Article 31(2) came up for consideration
before the Bench of 13 Judges. The ,High Court is not right
in saying that decision in the Bank Nationalisation case
still holds the field on the question of amount or
compensation to be paid for the acquired property. A
departure has been made from the view expressed earlier in
the light of the 25th Amendment. It is not necessary to
pin-point the details of such departure. For the purpose of
deciding the point which, falls for consideration in these
appeals, it will suffice say that still the over-whelming
view of the majority of judges in Kesavananda Bharati’s case
is that the amount payable for the acquired property either
fixed by the legislature or determined on the basis of the
principles engrafted in the law of acquisition cannot be
wholly arbitrary and illusory. When we say so we are not
taking into account the effect of Article 31 C inserted in
the ,Constitution by the 25th Amendment (leaving out the
invalid part as declared by the majority).
Just to support the principle of law culled out above, we
may refer to a few lines in some of the judgments in
Kesavananda Bharati’s case. Sikri C. J., has said at page
197 : "Applying this to the fundamental right of property,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 50
Parliament cannot empower legislatures to fix an arbitrary
amount or illusory amount or an amount that virtually
amounts to confiscation, taking all the relevant
circumstances of the acquisition into consideration." Shelat
and Grover JJ., in addition to what they have said earlier
categorically say at page 285 : and further that the
"amount" is neither illusory nor it has been fixed arbi-
trarily, nor at such a figure that it means virtual
deprivation of the right under Article 31(2). The question
of adequacy or inadequacy, however, cannot be gone into."
Hedge, and Mukherjee JJ., have observed at page 338 :
"Therefore, stated briefly, what the 25th Amendment makes
non-justiciable is an enquiry into the question whether the
amount fixed or determined is an equivalent value of or
’compensations for the property acquired or requisitioned
It is difficult to believe that Parliament intended to make
a mockery of the fundamental right conferred under Article
31(2). It cannot be that the Constitution while purporting
to preserve the fundamental right of the citizens to get an
"amount" in lieu of the property taken for public purpose
has in fact robbed him of all his right." Ray J., as he then
was goes point out at pages 446 and 447 the Article still
binds the legislature to provide for the giving to the owner
a sum of money either in cash or otherwise. The legislature
may either lay down principles for the determination of the
amount or may itself fix the amount.
The Constitution does not allow judicial review of a law on
the ground of adequacy of the amount and the manner as to
how such amount is to be otherwise than in cash." At page
555 is to be found the view of Jaganmohan Reddy J., in these
words
654
"Once the Court is satisfied that the
challenge on the ground that the amount or the
manner of its payment is neither arbitrary or
illusory........
Lastly we would refer to a passage occurring in the judgment
of one of us (Chandrachud J.) at pages 992 and 993. It runs
thus:
"The specific obligation to pay an "amount"
and in the alternative the use of the word
"Principles" for determination of that amount
must mean that the amount fixed or determined
to be paid cannot be illusory. If the right
to property still finds a place in the
Constitution, you cannot mock at the man and
ridicule his right. You cannot tell him . "I
will take your fortune for farthing."
As already stated the High Court took the view that the
amount payable under the, Act for the property acquired
would be such that it will be wholly arbitrary illusory and
leave the many operators in huge debts. Many of them were
playing their contract carriages having taken loans of
considerable sums of money from the, various financiers on
hire-purchase system, for whom also Mr. A. K. Sen appeared
and argued before us. They would not only be paupers but
huge liability will remain on their shoulders if the
interpretation put by the High Court were to be correct.
Mr. Lal Narayan Sinha, learned counsel for the appellants,
took a just and proper attitude in advancing an argument
before us which would take away the basis of the High Court
Judgment in this regard. With respect to each and every
relevant section on the question of payment of the amount in
lieu of the property acquired he suggested such a
reasonable, harmonious and just construction’ by the rules
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 50
of interpretation that we found no difficulty in accepting
his argument-rather, were glad to do so. The other side on
the interpretation so put, which we are going to mention
hereinafter, felt satisfied to a large extent. Mr. Sinha
also advanced some argument with reference to the valid part
of Article 31 C read with clauses (b) and (c) of Article 39
but very wisely did not choose to heavily rely upon it. On
the interpretation of the statute as canvassed by him, there
hardly remained any necessity of it.
Section 3 of the Act defines in clause (a) ’acquired
property’ to mean the vehicles and other property vesting in
the State, Government under section 4. The definition of
’contract carriage is an inclusive one with reference to
certain provisions of Motor Vehicles Act. Clause
(h) runs thus :
"Contract carriage operator’ means an operator
holding one or more contract carriage permit
and includes any person in whose name a public
service vehicle is registered and is specified
as a contract carriage in the certificate of
registration of such vehicle."
‘Permit’ in clause (m) means the permit granted under the
Motor Vehicles Act, authorising the use of a vehicle as a
contract carriage Then comes the important clause (n) which
runs as follows:
655
’Person interested’ in relation to any
acquired property includes the contract
carriage operator and any secured creditor or
financier under a hire purchase agreement, who
has a charge, lien or any interest in the
acquired property and any other person who is
affected by the vesting of the acquired
property and claiming or entitled to claim an
interest in the amount."
Section A provides for vesting of contract carriages etc.
with the permit or the certificate of registration or both
absolutely free from all encumbrances. Various other
properties mentioned in clauses (i) and (ii) of sub-section
(2) also vest on the issuance of the notification under sub-
section (1). While providing that the property shall vest
absolutely free from all encumbrances, a safeguard has been
provided for a person interested and having a claim to the
amount in respect of such property under the Act. Under
section 5, the operators are to furnish the required
particulars. Section 6 which deals with determination of
the amount must be read in full.
"6. Determination of the amount.-(1) For the
vesting of the acquired property under section
4, every person interested shall be entitled
to receive such amount as may be in the manner
hereinafter set out and as specified
in the Schedule, that is to say-
(a) where the amount can be fixed by
agreement it shall ,be determined in
accordance with such agreement;
(b) where no such agreement can be reached,
the State Government shall appoint as
arbitrator a person who is an ,officer not
below the rank of a Divisional Commissioner or
a District Judge;
(c) the State Government may, in any
particular case, nominate a person having
expert knowledge as to the nature of ,he
acquired property to assist the arbitrator and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 50
where Such nomination is made, the person
interested may also nominate an assessor for
the same purpose;
(d) at the commencement of the proceedings
before the :arbitrator, the State Government
and the person interested shall state what in
their respective opinion is the amount
payable:
(e) the arbitrator shall, after hearing the
dispute, make an award determining the amount
which appears to him just and reasonable and
also specifying the person or persons to whom
the amount shall be paid; and in making the
award be shall have regard to the
circumstances of each case and the provisions
of the Schedule so far as they are applicable;
(f) where there is any dispute as to the
person or persons who are entitled to the
amount, the arbitrator shall decide such
dispute and if the arbitrator finds that more
persons than one are entitled to the amount,
he shall apportion the amount, amongst such
persons;
656
(g) nothing in the Arbitration Act, 1940
(Central Act X of 1940), shall apply to
arbitrations under this section.
(2) Every award made by the arbitrator under
clause(e) of sub-section (1) shall also state
the amount of costs incurred in the
proceedings before him and by whom and in what
proportions such amount is to be paid."
A notice under section 7 is to be given to all persons
interested in respect of the amount determined under section
6. Any person interested and served with a notice under
section 7 can file a claim before the authorised officer
under sub-section (1) of section 8. The language of
subsection (2) created some difficulty in harmonising it
with the other provisions of the statute. It runs thus :
"The authorised officer shall forward the
claim made under sub-section (1) to the State
Government for the payment of the amount to
the person interested in the manner specified
under section 11."
Section 10 is important and provides for the various
categories of the: amount liable to deduction in certain
cases. The nature of such amounts liable to be deducted are
relatable to the Employees’ Provident Funds and Family
Pension Fund Act, 1952, Employees’ State Insurance Act,
1948, salary, wags etc. due to an employee, taxes etc. But
the important item to be noticed is mentioned in clause
(iii) of subsection (3) which makes "the amount due towards
the claims of secured creditors" deductible under section
10. Sub-section (4) authorises the arbitrator to decide any
dispute regarding the sum to be deducted under sub-section
(3). Then section 11(1) providing for the manner of payment
of amount for the acquired property says
"The amount determined under section 6 shall,
after deduction, if any, made under this Act,
be given in cash by the State Government to
the person interested,-
(a) in one lumpsum where the amount does not
exceed ten thousand rupees; and
(b) in ten equal annual instalments in other
cases, the amount of each instalment carrying
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 50
interest at the rate of six per cent per annum
from the notified date."
An appeal lies to the High Court from the, award of the
arbitrator as provided for in the 12th section. Certain
powers of the Civil Court have been conferred on the
arbitrator and the authorised officer under section 13.
Section 19 enjoins the, State Government to transfer the
whole of the acquired property in favour of the Corporation.
The permit stands transferred to the Corporation under
section 19(2). Subsection (6) says :
"(a) All sums deducted by the State Government
under sub-section (3) of section 10 shall
stand transferred to the corporation referred
to in sub-section (1).
657
(b) The corporation shall credit the sums
transferred to the appropriate funds or if any
part of the sums is payable to the employee,
directly, such part shall be paid to him
directly."
A monopoly is created in favour of the Corporation by the
20th section.
Then comes the Schedule spoken of in section 6 which
provides for principles for determination of the amount in
relation to the various properties acquired under the Act.
Para 1 deals with the principle and the manner of
determination of the amount for the vehicles. The
acquisition cost is to be determined first and then a
certain percentage is to be deducted in accordance with the
Table appended to sub-para (1). The explanation says :
"For the purpose, of this paragraph
"acquisition cost" shall be the aggregate cost
of the chassis as well as the body of the
contract carriage as charged by the
manufacturer of chassis and by the body
builder."
In respect of almost all other properties acquired the
amount to be paid is by and large the market value. of the
property; vide paras, 2, 3, and 4. Provisions have been
also made for payment of the amount in respect of the
workshops in para 5 and in respect of stores in para 6. Some
compensation has been provided in para 7 of the Schedule for
every permit acquired under the Act, although the amount so
fixed may not be adequate.
Now by the harmonious and reasonable rules of construction
as also to save the Act from being violative of Article
31(2) of the Constitution, we proceed to discuss and accept
in a large measure the interpretation put and canvassed by
Mr. Sinha. If the amount is fixed by agreement, well and
good. In the absence of an agreement, the State Government
shall appoint an arbitrator who will be an officer of a high
rank. Two assessors having expert knowledge as to the
nature of the acquired property--one by the Government and
one by the person interested, can be appointed to assist the
arbitrator. Both sides will state before the arbitrator as
to what should be the amount payable according to each. The
arbitrator shall hear the dispute and make an award
determining the amount which appears to him just and
reasonable. He shall also specify the person or persons to
whom the amount shall be paid. In making the award,. he
shall have regard to the circumstances of each case and the
provisions of the schedule so far they are applicable. Some
difficulty at the outset arose in reconciling the expression
"as specified in the schedule" occurring in subsection (1)
of section 6 and the underlined expression occurring in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 50
clause (e) of that sub-section.
The content and purport of the expressions "having regard
to" and "shall have regard to" have been the subject matter
of consideration in various decisions of the Courts in
England as also in this country. We may refer only to a
few. In Illingworth v. Welmsley(1) it was held
(1) (1900) 2 Queen’s Bench, 142.
658
by the Court of Appeal, to quote a few words from the,
judgment of Romer C.J. at page 144 : "All that clause 2
means is that the tribunal assessing the compensation is to
bear in mind and have regard to the average weekly wages
earned before and after the accident respectively. Bearing
that in mind, a limit is placed on the amount of
compensation that may be awarded....... In another decision
of the Court of Appeal in Perry. Wright (etc. etc.) (1)
Cozens-Hardy M.R. observed at page 45 1 :"No mandatory words
are there used; the phrase is simply "regard may be had".
