Union of India Vs. Kamlabhai
Harjiwandas Parekh & Ors  INSC 202 (7 September 1967)
07/09/1967 MITTER, G.K.
WANCHOO, K.N. (CJ) BACHAWAT, R.S.
CITATION: 1968 AIR 377 1968 SCR (1) 463
CITATOR INFO :
RF 1968 SC1138 (9) RF 1969 SC 634 (42) RF
1970 SC 564 (96) F 1972 SC2464 (8) R 1990 SC1277 (29)
Requisitioning and Acquisition of Immovable
Property Act, 1952, s. 8(3)(b)-Compensation-Arbitrator given option to fix
market value of property at the date of acquisition or twice the market value
of the property at the time of requisition whichever was less -Section whether
void as violative of Constitution of India, Art. 31(2).
A plot of land in Bombay belonging to the
husband of the first respondent was requisitioned by Government for military
purposes in 1942 under r, 75A(1) of the Defence of India Rules. In 1952 a
notification was issued under s. 7(1) of the Requisitioning and Acquisition of
Immovable Property Act enacted on March 14, 1952. According to the notification
the land was to be acquired by Government and would vest in the Government from
the date of the notification. In the absence of an agreement between the
parties as to compensation, the Chief Judge of Small Causes, Bombay was
appointed as arbitrator under s. 8 of the Act.
Shortly thereafter the first respondent
preferred a petition in the High Court wherein it was prayed that s. 8(3) of
the Act should be declared ultra vires and the arbitrator should be directed to
forbear from awarding compensation on the principles laid down in the section.
Under the impugned section the -arbitrator could award as compensation the
market value of the property at the date of acquisition or twice the market value
of the property at the time of requisition, whichever was less. After the
hearing before the High Court the challenge was limited to s. 8(3)(b) only.
The High Court held s. 8(3)(b) to be ultra
vires Art. 32 of the Constitution and as such void. The Union of India appealed
with certificate under Art. 133(1)(b).
HELD:(i) The Act was passed before the Fourth
Amendment Act of the Constitution in 1955. Its vires were to be decided on the
anvil of the Constitution as it stood before the said amendment. [467H] (ii)The
mode prescribed in cl. (b) of s. 8(3) is arbitrary.
It has no relation to the value of the land
on the date of the notice under s. 7 which may be many years after the date of
requisition. It is impossible to say that the date of requisition has or can
have any connection with the date of acquisition under s. 7. In assessing the
just equivalent of the value of the property at twice the price which the
requisitioned property would have fetched in the open market had it been sold
on the date of requisition, the arbitrator would be acting arbitrarily inasmuch
as he would be proceeding on a formula for which there is no rational basis.
[472D-473B] Clause (b) of s. 8(3) leaves no choice of assessing the value in
terms of cl. (a). The expression 'have regard to' in sub-cl. (c) of sub-s. (1)
of s. 8 therefore did not give the arbitrator any freedom of considering the
two modes laid down in sub-s. (3) and accepting the one which he thought fair.
[473C] State of West Bengal v. Mrs. Bela Banerjee and Ors.,  S.C.R. 558;
State of Madras v. D. Namasivaya Mudaliar,  6 S.C.R. 936; P. Vajravalu
Mudaliar v. Special Deputy Collector,  464 1 S.C.R. 614; N. B. Jeejeebhoy
v. Assistant Collector,  1 S.C.R. 636: and Ryots of Gerabandho v. Zamindar
of Parlakimedi. 70 I.A. 129, considered.
East Ramnad Electric Distribution Co. v.
State of Madras,  2 S.C.R. 747, distinguished.
In holding that the petitioner before it