The sentence is not grammatical, but I think the, meaning is
this : Where you cannot compute you must estimate, as best
as you can, the rate per week at which the workman was being
remunerated, and to assist you in making an estimate you may
have regard to analogous cases." It is worthwhile to quote a
few words from the judgment of Fletcher Moulton L.J. at page
458. Under the phrase" "Regard may be had to" the facts
which the Court may thus take cognizance of are to be "a
guide, and not a fetter." "This Court speaking through one
of us (Beg J., as he then was), has expressed the same
opinion in the case of Saraswati Industries Syndicate Ltd.
Etc. v. Union of India(2). Says the learned Judge at page
959 : "The expression "having regard to" only obliges the
Government to consider as relevant date material to which it
must have regard."
The arbitrator, therefore, reading section 6(1) as a whole
is not obliged to fix the amount as specified in the
Schedule. But he has to fix the amount which appears to him
just and reasonable on the totality of the facts and
circumstances keeping primarily in mind the amount mentioned
in the Schedule.
Another apparent conflict was writ large on the phraseology
of subsection (2) of section 6 and the provisions contained
in sections 10 and 11. Section 10 provides for the
deductions of the various amounts at the outset from the
amount determined by the arbitrator payable in respect of
the acquired properties, including those due to the secured
creditors, which undoubtedly, would include the financiers
of the hire-purchase agreements. The amount payable under
section 11 and the manner of its payment is, after deducting
all the amounts, provided in section 10. To that extent,
for the purpose of harmonious construction, sub-section (2)
of section 8 must mean the payments of the amounts as
mentioned in section 10 and the balance to the operator in
the manner specified under section 11. The Act thus
interpreted to a large extent will satisfy not only the
claims on account of wages and tax etc. but also the amount
due to the secured creditors. Surely the amount due, if
any,’ to any unsecured creditor cannot be taken into account
as there is no such provision made in section 10.
Sufficient power has been conferred on the arbitrator to
arrive at a just and reasonable figure of the amount payable
for the property acquired. And further, a procedural
safeguard has been provided by making a provision for an
appeal to the High Court from the award of the arbitrator.
(1) [1908] 1 King’s Bench, 441.
(2) [1975] 1 S.C.R. 956.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 50
659
No attack with any reasonable justification could be made on
paras 2 to 7 of the schedule. But a difficulty arose in
interpretation of the term "acquisition cost" occurring in
sub-para (1) of para 1. The literal meaning of that
expression in sub-para (1) would have been the acquisition
cost of the contract carriage operator or any other person
interested therein. But the difficulty created was by the
language of the explanation appended thereto when it said
that "acquisition cost" shall be the aggregate cost of the
chassis as well as the body of the contract carriage as
charged by the manufacturer of chassis and by ,the body
builder." Mr. Sinha rightly pointed out that the true and
the correct meaning of the words used in the explanation in
the light of sub-para (1) of para 1 would mean the cost of
the chassis fixed by the manufacturers for their dealers to
charge from the purchasers. Really the acquisition cost qua
the purchaser is the price which he pays to the
manufacturers’ dealer from whom he purchases and not the
manufacturer’s actual cost of manufacturing the chassis. So
far the acquisition cost of the body of the vehicle is
concerned, no difficulty is created by the explanation. It
would be the actual cost charged by the body builder.
On the interpretations aforesaid which we have put to the
relevant provisions of the Act, it was difficult-rather
impossible-to argue that the amount so fixed will be
arbitrary or illusory. In some respects it may be
inadequate but that cannot be a ground for challenge of the
,constitutionality of the law under Article 3 1 (2). The
respondents felt quite satisfied by the interpretations
aforesaid and could not pursue their attack on the vires of
the Act on that ground.
Legislative Competence Re : Contract Carriages Plying on
Inter-State Routes
The number of such carriages and such permits compared to
the total number of vehicles acquired was very few. It was
about 20 to 25 ,only. It is no doubt true that under the
Ordinance contract carriages with Inter-State permits were
not sought to be acquired. The Act, however, has done so and with a r
etrospective effect. Question is whether the
State Legislature of- Karnataka has gone beyond its powers
and competence in making such a provision. In that regard
it was also canvassed before us whether it was possible to
read down certain provisions of the Act to save it from
constitutional invalidity. If so, to what extent and in
what respect ?
The first attack on the legislative competence was that
acquisition ,of such a contract carriage squarely fell under
Entry 42 of List I of the Seventh Schedule to the
Constitution that is to say, "Inter-State trade and
commerce." In paragraph 97 of the judgment the High ’Court
seems to have rejected the contention that the Act violated
the freedom of trade and commerce guaranteed under Article
301 and 304. But the High Court in the earlier portion of
its judgment appears to have taken the view that an Inter-
State permit is, in fact and in substance, two or more
permits rolled into one. The vehicle ply in the different
States. The permit originally granted by the Karnataka
authority under the Motor Vehicle Act has to be
countersigned by the authorities of the other States, Some
of the operators kept their
660
vehicles and have got their workshops in other States. The
law made: by the Karnataka Legislature cannot have extra
territorial operation.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 50
We, do not think that the view expressed by the High Court
is wholly correct. There are numerous decisions of the
Privy Council,. the Federal Court and the Supreme Court in
support of the proposition that the pith and substance of
the Act has to be looked into and an incidental trespass
would not invalidate the law, vide for example Prafulla
Kumar Mukherjee and others and Bank of Commerce Limited,.
Khulna and Advocate-General of Bengal(1); Kerala State
Electricity Board v. Indian Aluminum Co.(2) The earlier case
of this Court is reported in A. S. Krishna v. State of
Madras(3). Almost a direct decision on this point is to be
found in an unreported decision of this Court in S. K.
Pasari v. Abdul Ghafoor and Ors. (4) The question for
consideration in that case was whether the State Government
had power under section 64A of the Motor Vehicles Act as
introduced by the Bihar Amendment to deal with a revision in
relation to an Inter-State permit. The High Court had taken
the view that it bad no such power, as such, a provision
falls within item 42 of List I of the Seventh Schedule to
the Constitution, namely, Inter-State trade and’ commerce
and not Entry 35 of List 111, namely, mechanically propelled
vehicles. This Court following the principle laid down in
the case of Narayanappa v. State of Mysore(5) reversed the
view of the High Court and held that the impugned section
fell within the legislative power of the State under Entry
20 of List III of Schedule Seven, of the Government of India
Act, 1935 corresponding to Entry 35 of List III of the
Seventh Schedule to the Constitution. The said decision has
been followed by this Court in Tansukh Rai Jain v. Nilratan
Prasad Shaw and others(6).
Mr. Sen submitted that the, portion of the Statute providing
for acquisition of contract carriages running on Inter-State
routes is in reality legislating on the subject of Inter-
State trade and commerce.The State Legislature was not
competent to do so. In support of his argument, learned
counsel referred to some of the American decisions, viz.
United States of America, Plff. in Err., v. Dan Hill(7);
Claude R.Wickard, Secretary of Agriculture of the United
States etal v. Roscoe C. Filburn(8); The Steamer Daniel
Ball, Byron D. Ball and Jessie Ganoe, Claimants, Appit. v.
United States(9). In Dan Hill’s case (supra) it was held
that the transportation of intoxicating liquor from one
State to, another was in itself Inter-State commerce, and
the Congress in the.
(2) [1976] 1 S.C.R. 552.
(3) [1957] S.C.R. 399.
(4) Civil Appeal No. 306 of 1964 decided on 4-5-1964.
(5) [1960] 3 S.C.R. 742.
(6) [1965] 2 S.C.R. 6
(7) 63 Law Ed. 337.
(8) 87 Law Ed. 122.
(9) 19 Law Ed. 999.
661
exercise of its plenary authority to regulate the Inter-
State transportation of intoxicating liquors. may prohibit
such transportation even into a State which permits it. In
the case of Claude R. Wickard (supra) the question arose
entirely in a different context. A Federal regulation of
the production of wheat not intended in any part for
commerce but wholly for consumption on the farm was held to
be within the power conferred by the commerce clause where
the, purpose of such regulation was to control the market
price of wheat in Inter-State commerce. In the case of The
Steamer Daniel Ball (supra) the question was whether the
impugned Act applicable to a steamer engaged as a common
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 50
carrier to carry goods in a navigable river between places
in the same State when a portion of the merchandise
transported by her is destined to places in other States
could control such a steamer under the authority of the
Congress to regulate an agency employed in commence between
the States. It was held that it could be so done.
In our judgment it is difficult to apply the principles of
any of the cases aforesaid to the facts and the provisions
of the Act. It is not an Act which deals with any Inter-
State trade and commerce. Even assuming for the sake off
argument that carriage of passengers from one State to the
other is in one sense a part of the Inter-State trade and
commerce, the impugned Act is not one, which seeks to
legislate in regard to the said topic. Primarily and almost
wholly it is an act to provide for the acquisition of
contract carriages, the Inter-State permits and the other
properties situated in the State of Karnataka. In pith and
substance it is an act of that kind. The incidental
encroachment on the. topic of Inter-State trade and
commerce, even assuming there is some, cannot invalidate the
Act. The Motor Vehicles Act, 1939 was enacted under Entry
20 of List III of Schedule Seven of the Government of India
Act, 1935 corresponding to Entry 35 of List III of the
Seventh Schedule to the Constitution. The subject being in
the Concurrent List and the Act having received the assent
of the President, even the repugnancy, if any, between the
Act and the Motor Vehicles Act stands cured and cannot be a
ground to invalidate the Act. Entry 42 of List III deals
with acquisition of property. The State has enacted the Act
mainly under this entry. It does not in any way violate or
militate against the provisions of the Road Transport
Corporation Act either, as argued by Mr. Sen.
Now we proceed to refer to some of the provisions of the
Motor ’Vehicles Act, to repel Mr. Sen’s arguments even with
reference to that Act. But it cannot be rejected fully. A
portion of it for the reasons to be hereinafter stated has
got to be accepted.
Under Section 23, every owner of a Motor Vehicle has got to
cause his vehicle to be registered by a registering
authority in the State in which he has the residence or
place of business where the vehicle is normally kept.
Almost all the Inter-State vehicles (there may be a few
exceptions) are registered in the State of Karnataka. They
are normally kept there. If a vehicle registered in one
State has been kept in another State for a period exceeding
12 months, then the registration has to be changed in
accordance with section 29. Under the
662
second proviso to section 45(1) if it is proposed to use a
vehicle in two or more regions lying in different States, an
application for a permit has to be made to the Regional
Transport Authority of the region in which the appellant
resides or has his in principal Place of business. Almost
all the Inter-State permits were initially granted by the
Karnataka authority. Section 63(1) says :
"Except as may be otherwise prescribed, a
permit granted by the Regional Transport
Authority of any one region shall not be valid
in any other region, unless the permit has
been countersigned by the Regional Transport
Authority of that other region, and a,permit
granted in any one State shall not be valid in
any other State unless countersigned by the
State Transport Authority of that other State
or by the Regional Transport Authority
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 50
concerned :"
This Court has expressed the view in the case of M/s.
Bundelkhand Motor Transport Company, Nowgaon v. Behari Lal
Chaurasia and another(1) followed in Punjab Sikh Regular
Motor Service, Modhapara v. The Regional Transport
Authority, Raipur and another(2) that permits granted by one
Regional Authority and counter-signed by another Regional
Authority either in the same State or in different States
are really different permits rolled into one. If the
initial granting authority does not renew the permit for
plying the vehicle within the, jurisdiction of another
authority the latter by mere counter-signing the permit
cannot empower the permit holder to ply the bus either in
their region or another State. None of the Inter-State
permits in these cases has been issued by any central
authority in accordance with section 63A of the Motor
Vehicles Act.
In the case of The Bengal Immunity Company Limited v. The
State of Bihar and others(3) Venkatarama Ayyar J., delivered
his separate judgment. Although he dissenting from the
majority view in regard to the main controversy in the case,
in his judgment from page 811 onwards he discussed very
lucidly, if we may say so with respect, the concept of extra
territorial operation of a law. It has two connotations as
pointed out by the learned Judge at page 814 : It........
means a law of a State with reference to its own citizens in
respect of acts or events which take place outside the
State. In discussing questions relating to extra-
territorial operation, it is desirable that the two con-
notations of the words should be kept distinct and
separate". Two other connotation is the operation of the
law itself to subjects or properties outside the territory
of the State which has made the law.
For the reasons stated above by and large the law is not
invalid. But to maintain its constitutionality in full, on
the well-known principles of law established and noticed in
several decisions, such as, in The Hindu Women’s Rights to
Property Act 1937. and the Hindu Women’s
(1) [1966] 1 S.C.R. 485.
(2)[1966] 2 S.C.R. 221.
(3) [1955] 2 S.C.R. 603,
663
Rights to Property (Amendment) Act, 1938, and A Special
Reference under section 213 of the Government of India Act,
1935: (1) R.M.D. Chamarbaugwalla v. The Union of India(2)
and Gulabhai Vallabhbhai Desai etc. v. Union of India &
Ors(3) a reading down of some of the provisions is
permissible. And that reading down will be only to this
effect. Vehicles kept and registered in the State of
Karnataka in respect of which initially the Inter State
permit has been granted by this State have validly been
acquired. The permit acquired in respect of those vehicles
will be the permit operative within the territory of the
State of Karnataka. The counter-signed portion of the
permit, which as pointed out above on the authorities of
this Court is in substance and in effect a separate permit
authorising the permit holder to ply the bus in another
State, cannot be acquired. Such an acquisition will fall
within the second connotation, of the extra-territorial
operation of the law, as referred to above from the Bangal
Immunity case. The State Government on acquisition and the
vesting of the acquired property cannot transfer the
countersigned portion of the permit to the Corporation. The
Corporation in view of the transfer under section 19 will be
able to utilize the unexpired portion of the permit for
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 50
plying the vehicle only in the Sate of Karnataka until and
unless it gets it signed by the Transport authority of the
other State or States in accordance with the Motor Vehicles
Act or take steps in accordance with section 20 of the Road
Transport Corporations Act. This portion of the law,
although it is a very minor one, has got extra-territorial
operation in the connotation and sense which did not permit
the Karnataka Legislature to enact such a law. If on the
facts of a particular case it be found that any particular
vehicle is kept and registered or is plying on an initial
permit granted by another State, such a vehicle also would
not stand acquired under the Act and the notifications
issued thereunder. Since the High Court has not gone into
the details of the facts, we were not concerned to go into
them. The Constitution Bench was formed merely to decide
the constitutional issues.
At the end we may also indicate that under sub-section (6)
of section 19 all sums deducted by the State Government
under sub-section (3) of section 10 which include the sums
payable to the secured creditors stand transferred to the
Corporation which is obliged to credit the sums transferred
to the appropriate funds. The said provision would take
within its ambit the liability of the Corporation to pay
forthwith the sum found due to the secured creditors. Since
we have upheld the constitutional validity of the Act on
merits by repelling the attack on it by a reasonable and
harmonious construction of the Act, we do not consider it
necessary to express any opinion with reference to Article
31C read with clauses (b) and (c) of Article 39 of the
Constitution. Our learned brother Krishna Iyer J., has
prepared a separate judgment. specially dealing with this
point. We must not be understood to agree with all that he
has said in his judgment in this regard.
(1) [1941] 1 S.C.R. 485.
(2) [1957] S.C.R. 931.
(3) [1967] 1 S.C.R. 602.
664
For the reasons stated above, we allow the appeals and set
aside the judgment of the High Court. It will be open to
any of the writ petitioners to file a petition in the High
Court either in the same writ petition or a fresh one for
adjudication and decision of the special facts of a
particular case, if necessary, in the light of this
judgment. It is hoped that since the matter has been
considerably delayed by now, very early and expeditious
steps would be taken for determination and payment of the
amounts in respect of the acquired property to the persons
interested in accordance with the Act in the light of this
judgment. We shall make no order as to costs in any of the
appeals.
KRISHNA IYER, J.-We go wholly with our learned brother
Untwalia J. Then why a separate afterword ?
Because, to put it simplistically, a legislation for the
nationalisation of contract carriages by the Karnataka
State, where provision has been made for fair compensation
under present circumstances, has still been struck down by
the High Court on the surprising grounds of absence of
public purpose, illusoriness of compensation State take-over
being beyond the orbit of Article 39(b) and the like, and to
express ourselves emphatically in reversal on the obvious,
yet basic, issue we itemise below which is necessary to
obviate constitutional derailment again. The public sector,
in our constitutional system, is so strategic a tool in the
national plan for transformation from stark poverty to
social justice, transcending administrative and judicial
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 50
allergies,, that the questions raised and rulings thereon
are of larger import for the country than one particular
legislation and its vires and one particular government and
its policies. What are those disturbing interrogatories ?
If the State, to subserve the objects of governmental or
other like agencies, compulsorily takes movable property or
realty of private citizens, the like of which are readily
available in the open market. does the law authorising such
taking violate the limitation of ’public purpose’ imposed by
Article 31(2) of the Constitution, in the absence of urgency
which brooks no delay whatever 9 Further, does the prospect
of easy purchase elsewhere, negate the presence of ’public
purpose’, implying thereby the resort to compulsory
acquisition within the framework of Article 31(2) is
interdicted save where there is ’State necessity’ coupled
with scarcity’ of supplies in the market ? Secondly, does a
legislation qualify for immunity under Article 31C read with
Article 39(b), only where the scheme is to divide and deal
out to a plurality of persons, to disperse, diffuse or
scatter ownership and control of material resources of the
community compulsorily taken by the State ? Or does it em-
brace ’distribution with a wider connotation of ’removal’
from the private sector and allocation in the public sector,
dividing and arranging. separating and allocating, acquiring
from individuals and making over to collective institutions
or State organs, acting for and in the interest of the,
community, according, to the State Plan or policy decision
on the scheme of distribution and allocation of resources
among the different sectors of economic activity so as best
to subserve the public good ? How, in short, do we decode
’distribute’ in Article 39(b) illumined by Article, 38 ? As
permitting or proscribing holding of ’resources by
665
the State or its designated organ monopolistically, for the
better production and/or distribution of goods and services
to the community, for participative control by and
distribution of profits among workers and for all those
other benefits claimed to flow out of public ownership,
social control, commitment to community, parliamentary
accountability and vaster capability ? Does R. C. Cooper(1)
remain a legal tender even after demonetisation on the
question of acquisition vis-a-vis compensation, by the 25th
(Constitution) Amendment ? Can the theory of ’illusory
compensation’ be apocryphal or be exaggerated to apply to
diminished compensation as a revised reincarnation of
’adequate compensation’ still menacing projects of
nationalisation ? How do we conceptulise ’material
resources’ and ’public purpose’ in our current consti-
tutional setting ? When cryptic phrases expressive of
constitutional, culture and aspirational future, fundamental
to the governance of the nation, call for interpretative
insight, do we merely rest content to consult the O.E.D. and
alien precedents, or feel the philosophy and share the
foresight of the founding fathers and their telescopic
faculty ? Is the meaning of meanings an artless art ? Holmes
(2) J. in lovely language,, stated ’what oft was thought but
never so well expressed’ :
"A word is not crystal, transparent and
unchanged; it is the skin of living thought
and may vary greatly in colour and content
according to the circumstances and the time in
which it is used."
Jerome Frank adopted a quotation from Holmes
which drives home the same point :
"We must think things not words, or at least,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 50
we must constantly translate our words into
the facts for which they stand if we are to
keep to the real and the true. (3) "
Be the High Court’s judgment right or wrong, its
socioeconomic and jurisprudential repercussions for a social
Welfare State or a ’Socialist Republic’ are sufficiently
profound to explain why, from us too, an afterword.
Is it otiose to ponder over these matters articulately even
though we generally concur in the reasoning and conclusion
of our learned colleagues ? Some economic issues of moment,
quiet in their legal look but critical in their later
portent, come before the Court as has happened now, when,
regardless of assent or dissent, the spelt-out opinion of
the judges sitting on the same bench, separately or
conjointly, becomes the right of the citizen, read in the
context of the pregnant provision in Article 141. When major
juristic problems of futuristic import involve
constitutional probes, a plurality of opinions may bring out
if we may mix metaphors-morefacets, shifts in emphasis,
finer notes, fresh vistas and seeds of development, not
necessarily verbal re-hash or medley of repetitive
prolixity. A hundred noetic flowers and some cerebral
briars are not a confusing crowd of colours.
Judicial perspective vis a vis constitutionality of economic
legislation.
(1) [1970] 3 S.C.R. 530.
(2) Towne V.Eigner,245U.S..418=62L.ed. 372,376
(3) Dias Jurisprudence, 4th Edn. p. 625
666
When confronted by serious constitutional problems, judicial
statesmanship drops the craft of a legal tinker or
lexicographic borrower but transforms itself into that of
social engineer who ’beholds the future in the present and
his thoughts are the germs of the flower and fruit of latest
time’. He gives conscious expression, in juristic tongue,
to the Constitution’s implicit purpose grounded on the permanent in
terests of man as a progressive. being-here,
the little yet large man of India breaking out of an
iniquitous system, yet reaching out to a human society, shot
with distributive justice. The presence of this people-
oriented perspective in the court, as the interpreter of the
Constitution and its imperatives and the laws designed to
inaugurate a Human Tomorrow, compels us in all humility and
aware of inadequacy, to lend our pen to the reversal of the
decision under appeal which de facto proceeds on fastidious
societal values of vanishing validity. in the changed
setting, and is partly founded on exotic juridical doctrines
(eminent domain) incongruous with the legitimate realities
of the emerging Indian Order as are writ into Article 31 (2)
and more unmistakably in Article 31C read (in the manner of
Keshvananda Bharati) (1) along side of Article 39(b) and
(c).
The social philosophy of the Constitution shapes creative
judicial vision and orientation. Our nation has, as its
dynamic doctrine,, economic democracy sans which political
democracy is chimerical. We say so because our
Constitution, in Parts III and IV and else-where, ensouls
such a value system and the debate in this case puts
precisely this soul in peril.
Friedman has said in his ’Legal Theory and Social
Evolution’.
’The lawyer cannot afford to isolate himself
from the social process. His independence can
never be more than relative, and it is only a
clear awareness of the political, social and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 50
constitutional foundations of, his function in
general as well as of particular legal
problems that enables him to find the proper
balance between Stability and progress."(2)
Our thesis is that the dialectics of social justice should
not be missed if the synthesis of Part III and Part IV is to
influence State action and court pronouncements.
Constitutional problems cannot be studied in a socio-
economic vacuum, since socio-cultural changes are the source
of the new values,, and sloughing off old legal thought is
part of the process of the new equity-loaded legality. A
judge is a social scientist in his role as constitutional
invigilator and fails functionally if he forgets this
dimension in his complex duties.
The credal essence of the Constitution consists in its
Preamble,Articles 38, 39(b) and (c), 31 and the bunch of
Articles 31A, 31Band 31C (We do not deem it necessary to
refer in this case to the42nd Constitution Amendment
Act).
(1) [1973] Supp S.C.R. 1
(2) Legal Theory and-Social Evolution, p. 81, 5th Edn.
667
Our emphasis is on abandoning formal legalistics or sterile
logomachy in assessing the vires of statutes regulating
vital economic are-as, and adopting instead a dynamic,,
goal-based approach to problems of constitutionality. It is
right that the rule of law enshrined in our ,Constitution
must and does reckon with the roaring current of change
which shifts our social values and shrivels our feudal
roots, invades our lives and fashions our destiny. The key
issues argued at learned length in these appeals cannot
suffer ’judicial separation’ from the paramount principles
in the Preamble and in Article 39(b) and (c). So we have to
view the impugned provisions from the vantage point of
socio-legal perception.
The semantic sin of dubious legislating drafting
Before entering the thorny thicket of debate on the
questions arising in this batch of appeals a cautionary word
may be uttered, without disrespect, about the unwitting
punishment of the community by our legislative draftsmen
whose borrowed skills of Westminster vintage and hurried
bills without sufficient study of their economic project,
occasionally result in incomprehensibility and incongruity
of the law for the lay and the legal. Francis Bennion,(1)
commenting on the Renton Committee Report, writes :
"The Renton Committee points out that the
problem of obscure statute law is important to
every citizen.
"There is hardly any part of our national
life or of ourpersonal lives that is not
affected by one statute or another.The
affairs of local authorities, nationalised
industries, publiccorporations and private
commerce are regulated by legislation. The
life of the ordinary citizen is affected by
various provisions of the statute book from
credle to grave."
The committee might have added that the rule
of law and parliamentary democracy itself
are imperilled if laws are incomprehensible.
They did say that it is of fundamental
importance in a free society that the law
should be readily ascertainable and reasonably
clear, and that otherwise it is oppressive and
deprives the citizens of one of his basic
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 50
rights. It is also needlessly expensive and
wasteful. Reed Dicerson, the famous American
draftsman, said it cost the government and the
public "many millions of dollars annually."
It must be said in fairness to both sides that Shri Lal
Narain Sinha whole heatedly agreed with Shri Asoke Sen (they
appeared on opposite sides> that the legislation was
illdrafted and made a big drift on the creative imagination
and linguistic tolerance of the judges, to reconcile the
verbal deficiencies and semantic difficulties besetting the
text. Shri Sinha told the Court that a clarification bill
was going before the House shortly as an amending exercise
in this behalf. Our draftsmen
(1) Laws are not for laymen-Guardian Miscellany May 29,
1975.
6-951SCI/77
668
handle foreign know-how meant for different circumstances,
and without full grasp of the economic regulation or the
leisure and facilities for such study.
In a country where the people are, by and large, illiterate,
where a social revolution is being pushed through by
enormous volume and variety of legislation and where new
economic adventures requiring unordhoodoz jural techniques
are necessitous, if legal drafting is to be equal to the
challenge of change, a radicalisation of its methodology and
philosophy and an ability for the legislative manpower to ex-
press themselves in streamlined, simple, project-oriented
fashion is essential. In the hope that a role-conscious
court communicates to a responsive Cabinet, we make this
observation.
What is the battle about?
Back to the challenging problems thrown up by the High
Court’s decision. The facts are there in the leading
judgment and the formulation of the controverted
propositions also needs no reiteration. Broadly speaking,
we strike no note of dissensus but seek to bring out some
social, nuances even in consensus. Let us project the pegs
on which our discussion may hang. Incidentally, conceptual
differences about the dimensions of the change visualised by
Article 31C read with Article 39(b) and (c) are bound to
exist among judges who, after all, professionally objectify
the social philosophy of the Constitution through the
subjective prism of their own mentalism.
1.What is a ’public purpose’, set as a constitutional
limitation in Article 31(2), compliance with which
conditions the immunity from attack based on Article 19(1)
(f) or inadequacy of recompense when any person is deprived
of his property ?
1. (a) What is the degree of nexus between the public
purpose and the acquisition desiderated by Article, 31(2)
?
1 (b) Can Cooper (supra) be judicially resurrected, draped
differently but with the same ’compensation’ soul, even
after the amendment of Article 31 (2) ?
2. What are the pervasive ambience and progressive amplitude
of the ’directive principle’ in Article 39(b) and (c) in the
context of nationalisation of public utilities ?
2(a) Can State monopoly by taking over private property be a
modus operandi of distribution of ownership and control of
the material resources of the community to subserve the
common good, within the framework of Article 39(b) ?
2(b) Are distribution and nationalisation antithetical of
overlapping ?
2(c) What is the connotation of the expression ’material
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 50
resources’ ? Can private buses be regarded as material
resources of the community ?
669
These and cousin issues are the legal-economic points
canvassed before us and are sure to occupy the centre of the
stage when management and control of growth in effective
measure for common weal expand the frontiers of public law
with a view to implement the ’distributive justice’ embodied
in Articles 38 and 39 and, by Article 37, made fundamental
in the governance of the country. Dr. Ambedkar, in words
significant, said :
"In enacting this part (Part IV) of the
Constitution, the Assembly is giving certain
directions to the future legislature and the
future executive to show in what manner they
are to exercise the legislative and executive
power they will have. Surely it is not the
intention to introduce in this part these
principles as mere pious declarations. It is
the intention of this Assembly that in future
both the legislature and the executive should
not merely pay lip-Service to those principles
but that they should be made the basis of all
legislative and executive action that they may
be making hereafter in the matter of the
governance of the country."
The Directive Principles, being the spiritual essence of the
constitution, must receive sweeping signification, being our
socio-economic Magna Carta, quiddities apart.
They key etc. thought of the Constitution and the
interpretative response.
The role of nationalisation of essential services for the
better life of the people, an item on the country’s urgent
developmental agenda, must be gathered before the wide range
of the companion set of constitutional articles can be
spanned by the court in interpretative terms. Codified law
is legislatively crystallised politico-economics and so the
search of the jurist has to be wider and deeper and
interlaced. Take care of the basics, the specifics will
take care of themselves. So we have to go behind the legal
facade to respond to the rhythm of the pulsating text of the
Constitution which casts heavy developmental responsibili-
ties on the Welfare State. Roscoe Pound’s remark reflects
this thought :
"All he social sciences must be co-workers, and emphatically
all must be co-workers with jurisprudence."
Moreover, sheer legalism cannot lightly upset legislative
wisdom or efficiency while passing on the constitutionality
of economic legislation based on national planning, public
finance, private investments, cost accounting, policy
decisions, historical factors and a host of complex. social
variables, Dixon C.J.(1) in a different context observed :
"These matters of incidental powers are
largely questions of degree, but in
considering them we must not lose sight of the
fact that once the subject matter is fairly
within the province of the Federal legislature
the justice and wisdom of the provisions which
it makes in the exercise of its powers over
the subject matter are matters entirely for
the legislature and not for the Judiciary."
(1) Burton v. Honan : 1952, 86 C.L.R. 169, 179.
670
This is no argument for abdication of judicial power; for
where legislation is colourable, measures make-believe or
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 50
orders mala fide, the judges are the masters of the
situation, and this Court, under Article 141, declares the
law in that supreme spirit. But courts must be circumspect
not to rush in where serious reflection will make them fear
to tread nor to resort to adroit circumvention because of
economic allergy to a particular legislative policy.
At this stage, a glance at the raw realities, to abolish
which Article 31(2), Article 31C and Articles 38 and 39 have
been enacted, is necessary. Poverty has, for ages, been the
omnipresent reality of Indian life. Stark inequalities have
been chronic and the ’hidden hunger’ (to use Myrdal’s
phrase) of the people have pushed the Freedom Movement
forward in the socialistic direction toward a better life.
The fasciculus of clauses in the Constitution we have
referred to is calculated to prevent the revolution of
rising expectations from becoming a revolution of rising
frustrations. These compulsions must inform legal
interpretation. For, in the words of Seton Pollock,
"The law itself, though of crucial social
importance, is only one element in the total
human task. That task is to meet and
master those frustrations that diminish man in
this humanity and obstruct the realisation of
his freedom and fulfilment within the human
society. Those frustrations stem from
ignorance, poverty, pain, disease and
conflicts of interest both within the person
(the field of psychological medicine) and
between persons (the territory of the law).
These manifold and interacting frustrations
cannot be met by any one discipline but only
by a coordinated attack upon the problem
through enlightened political and
administrative initiatives and by educational,
medical, psychological and legal remedies.
Our concern is with the human condition and
the imperative need to improve it through such
resources as we can develop. We are beginning
to see more clearly the need for a unitary
view which is, in essence, spiritual in its
character, reaching down to the realities that underlie our
fragmented disciplines.
The burning issue of our times is how our
resources can be developed and combined to
achieve the fulfilment of the human task and
the improvement of the human condition."
(Preface to ’The English Legal Aid System’ by
Seton Pollock Orient Longmans)
The Father of Nation long ago argued for ’the art and
science of mobilising the entire physical, economic and
spiritual resources of all the various sections of the
people in the service of the common good of all’. Sir
Leslie Scarman developed this new dimension of law in the
English climate when he said :
"I shall endeavour to show that there are in
the contemporary world challenges, social,
political and economic,
671
which, if the system cannot meet them, will
destroy it. These challenges are not created
by lawyers; they certaintly cannot be
suppressed by lawyers; they have to be met
either by discarding or by adjusting the legal
system. Which is to be ?"
A panoramic sociological view-not a narrow legal peep-alone
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 50
can invest judicial power with capability to help solve the
myriad problems of Mankind and Mother Earth.
We have divagated to drive home the pertinence and power of
poverty to change our social order through law, and the
necessity of the constitutional court to appreciate this
fundamental logos before voiding any ’law’. Ideas of the
Old Order on ’public purpose’, illusory compensation, nexus
doctrine and ’distributed to subserve the common good’
should not reduce lofty constitutional considerations into
’hollow concepts, tea-cup debates and impotent ideas (which)
debase modern jurisprudence’ and are ’intellectually
subversive’, to use the indignant expressions of John Batt.
Nietzsche once said : ’The great problems are in the
streets’. Abraham Lincoln warned that ’the dogmas of the
quiet past are no longer adequate to the stormy present.’
Our legal doctrines, canons of interpretation and
constitutional attitudes must therefore take not of this
adaptational potential and response to
The scheme of the impugned statute
Coming now to the concrete provisions of the Act, tested on
the anvil of Article 31(2) and 39(b) and (c), we have to get
a hang of the legislative project. Its purpose is to
acquire contract ages from a,]]. private sources. The
reason for this measure of nationalisation is set out in the
’whereas’ paragraphs. In broad terms, it is.... that
private contract carriages are being operated in the State
in a manner highly detrimental and prejudical to the public
interest. it is further claimed that with. a view to prevent
such misuse and also to provide better facilities for the
transport of passengers and ’to give effect to the policy of
the State towards securing that the ownership and control of
the material resources of the community are so distributed
as best to subserve the common good and that the operation
of the economic system does not result in the concentration
of wealth and means of production to the common detriment,’
acquisition of contract carriages is being resorted to. The
requisite declaration contemplated in Article 31C is thus
made in the preamble as well as in Section 2 of the Act. Of
course, in the light of the Keshavananda Bharati Case
(supra) there is in this Court a power-and if demanded, a
duty-to examine whether there is real nexus between the
legislation and Article 39(b) and (c) or whether the
ritualistic declaration is cutely but colourably designed to
ward off attack from Article 14, 19 and 31, Make-believes
cannot make-do. But if there is a reasonable relation
between the two, the Court cannot constitute itself as a
super administrator and suggest that there are better ways
of achieving the object than what the legislature has chosen
to adopt. ’Quo modo’ is not for the court.
672
The anatomy of the Act has been set out in the leading
judgment and we adopt it.
Let us now examine the fatal constitutional vices, embedded
in the Act and discovered at the High Court level. One such
lethal feature which appealed to the High Court, and has
been repeated before us by Shri Asoke Sen with insistence,
is that there is no public purpose involved in the
acquisition of contract carriages and so the enactment is
not invulnerable under Article 31(2). The statutory purpose
was to acquire contract carriages in private ownership, and
transfer them to the State Road Transport Corporation which
was to enjoy the exclusive privilege of running contract
carriages. The expected shower of benefits was elimination
of misuse of contract carriages in private hands and
augmentation of public good by plying these vehicles under
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 50
prolic ownership and direction. The first question is
whether such taking from a private person and vesting in a
public body is not a public purpose. There are two sub-
issues which are distinct and mu-it be kept distinct if
ideational confusion is not to vitiate our conclusion : (a)
Is there a public purpose ?; and (b) If there is, what are
the ways to fulfil that purpose ? The ends cannot be
telescoped into the means. Once this perspicacity in
thinking is present, it is unarguably obvious that the,
State Government’s or the State Corporation’s purpose is a
public ’purpose. Putting aside the possible distortions,
historically proved, of class domination of the, State
apparatus and assuming the values of our constitutional
order, the State symbolizes, represents and acts for the
good of society. Its concerns are the ways of meeting the
wants of the community, directly or otherwise. The purpose
of a public body to run a public transport service for the
benefit of the people, operating it in a responsible manner
through exercise of public power which is controlled and
controllable by society through its organs like the
legislature and, at times, even the court, is manifestly a
public purpose. Does the purpose subserve some public use
or interest or produce some public good or utility ? If it
does, the purpose becomes public. ’Public’ qualifies the
object. Black’s Legal Dictionary elucidates the expression
:
"The term is synonymous with government
purpose, (State V. Dizon). As employed to
denote the objects for which taxes may be
levied, it has no relation to the urgency of
the public need or to the extent of the public
benefit which is to follow; the essential
requisite being that a public service or use
shall effect the inhabitants as a community,
and not merely as individuals. (Stevenson v.
Port of Portland). A public purpose or public
business has for its objective the promotion o
f
the public health, safety, morals, general
welfare, security, prosperity, and contentment
of all the inhabitants of residents within a
given political division, as, for example,
state, the sovereign powers of which are
exercised to promote such public purpose or
public business. (Green v. Frazier)."
(underscoring ours)
There may be many processes of satisfying a public purpose.
wide range of choices may exist. The State may walk
into the open market and buy the items, movable and
immovable, to fulfil the public
673
purpose; or it may compulsorily acquire from some private
person’s possession and ownership the articles needed to
meet the public purpose; it may requisition, instead of re-
sorting to acquisition; it may take, on loan or on hire or
itself manufacture or produce. All these steps are various
alternative means to meet the public purpose. The State may
need chalk or cheese, pins, pens or planes, boats, buses or
buildings, carts, cars, or eating houses or any other of the
innumerable items to run a welfare-oriented administration
or a public corporation or answer a community requirement.
If the purpose is for servicing the public, as governmental
purposes ordinarily are, then everything desiderated for
subserving such public purpose falls under the broad and
expanding rubric. The nexus between the taking of property
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 50
and the public purpose springs necessarily into existence if
the former is capable of answering the latter. On the other
hand, if the purpose is a private or non-public one, the
mere fact that the hand that acquires or requires is
Government or a public corporation, does not make the
purpose automatically a public purpose. Let us illustrate.
If a fleet of cars is desired for conveyance of public
officers, the purpose is a public one. If the same fleet of
cars is sought for fulfilling the tourist. appetite of
friends and relations of the same public officers, it is a
private purpose. If bread is ’seized’ for feeding a
starving section of the community, it is a public purpose
that is met but, if the same bread is desired for the
private dinner of a political maharajah who may pro tem fill
a public office, it is a private purpose. Of course, the
thing taken must be capable of ’serving the object of the
taking. If you want to run bus transport you cannot take
buffaloes.
A public purpose is vastly wider than public necessity, even
as a mere purpose is more pervasive than an urgency. That
which one sets before him to accomplish; and end, intention
or aim, object, plan, project-is purpose (Black’s Legal
Dictionary). A need or necessity is compulsive, urgent,
unavoidable. In purpose, there is dires; in necessity,
there is imperative demand. ’The presumption is that a use
is public, if the legislature has declared it to be such,
and the decision of the legislature must be treated with the
consideration due to a co-ordinate department of the
government of the state’. It-, effect is not conclusive but
considerable’ ’Public purpose’ should be liberally
construed, not whittled down by logomachy.
The concept of ’public purpose’ has been considered in some
academic writings and judicial rulings and a glance at them
may give theoretical nourishment to juridical ideas. We
have to remember that neither socialist jurisprudence nor
capitalist legal culture can govern the concept of public
purpose in India’s mixed economy and expanding public
sector, in the context of progressive developmental
programmes. Even the Privy Council, way back in 1914, in
Framjee Patit 42 I.A. 44 approved of the wide definition of
’public purpose.’ This court has also taken a liberal view
of ’Public purpose’. In a host of cases beginning with
Kameshwar AIR (1952 SC 889). Agrarian reform, slum
clearance to house the homeless, procuring a house for a
diplomat (Bombay v. Ali Gulshan : AIR 1955 SC 810) or an
office for the State Trading Corporation, acquisition of
land to construct a dharmashala, houses for members of a
cooperative society housing scheme,
674
houses for workmen or for a Mahatma Gandhi Memorial, as
pointed out by an Indian Jurist (Rajeev Dhavan, in his study
of ’The, Supreme Court of India’ (Tripathi) have been
regarded in decided cases as public purposes.’ Conceptually,
it has a home-spun texture altho’ that public transport is a
public purpose is self-evidence anywhere. The dynamics of
development must inform interpretation in this area.
There is a touch of swadeshi about a country’s jurisprudence
and so our legal notions must bear the stamp of Indian
Developmental amplitude linked to constitutional goals.
Counsel for the appellant, from his angle, produced before
us the Industrial Policy Resolution of the Government of
India of April 6, 1948 and April 30, 1956 wherein
considerable importance was attached to the national economy
securing a continuous increase in production and equitable
distribution. This 1948 Resolution itself pointed out that
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 50
the State must play an increasingly active role in the
development of industries. Many other items were included
for a progressive participation by the State by the time the
1956 Resolution was made. This fresh statement of
Industrial policy took note of the constitutional preamble
which, inter alia aimed at securing justice-social, economic
and political. Articles 38 and 39 were also adverted to so
that a precise direction might be given to the socialist
pattern of society as the objective of social and economic
policy. In particular, it was explicitly stated that ’the
State will progressively assume the predominant and direct
responsibility from setting up new industrial undertakings
and for developing ’transport facilities’. Indeed, the
State was to become the agency for planned national deve-
lopment and the socialistic pattern of society as the
national objective required that all industries, of basic
and strategic importance, or in the nature of public utility
services should be in the public sector’. ’There was a
division and distribution, in a broad manner, of industries
and utilities between the private and the public sector.
Stress was laid on the need to improve the living and
working conditions of workers a,., well as their efficiency
and a schedule in which road transport figures (Schedule B)
was appended setting out those categories which would be
progressively State-owned and in which the State would
therefore generally take the initiative in establishing new
undertakings.
When we ascertain the content of ’public purpose, we have to
bear the above factors in mind which mean that acquisition
of road transport Indeed, even inEngland, ’public
purposes’ have been defined to mean such ’purposes’of
the administration of the government of the country (p. 228,
Words & Phrases Legally defined, II Edn.). Theoretically, or
even otherwise, there is no warrant for linking up public
purpose with State necessity, or in the court throwing off
the State’s declaration of public purposes to make an
economic research on its own. it is indeed significant that
in Section 40(b) of the Land Acquisition Act, 1894, the
concept of ’public use’ took in acquisition for the
construction of some work even for the benefit of a company,
provided such work as likely to prove useful to the public.
Even the American Constitution, in the Vth Amendment, uses
the expression ’Public use and it has been held in India in
Kameshwar that ’public purpose’ is
675
wider than ’public use’. Mahajan J. (as he then was)
observed ill that case :
"The phrase ’public purpose’ has to be
construed according to the times in which
particular legislation is enacted and so
construed, the acquisition of the estates has
to be held to have been made for a public
purpose." (p. 942)
In the ’same judgment, the learned judge went
on to state :
"The legislature is the best judge of what is
good for the community, by whose suffrage it
comes into existence and it is not possible
for this court to say that there was no public
purpose behind he acquisition contemplated by
the impugned statute." (P. 941)
We have no doubt that this wider approach necessarily means
that a comprehensive signification has to be, given to the
expression ’public purpose’.
It is true that Cooley and Willoughby and Willis and other
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 50
American writings and rulings and theories like ’eminent
domain and ’police powers’ have been eruditely referred to
in the early days of this Court. However useful they may be
in helping to understand the scope of ’public purpose, we
have to be guided by the Directive Principles of State
Policy while decoding the cryptic expression "public
purpose’. Even in Kameshwar the Court referred to Article
39 and the preamble to the Constitution and the obligation
to secure its citizens justice Social, economic and
political. The reference, here and there, in the separate
judgments delivered in that case to the ’necessities of the
State’ cannot cut back upon the ambit of the concept.
It is significant that Das J. (as he then was) has in
Kameshwar observed :
"We have been referred to some American
authorities for ascertaining the meaning and
implication of ’public use’ an expression
which obviously is of a more limited import
than the expression ’public purpose used in our Constitut
ion."
The learned Judge explains that the notion of ’public use’
is-rapidly changing in America, for in the modern view,
’public use’ means ’useful to the public.’
It is right to remember, what has been mentioned in Shri
Justice Das’ judgment, that modern conditions and the
increasing inter-dependence of the different human factors
in the progressive complexity of the community make it
necessary for the government to touch upon and limit
individual activities at more points than formerly. In Cor-
pus Juris the meaning of the term is stated to be flexible
and varying with time and circumstances. All that can be
said is that it embraces public utility, public advantage
public interest or object.
676
"It is thus quite clear that a fresh outlook
which places the general interest of the
community above the interest of the individual
pervades our Constitution.... The words
’public purpose’ used in Article 23(2)
indicate that the Constitution used those
words in a very large sense. In the never
ending race, the law must keep pace with the
realities of the social and political
evolution of the country as reflected in the
Constitution. If, therefore, the Sate has to
give effect to this avowed purpose of our
Constitution, we must regard as ’public
purpose’ all that will be calculated to
promote the welfare of the people as envisaged
in these Directive Principles of State policy
whatever else that expression may mean."
This new outlook, in the words of Das J. brings in economic
justice regarded yesterday as a fantastic formula, but is
today a directive principle of State policy.
To conclude this branch of the discussion, there ’is no
validity in Shri Sen’s contention that because the Road
Transport Corporation, Act, 1950, speaks of business
principles as guiding State Transport Services, therefore
taking over of private buses is not a public purpose. Nor
is there any force in reading compulsive need or State
necessity of some imperative urgency as a component of the
concept of public purpose. Speaking for ourselves, nothing
that has been stated in the judgment of the High Court
discussing the doctrine of ’eminent domain’, and allied
matters, or/in the submissions of Shri Sen conjuring up..,I
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 50
grim picture of government acquiring even paper, pencil,
ink. furniture. spares and tyres and cars and buses merely
because they do not want to pay market price even when these
items are abundantly available, does not deffect us from the
conclusion that a Government which seeks to serve the
community is entitled even for its commercial purposes to
invoke its power of compulsory purchase, even when not
driven by necessitous circumstances. We cannot confuse
between abuse of public power and limitation of public
purpose.
The nexus between ’public purpose’ and Part IV is also
relevant. Sir Alladi Krishnaswami Ayyar in his speech in
the Constituent Assembly said : ’No Government responsible
to the people can afford lightheartedly to ignore the
provisions in Part IV of the Constitution. As early as A.
K. Gopalan (1950 SC 27), Chief Justice Kania state, with
reference to Directive Principles, that ’it represents not
the temporary will of a majority in the Legislature but the
deliberate wisdom of the nation’. Shri Justice Mathew
explained this idea at the Second Kerala State Lawyers’
Conference thus :
". . . State is not an end in itself, but only
an instrumentality, to be evaluated in terms
of its contribution to the welfare of the
political community. The concept of the
laissez faire of the nineteenth century arose
from a philosophy that general welfare is best
promoted when the intervention of the State in
economic and social matters is kept to the
lowest possible minimum. The rise of the
welfare State proceeds from the political
philosophy that the greater economic
677
and social good of the greater number requires
greater intervention of the Government and the
adoption of public measures aimed at general
economic betterment. Today, people cry for
intervention of Government when anything goes
wrong in any front. They demand interjection
of Government in every aspect and sphere of
life."
Will ’public purpose’ run riot ?
The consternation that if anything can be acquired
compulsorily for a public purpose everything will be so
acquired is understandable only if we readily grant that the
Legislature and the Cabinet are the veils and vestments worn
by a callous body irresponsible to the people and
irresponsive to justice. There is a general presumption in
favour of honest and reasonable exercise of power (State of
West Bengal v. Anwar Ali Sarcar, 1952 SCR, 284, 301, per
Patanjali Sastry J.). of course not that gross abuse of
power and demoniac departure from legal norms are unknown;
even so we should have faith in Parliament which,
ultimately, is responsible to the people who cannot be
ignored by it for all time without imperilling it own
existence. Repelling the argument of likely abuse of power,
Das J. observed (1954, SCR 587) :
"What is abnormal if our Constitution has
trusted the legislature, as the people of
Great Britain have trusted their Parliament ?
Right to life and personal liberty and the
right to private property still exist in Great
Britain in spite of the supremacy of
Parliament. Why should we assume or apprehend
that our Parliament or State legislatures
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 50
should act Eke mad men and deprive us of our
property without any rhyme or reason ? After
all our executive government is responsible to
the legislature and the legislature is
answerable to the people. Even if the
legislature indulges in occasional vagaries,
we have to put up with it for the time being.
That is the price we must pay for democracy.
But the apprehension of such vagaries can be
no justification for stretching the language
of the Constitution to bring it into line with
our notion of what an ideal Constitution
should be. To do so is not to interpret the
Constitution but to make a new Constitution by
unmaking the one which the people of India
have given to themselves. That I apprehend,
is not the function of the Court. If the
Constitution, properly construed according to
the cardinal rules of interpretation, appears
to some to disclose any defect or lacuna the
appeal must be to the authority competent to
amend the Constitution and not to the court."
(1954 SCR 587; 654; Subodh Gopal Bose)
To take Sri Sen’s illustration, if a law authorises--or
government does-resort to compulsory acquisition of all its
requirements of stationary or routine needs of public sector
undertakings, with a view to pay nominal sum and get away
with it, that Legislature or Government will, without the
Court’s services, go the way world history
678
has blown away gross misrule. The court is not the only
sanctuary in a democracy against caprise dressed in ’little
brief authority. If the act becomes so shockingly
iniquitious to violate the law of life, the Court will have
enough reserve power under the Constitution to speak for law
and to save the government from itself. These extreme
lurid, recondite picturisations cannot be transformed into
probabilities and realities, especially in a case where we
find little to complain in fairness of procedure or delivery
of the end product. Of course, in a ’radical change’
situation, certain classes, invoking varnishing values, may
cry ’wolf’ and in any welfare legislation stray injustice is
unavoidable. Perfection is God’s property, to aim at its is
human progress. We find no legal flaw in the measure under
attack.
We think it is a fallacy to deny the presence of public
purpose merely because its ’satisfaction by readily
available private purchase is possible in the circumstances.
It is for the State to decide whether it should pay market
price and buy or resort to Article 31 (2) and pay an amount
which may be administratively feasible but less than the
market price. It may take on hire and not buy at all, it
may requisition without paying full compensation. These are
the means which cannot be confounded with the ends and it is
egregious error to roll up the two together. The entire
object of Article 31(2) is defeated if such a constricted
construction or cramped meaning were to be given to the
provision. It is a social welfare handicap, a jurispruden-
tial error and a truncation of the State’s constitutional
power to rule that it shall not ’seize’ private property
within Article 31 (2) unless it proves beyond reasonable
doubt a scarcity situation, a public necessity and
unavailability in the open market and the like. Yet this is
the ‘ reasoning’ which has had a fascination for the High
Court. The specious submission is tersely put by the High
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 37 of 50
Court thus :
"It was argued that for compulsory taking over
of the vehicles with permits and other effects
of the contract carriage operators, there was
no necessity or need or, in other words, there
was no nexus between the public purpose and
the taking over of the particular property."
(ILR 1976 Karnataka 11478, 1512)
The accent was on need or necessity. The Court felt the
pell of this ratiocination and erroneously argued itself
into convincing conclusiveness:
"State necessity or need for taking the
particular property of a citizen is the very
foundation for the exertion of the power of
Eminent Domain. If there is no State
necessity or need for the particular property,
then, in my opinion, the power of Eminent
Domain cannot be exerted. Let me assume that
the law provides for paying just compensation
for taking the property of a citizen but there
is no state necessity for taking over that
property. In such an event. the property
cannot be taken in an exercise of the power of
Eminent Domain. The ambit of legislative
power conferred by
679
Entry 42 of List 11 of the Seventh Schedule,
Acquisition or requisitioning of property’, in
my opinion, cannot comprehend the. taking of
private property by the state even on payment
of just compensation if there is no state
necessity. If there is no nexus between the
taking over or private property and State
necessity such a power cannot be exerted. I
am of opinion that even if Article 31 is
deleted from Part III of the Constitution, the
State cannot acquire property of a citizen or
make a law for acquisition of private property
if the taking over has no relation to State
necessity. Such a legislation will be ultra
vires of the powers of the State Legislature."
material in the Act itself to show that the
Legislature was conscious of the fact that the
acquisition under section 4 is not for a
public purpose.................. When the
purpose of the acquisition is ’deemed’ to be a
public purpose, the only meaning possible is
that whereas the purpose of the acquisition is
not in reality a public purpose,, the State
Legislature requires the purpose to be treated
as if it were a public purpose. It is rather
an admission on the part of the Legislature
that the purpose of the acquisition is not a
public purpose." (pp. 1515-16)
If this were good law and logic, the States’ operations
might shrink into midget size with large spaces for laissez
faire economics. The flaw and fallacy of the law and the-
fetter on the State in this constitutional interpretation
goes far beyond this Act and to mortality. We have no
hesitation in visualising a wider horizon of public purpose
as outlined by us earlier and consequentially to overrule
the view of the High Court. The people in our welfare State
await State undertakings in a wealth of ways most of which
involve compulsory talking of private property and this
futurism argues for a wider connotation of public purpose.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 38 of 50
The aware court must remember the hint of Francis Bacon that
’it is a hard thing to torture the laws so that they torture
men-poor men hopefully looking forward for benignant State
action. After all, ordinarily, the legislature will acquire
compulsorily only if it considers it a proper measure to
promote public good.
Compensation vis a vis the 25th Amendment
The constitutional salvoes of Shri Sen were fired on the
target of illusory compensation granted according to him, by
the impugned Act. The amendment and recasting of Article
31(2) would stand stiutified if the High Court were right
that payment which is less than the dealer’s price inclusive
of sales-tax or does not make good the loans of the
operators or spreads payments over long years awarding only
6% interest, is illusory and unconstitutional.
We are not dealing with the details of the arithmetic
arranged by the statute for payment of the amounts to
persons interested in the acquired properties since it is
fairly clear, as explained by Shri Lal Narain Sinha, that
the Act awards, through the arbitrator, an amount which is
just and reasonable for those who suffer deprivation of
their
680
property. Even so, the law bearing on Article 31(2),
particularly in view of the exceptionable construction
adopted by the High Court, needs to be clarified
unambiguously and declared decisively. Indeed, if the High
Court were right in its holding on, this branch, 27 years of
decisions and amendments and decisions and amendments have
taken us back to square one Full compensation with a formal
difference. The Court will not question the ’adequacy’
directly, but ’interpret’ the amended articles into the same
desideratum. In this condition of the law, we deem it
proper to dive to the beginning briefly.
Right from the start the framers of the Constitution have
been clear in their minds, as the, debates, drafts, reports
and resolutions show. that the amount payable when private
property is taken by the State is a matter of legislative
policy and not of judicial fixation. Speaking with a sense
of history, the Father of the Nation used prophetic words,
as far back as the time of the Round Table Conference, while
dealing with the issue of compensation :
"If the national government comes to the
conclusion that the step is necessary no
matter what interests are concerned, they will
be dispossessed and they will be dispossessed.
I might tell you, without any compensation
because if you want this Government to pay
compensation, it will have to rob Peter to
pay Paul, and that would be impossible."
He reminded the British masters again
"I have in mind many things I would have to do
in order to equalise conditions. I am afraid
that for years together India would be engaged
in passing legislation in order to raise the
downtrodden, the fallen, from the, mire into
which they have been sunk by the capitalists,
by the land-lords, by the so-called higher
classes and then, subsequently and
scientifically by the British rulers."
"If we are to lift these people from the mire
then it would be the bounden duty of the
National Government of India in order to set
its house in order, continually to give
preferences to these people and even tree them
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 39 of 50
from the burden under which they are being
crushed.
And if the landlords, zamindars, monied-men
and those who are today enjoying privileges-I
do not care whether they are European or
Indian-if they find that they are
discriminated against, I shall sympathise with
them, but I will not be able to help them. It
will therefore be a battle between the haves
and the have-nots."
Speaking as one of the foremost jurists of the country and
with a sense of far-sightedness, Alladi Krishnaswami Iyer,
in the Constituent Assembly, argued for legislative
autonomy, without forensic intervention in the matter of
fixation of compensation and the principles in
681
that behalf. He rightly stressed that by their very nature
the principles of compensation could not be the same in
every species of acquisition :
"Law, according to me, if it is to fulfil its
larger purpose, must serve as an instrument of
social progress. It must reflect the
progressive social tendencies of the age. Our
ancients never regarded the institution of
property as an end in itself. Property exists
for dharma, dharma and the, duty which the
individual owes to the society from the whole
basis of social framework. Dharma is the law
of social well-being and varies from yuga to
yuga. Capitalism as it is practised in the
West came in the wake of the Industrial
Revolution and is alien to the root idea of
our civilisation. The sole end of the
property is yagna and to serve a social
purpose."
(Quoted from Fundamental Rights & Socio-
Economic Justice-by K. P. Krishna Shetty-pp.
127-128)
Shri Jawaharlal Nehru, speaking in the Constituent Assembly
with reference to determination and payment of compensation
emphasized that it was left to Parliament to determine the
various aspects thereof and
"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 com-
pensation its--If 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. Naturally the judiciary
comes in to see if there has been a fraud on
the Constitution or not. But normally
speaking, one presumes that any parliament
representing the entire community of the
nation will certainly not commit a fraud on
its own Constitution and will be very much
concerned with doing justice to the individual
as well as the community.
(P. 123, Krishna Shetty, supra)
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 40 of 50
When complications arose on account of judicial
interpretation of Article 31 not being in accord with what
the framers of the Constitution fancied, amendments to the
Constitution came in. Shri Jawaharlal Nehru, speaking on
the 4th Amendment, which has since been upheld by this
Court, said in Parliament :
"If we are aiming, as I hope we are aiming and
we repeatedly say we are aiming, at changes in
the social structure, then inevitably we
cannot think in terms of giving what is called
full compensation. Why? Well, firstly
because
682
you cannot do it, secondly because it would be
improper to do it, unjust to do it, and it
should not be done even if you can do it for
the simple reason that in all these social
matters, laws etc., they are aiming to bring
about a certain structure of society different
from what it is at present. In that different
structure, among other things that will change
is this, the big difference between the have’s
and the have-not’s. Now, if we are giving
full compensation, the have’s remain the
have’s and the have-not’s, have-not’s. It
does not change in shape or form if
compensation takes place. Therefore, in any
scheme of social engineering, if I may say so,
you cannot give full compensation, apart from
the patient fact that you are not in a
position-nobody has the resources--to give
it."
The divergence of thinking between those who framed the Con-
stitution and amended it and the summit judiciary showed up
glaringly in Cooper’s case and then came the Constitution
25th Amendment Bill devoted primarily to overcome the effect
of Cooper. While moving, the Constitution 25th Amendment
Bill which brought in Article 31C, the then Law Minister
emphasized :
"Critics of the present measure seek to invest
property rights with an aura of sacrosanctity
by regarding it as a primordial institution of
the law of nature. It is this approach which
led the Supreme Court in the Bank
Nationalisation case to seek help from the now
archaic and long-past dead theories of
Blackstone who regarded property as a natural
right. Such a view is not only out of tune
with the juristic approach to the institution
of private property in modern jurisprudence,
but it is not in tune even with the native
genius of ancient and traditional juristic
thought in India. The individual’s right to
private property must yield second place to
the supervening-right of society to acquire
the property for a public purpose. That is
the eminent and dominant basis of the
amendment which the House is called upon to
consider today."
The Law Commission also had, in its 46th Report, supported
Article 31-C in the sense that Cooper’s case was not in
keeping with what they regarded as the intendment of the
Constitution :
"Nehru described this position in his
characteristically lucid words by observing :
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 41 of 50
"The service of India means the service of the
millions who suffer. It means the ending of
poverty and ignorance and disease and
inequality of opportunity. The ambition of
the greatest man of our generation has been to
wipe every tear from every eye. That may be
beyond us, but as long as there are tears and
suffering, so long our work will not be over."
683
The view of the Commission has a bearing on
our understanding of the provision and were
referred to in the parliamentary debates and
so we excerpts portions thereof. Wrote the
Commission :
"Reverting then, to clause 2 of the Bill, it
would be noticed that sub-clause (a) of this
clause deletes the word ’compensation’ and
introduces in its place the word ’amount’ in
order to avoid any controversy about the
adequacy of the amount which Parliament may
direct to be paid in the mannerspecified
by the clause, where property belonging toa
citizen is compulsorily acquired or
requisitioned. It also provides, as did
Article 31(2) in the unamendedform, that a
law passed by virtue of the powers conferred
by Article 31(2) shall not be called in
question in any Court on the ground that the
amount so fixed or determined is not adequate;
and it adds that the said law cannot also be
challenged on the ground that the whole or any
part of such amount is to be given otherwise
than in cash.
Sub-clause (b) of clause, 2 of the Bill
inserts clause (2B) after clause (2A) in the
existing Article, and it lays down that
nothing in sub-clause (f) of clause (1) of
Article 19 shall effect any such law as is
referred to in clause (2). In other words, an
additional safeguard has been provided by
clause (2B) which is sought to be introduced
by the Bill to prevent any attack against the
law passed under Article 31 (2) on the ground
that any of its provisions contravene the
fundamental rights guaranteed by Article 19(1)
(F)."
Specific mention is made of the Bank Nationalisation Case
and its poignant pertinence consists in the High Court still
clinging to Cooper:
On a careful reading of the several opinions of the learned
Judges in Keshavananda Bharati’s case, I am of the clear
opinion that the law laid down in Cooper’s case holds good."
(ILR 1976 Kar. 1478, 1522)
The Commission remarks
"Every student of Constitutional Law knows
that Parliament thought that it was necessary
to make these provisions because of the recent
decision of the Supreme Court in Rustom
Covasjee Cooper & Another v. Union of India.
Parliament presumably thought, and we think
rightly, that the effect of this majority
decision of the Supreme Court was in
substance, to make compensation provided for
by the impugned legislation justiciable and
subject it to the test of reasonableness under
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 42 of 50
article 19(5); and, to that extent the said
decision is inconsistent with the view taken
by the
-7-951SCI/77
684
Supreme Court in State of Gujarat v. Shantilal
Mangaldass & others. Indeed, ever since. the
Supreme Court had generally interpreted clause
(2) of Article 31 to mean that the adequacy of
compensation directed to be paid by laws pass-
ed under the said clause was not justiciable
as we have explained earlier, except in cases
where it reasonably appeared to the Court that
the compensation was illusory or that the
whole legislative exercise was a fraud on the
Constitution. But, in Cooper’s case, the
majority view appeared to strike a somewhat
different note; and that, according to Parlia-
ment, made it necessary to introduce the
amended clause (2) in Article 31. We think
that, in the circumstances to which we have
just referred, Parliament is justified in
introducing the amendment in question."
A seminal aspect of the changes wrought by the 25th
Constitution Amendment Act is the immunization of ’Article
39 enactments’ from the viral attack of certain fundamental
rights (the attackers were almost never the poor). The
Commission commented :
"By introducing this clause (31-C), Parliament
is taking the first major and significant step
towards implementing two of the Directive
Principles enshrined in clause (b) and (c) of
Article 39 in Part IV of the Constitution, and
,
in thatsense, the clause under
consideration can be appropriately described
as historic. After it is adopted, Parliament
will have heralded a new era in the pursuit of
the goal placed before the nation by the
Constitution to establish social and economic
justice in this country. The Commission is in
full agreement with this object of the clause.
In the two decades after the Constitution was
passed, the inter-relation between the
Directive Principles and Fundamental Rights
have been often considered by the Supreme
Court. The Directive Principles enshrined in
Part IV are, in terms, declared to be non-
justiciable and yet, Article 37, which makes
this declaration, emphatically adds that the
said principles are nevertheless fundamental
in the governance of the country and it
ordains that it shall be the duty of the State
to apply these principles in making laws."
’In the Directive Principles, however, one
finds an even clearer statement of the social
revolution. They aim at making the Indian
masses free in the positive sense, free from
the passivity engendered by- centuries of co-
ercion by society and by nature, free from the
abject physical conditions that had prevented
them from fulfilling their best selves."
The High Court has referred to Cooper’s case the ratio of
which to put it tersely-goes to the extent of saying that if
any of the relevant consideration in ascertaining the market
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 43 of 50
value were not included. It ceased to be ’compensation’
within the meaning of Article
685
31.Then came the scenario--the 25th Amendment deleting the
expression ’compensation’ and substituting the neutral word
’amount’ and restructuring the Article effectively to
exclude judicial examination even of the principles of
evaluation, the, challenge. to the constitutionality of that
constitutional amendment and the elaborate Bharati ruling
upholding, by a majority, the vires of the Amending Act.
And yet, the I-High Court has, after selectively culling out
passages from the bunch of opinions in Bharati come full
circle to Cooper again. This about-turn is untenable in our
view and it is necessary to run rapidly but in a short
compass through the multiple views expressed by the many
judges who heard and pronounced.
Bharati-the majority opinion-blinds us. What, on the
question of payment for taking was the preponderant view ?
Sikri C.J. permitted a narrow area for judicial inspection
and readily accepted that full compensation was not a
fundamental right. The Court could satisfy itself only
about the amount not being a monstrous or unprincipled
under-value. Cooper was dead by this test. The learned
Chief, Justice said
" . . What meaning is to be given to the
expression ’the amount so fixed’. The amount
has to be fixed by law but the amount so fixed
by law must also be fixed in accordance with
some principles because it could not have been
intended that if the amount is fixed by law,
the legislature would fix the amount
arbitrarily. It could not, for example, fix
the amount by a letter.
If I were to interpret Article 31 (2) as
meaning that even an arbitrary or illusory or
a grossly low amount could be given, which
would shock not only the judicial conscience
but the conscience of every reasonable human
being, a serious question would arise whether
Parliament has not exceeded its amending power
under Article 368 of the Constitution. The
substance of the fundamental right ,to
property, under Article 31, consists of three
things : one, the property shall be acquired
by or under a valid law; second, it shall be
acquired only for a public purpose; and
thirdly, the person whose property has been
acquired shall be given an amount in lieu
thereof, which, as I have already said, is not
arbitrary, illusory or shocking to the
judicial "conscience or the conscience of
mankind."
(196-197 pp)
The payment may be substantially less than the market value,
the principles may not be all-inclusive, but the court would
not, because it could not, upset the taking save where the
principles of computation were too arbitrary and illusory to
be unconscionably shocking.
Shri Justice Shelat, with the concurrence of Shri Justice
Grover, put his viewpoint thus
"It is significant that the amount can be determined in
accordance with specified principles, if it is not fixed ’by
the
686
law itself. Moreover, its adequacy cannot be
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 44 of 50
questioned in a court. The use of the word
’principles’ and the question ,of inadequacy
can only arise if the amount has some norm.
If it has no horm no question of specifying
any principles arises nor can there be any
occasion for the determination of its
adequacy. The very fact that the court is
debarred from going into the question of
adequacy shows that the amount’ can he
adequate or inadequate. Even if it is
inadequate, the fixation or determination of
the amount is immune from any challenge. It
postulates the existence of some standard or
norm without which any enquiry into adequacy
becomes wholly unnecessary and irrelevant." (p
.
283) (emphasis, added).
"It is true that the ’amount’ to be paid to an
owner may not be the market value. The price
of the property might have increased owning to
various factors to which no contribution has
been made by the owner. The element of social
Justice may have to be taken into
consideration.......... The Court will
certainly give due weight to legislative judg-
ment. But the norm or the principles of
fixing or determining the ’amount’ will have
to be disclosed to the Court. It will have to
be satisfied that the ’amount’ has reasonable
relationship with the value of the property
acquired or requisitioned and one or more of
the relevant principles have been applied and
further that the ’amount’ is neither illusory
nor it has been fixed arbitrarily, nor at such
a figure that it nor Virtual deprivation of
the right under Article 31(2), The question of
adequacy or inadequacy, however, cannot be
gone into" (pp. 284-85) (emphasis; added).
Hegde J. discussed the question from lexicographic,
political and social angles and held :
"The market value of a property is the result
of an interaction of various forces. It may
not have, any reasonable relationship with the
investment made by its successive owners. The
price of the property acquired might have shot
up because of various contributions made by
the society such as improvements effected by
the State in the locality in question or the
conversion of a rural area into an urban area.
It is undoubtedly open to the State to
appropriate to itself that part of the market
value of a property which is not the result of
any contribution made by its owners. There
may be several other relevant grounds for
fixing a particular ’amount’ in a given case
or for adopting one or more of the relevant
principles for the determination of the price
to be paid. In all these matters the
legislative judgment is entitled to great
weight. It will be for the aggrieved party to
clearly satisfy the Court that the basis
adopted by the legislature has no
687
reasonable relationship to the value of the
property acquired or that the ’amount’ to be
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 45 of 50
paid has been arbitrarily fixed or that the
same is an illusory return for the property
taken. So long as the basis adopted for
computing the value of the property is
relevant to the acquisition in question or the
amount fixed can be justified on any such
basis, it is no more open to the court to
consider whether the amount fixed or to be
determined is adequate. But it is still open
to the court to consider whether ’amount’ in
question has been arbitrarily determined or
whether the same is an illusory return for the
property taken. It is also open to the court
to consider whether the principles laid down
for the determination of the amount are
irrelevant for the acquisition or requisition
in question. To put it differently, the
judicial review under the amended Article
31(2) lies within narrow limits. The court
cannot go into the question whether what is
paid or is payable is compensation. It can
only go into the question whether the ’amount’
in question was arbitrarily fixed as illusory
or whether the principles laid down for the
purpose of determining the ’amount’ payable
have reasonable relationship with the value of
the property acquired or requisitioned." (pp.
341342).
Even here we may excerpt Hegde J’s highlight
of Part IV
"Part IV of the Constitution is designed to
bring about the social and economic revolution
that remained to be fulfilled after
independence. The aim of the Constitution is
not to guarantee certain liberties to only a
few of the citizens but for all. The
Constitution visualizes our society as a whole
and contemplates that every member of the
society should participate in the freedoms
guaranteed. To ignore Part IV is to ignore
the substance provided for in the
Constitution, the hopes held out to the Nation
and the very ideals on which our Constitution
is built. Without faithfully implementing the
Directive Principles, it is not possible to
achieve the Welfare State contemplated by the
Constitution. A society like ours stepped in
poverty and ignorance satisfying the minimum
economic needs of every citizen of this
country. Any Government which fails to fulfil
the pledge taken under the Constitution cannot
be said to have been faithful to the
Constitution and to its commitments." (343-
344).
Reddy J. in short paragraph disposed of the
question
"Once the Court is satisfied that the
challenge, on the ground that the amount or
the manner of its payment is neither arbitrary
or illusory or where the principles upon which
it is fixed are found to bear reasonable
relationship to the value of the property
acquired, the Court cannot go into the
question of the-adequacy of the amount so
fixed or determined on the basis of such
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 46 of 50
principles." (p. 555).
688
our learned brother Chandrachud J. explained
his stand effectively thus :
"The specific obligation to pay an ’amount’
and in the alternative the use of the word
’principles’ for determination of that amount
must mean that the amount fixed or determined
to be paid cannot be illusory. If the right
to property still finds a place in the
Constitution, you cannot mock at the man and
ridicule his right. You cannot tell him :
I will take your fortune for a farthing :."
(p. 992-993).
"As at present advised, I am inclined to the
view which as I have said is unnecessary to
discuss fully, that though it is not open to
the court to question a law under Article
31(2) on the ground that the amount fixed or
determined is not adequate, Courts would have
the power to question such a law if the amount
fixed thereunder is illusory; if the
principles, it any are stated, for determining
the amount are wholly irrelevant for fixation
of the amount, if the power of compulsory
acquisition or requisition is exercised for a
collateral purpose; if the law offends
constitutional safeguards other than the one
contained in Article 19(1)(f); or, if the law
is in the nature of a fraud on the
Constitution. I would only like to add, by
way of explanation, that if the fixation of an
amount is shown to depend upon principles
bearing on social good it may not be possible
to say that the principles are irrelevant."
(p. 993) (emphasis added)
It is regrettable that two significant points made by
brother Chandrachud J. have slipped out of the scrutiny of
the High Court and we have emphasized them for
identification. Are the principles wholly irrelevant ? Do
the principles bear on social good ? In the present case,
few will agree that the principles are wholly irrelevant or
not geared to social good.
The majority view in Bharati was set out by the Court and
there it was stated : Section 2(a) and (b) of the
Constitution (25th Amendment) Act, 1971 is valid. Glosses
apart, the provision excluding the court’s power to
investigate either the adequacy of the amount or the
propriety of the principles to determine the amount was
upheld. It follows that individual annotations
notwithstanding the Court has set its seal of validity on
Article 31(2). Nothing covered by it can now be available
for examination using passages in separate opinions. The
result is the quantum of the amount or the reasonableness of
the principles are out of bounds for the Court. Article 31C
has also been upheld subject to the rider that there should
be nexus between Article 39(b) and (c) and the object of the
acquisition. Our learned brother, Chandrachud J., has
struck a middle note and pointed out that where the inputs
of valuation prescribed by the statute are wholly irrelevant
or unconnected with Social good, thin, Article 3 1 (2) may
not retrieve the statute. It is a far cry from this
observation to the position that the 25th Constitution
Amendment leaves untouched the ratio in Cooper. We have
pointed out how the said constitutional amendment was ex-
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 47 of 50
689
pressly undertaken, inter alia, to undo the effect of Cooper
and to forbid forensic diagnostics into the question of
compensation. In this light it is difficult to uphold the
view of the High Court that Cooper survives after death and
keeps virtually alive the obligation for payment of market
value inclusive of the usurious rates of interest at which
the owner borrowed to buy the property seized by the state.
This takes us to the non-negotiable minimum of nexus between
the purpose of the acquisition and Article 39(b). Article
39(c) was feebly mentioned but Article 39(b) was forcefully
pressed by the appellant. Better read Article 39(b) before
discussing its full import :
" 39(b) Certain principles of policy to be
followed by the State.--The State shall, in
particular, direct its policy towards securing
that the ownership and control of the material
resources of the community are so distributed
as best to subserve the common good."
The key word is ’distribute’ and the genius of the article,
if we, may say so, cannot but be given fully play as it
fulfils the basic purpose of restructuring the economic
order. Each word in the article has a strategic role and
the whole article is a social mission. ’It embraces the
entire material resources of the community. Its task is to
distribute such resources. Its goal is so to undertake
distribution as best to subserve the common good. It re-
organizes by such distribution the ownership and control.
’Resources’ is a sweeping expression and covers not only
cash resources but even ability to borrow (credit
resources). Its meaning given in Black’s Legal Dictionary
is:
"Money or any property that can be converted
into supplied: means of raising money or
supplies; capabilities of raising wealth or to
supply necessary wants; available means or
capability of any kind."
And material resources of the community in the context of
reordering the national economy embraces all the national
wealth, not merely natural resources, all the private and
public sources of meeting material needs, not merely public
possessions. Every thing of value or use in the material
world is material resource and the individual being a member
of the community his resources are part of those of the com-
munity. To exclude ownership of private resources from the
coils of Article 39(b) is to cipherise its very I purpose of
redistribution the socialist way. ’A directive to the State
with a deliberate design to dismantle feudal and capitalist
citadels of property must be interpreted in that spirit and
hostility to such a purpose alone can be hospitable to the
meaning which excludes private means of production or goods
produced from the instruments of production. Sri A. K. Sen
agrees that private means of production are included in
’material resources of the community’ but by some baffling
logic excludes things produced. If a car factory is a
material resource, why not cars manufactured ? ’Material’
may cover everything worldly and ’resources’, according to
Random House Dictionary, takes in ’the collective wealth of
a country
690
or its means of producing wealth : money or any property
that can be converted into money; assets.’ No further
argument is needed to conclude that Article 39(b) is ample
enough to rope in buses. the motor vehicles are part of the
material resources of the operators.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 48 of 50
The next question is whether nationalisation can have nexus
with distribution. Should we assign a narrow or spacious
sense to this concept ? Doubtless, the latter, for reasons
so apparent and eloquent. To ’distribute’, even in its
simple dictionary meaning, is to ’allot, to divide into
classes or into groups;’ and ’distribution embraces
’arrangement, classification, placement, disposition,
apportionment, the way in which items, a quantity, or the
like, is divided or apportioned; the system of dispersing
goods throughout a community’ (See Random House Dictionary).
To classify and allocate certain industries or services or
utilities or articles between the private and the public
sectors of the national economy is to distribute those
resources. Socially conscious. economists will find little
difficulty in treating nationalisation of transport as a
distributive process for the good of the community. You
cannot condemn the concept of nationalisation in our Plan on
the score that Article 39(b) does not envelope it. It is a
matter of public policy left to legislative wisdom whether a
particular scheme of take-over should be undertaken.
Two conclusions strike us as quintessential. Part, IV,
especially Article 39(b) and (c), is a futuristic mandate to
the state with a message of transformation of the economic
and social order. Firstly, such change calls for
collaborative effort from all the legal institutions. of the
system : the legislature, the judiciary and the
administrative machinery. Secondly and consequentially,
loyalty to the high purpose of the Constitution, viz.,
social and economic justice in the context of material want
and utter inequalities on a massive scale, compels the court
to ascribe expansive meaning to the, pregnant words used
with hopeful foresight, not to circumscribe their
connotation into con tradiction of the objectives inspiring
the provision. To be Pharisaic towards the Constitution
through ritualistic construction is to weaken the social-
spiritual thrust of the founding fathers’ dynamic faith.
An American political scientist, Benjamin Twiss, commented
with jarring exaggeration upon the conservative perspective
of the lawyer in the United States of the slump years in the
thirties :’
"It is not surprising that lawyers’ fame is
evanescent.... Allied with those who are pre-
occupied with production and profits to the
exclusion of standards of consumption and
general well-being, lawyers have taken a
negative rather than a creative and
constructive attitude toward social
development. In defending rights of
untrammelled enterprise against rules of fai
r
play and in presuming the unconstitutionality
of legislative enactments, they have missed
their cue to the role of constructive leaders
and have been instead dogs in the manger."
(Lawyers for Social Change : Perspectives on
Public Interest Law : by Robert L. Rabin
Stanford Law Review Col. 28, No. 2, January
1976).
691
This does not apply to the Indian Bar on Bench at all and is
referred to ex abundanti cautela. Law and Development in
India should repel, as far as possible, such an unlovely
judgment on Indian jural perspectives and performances. The
Court and counsel have a justice constituency with economic
overtones, the manifesto being the Constitution designed to
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 49 of 50
uphold the humanist values of life, liberty and the equal
pursuit of happiness, material and spiritual.
An Explanatory Post-script to our juristic Attitude
We have been guided by the thought that an all-too-large gap
between the law and public needs, arising out of narrow
notions, must be bridged by broadening the constitutional
concepts to suit the changing social consciousness of the
emerging Welfare State. Institutional crises and
confrontations can be and should be avoided by evolving a
progressive interpretation, discarding over-sensitivity to
under-valuation when private property is taken for public
good. ’A legal system that works to serve the community’
says Bernard Schwartz, ’is better than the academic
conceptions of a bevy of Platonic guardians unresponsive to
public needs’. The law, in the words of Justice Holmes, is
a magic mirror in which we see reflected not only our own
lives but also the lives of those who went before us-and may
we add, of those who come after us. But basically we have
brought to bear upon the impugned legislation a value
judgment in tune with the ’welfare" wave length of our
Constitution and the still, and music of Indian humanity.
’The law moves with the main currents of the society it
regulates. Each society has its own values which are
necessarily reflected in the ends that the legal order seeks
to further. The ends of law are attained by recognizing
certain interest, defining the limits within which they
shall be recognized legally, and endeavouring to secure
those interests that are within the limits defined.’ (Quoted
from the Law in America Bernard Schwartz-p. 34) We have
recognised that rights and obligations of long ago do not
acquire a static validity in our galloping age and a decent
oblivision must put them back into forgotten antiquity if
we, as a nation, are to run on the rails of the rule of law
and so we have nullified the attempt to drift back from
Bharati to Cooper on ’compensation’. A blend of law as a
set of responses to the new needs of expanding society and
of Daniel Chapman’s advice that ’the known certainty of the
law is the safety of all’, has played upon our approach. We
are aware that in constitutional construction, a limited
judicial lawmaking is inevitable ’.juristic chemistry’, to
borrow Roscoe Pound’s expressive phrase. " The chemist does
not make the materials which go into his test tube : He
selects them and combines them for some purpose and his
purpose gives form to the result.’ Our constitution makers
have had due regard to the felt necessities of the time and
the philosophical and political theories about what would
best serve the country’s progress; and so we have grounded
ourselves on these solid prescriptions unreflected by
speculative niceties lent by literal study and possible
injuries inevitable in reshaping society. ’The object and
end of all Government is to promote the happiness and
prosperity of the community by which it is established’,
wrote U.S. Chief Justice Taney, 140 years ago in Charles
River Bridge v. Warren Bridge and we, in a republic with an
irrevocable tryst to give social justice in the
692
midst of poverty, cannot diminish the power to accomplish
those ends. To be stable is not to stand still; to move
forward and reconcile is the road to the goal-juridical
engineering geared to desiderated policy objectives, being
the key to most constitutional problems. Not unoften, the
subjective philosophy of the judge underpowers the
philosophy of the Constitution while it should be
overpowered by it. Cardozo, with apt elegance, struck this
note :
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 50 of 50
"The great tides and currents which engulf the
rest of man do not turn aside in their course
and pass the Judges by." Cardozo, The Nature
of Judicial Process, 1932, P. 170.
Taking this warning to head, we have also to take the
Constituent Assembly’s hope to heart :
"The Judiciary was to be the arm of the,
social revolution, upholding the quality that
Indians had longed for in colonial days......The
courts were also idealised because, as
guardians of the Constitution, they would be
the expression of a new law created by Indians
for Indians."
Granville Austin, The Indian Constitution.
The Discovery of Law India by interpreting liberally to
embrace the higher values of collective good and to curb,
where necessary, individual property rights, is all that we
have endeavoured to do. We have been cautioned by
appellant’s counsel that governments may usurp and destroy
if judges do not cry halt. Where arbitrary, oppressive and
mala fide misuse of power is a real peril, the court shall
not fail. But to intervene and strike down, because a
measure, within the constitutional bounds, may work hardship
for some but is conceived for the good of the many in
keeping with. the planned process of Development, has a
’Tory’ touch. Canonisation of laissez faire cannons by the
Court is to move cotinter-clockwise. Lord Sankey held the
view that in the field of constitutional Law, progressive
and dynamic interpretation in the light of political
developments must dominate (see : British Coal Corporation
v. The King : 1935 AC 500). Lord Jowitt L.C. in Attorney
General of Ontario v. Attorney Gen. of Canada (1947 AC 503)
affirmed the same approach
"To such an organic statute the flexible
interpretation must be given that changing
circumstancesrequire and it would be
alien to the spirit with which the preamble
to the Statute of Westminster is instinct, to
concedeanything less than the widest
amplitude of power to the Dominion legislature
under section 101 of the British North America
Act."
Legalism has to yield when spacious issues arise. "Whatever
the legal aspect of the thing, there are moments when it is
a feeble need to rely on," said Nehru, in the Constituent
Assembly (I Constituent Assembly Debates, p. 61).
There is another stark possibility the, Administration
sliding back from the progressive constitutional values to
protect private interests; and then the Court may be
activate the ’welfare jurisprudence’ of the Constitution by
appropriate commands.
M.R.
693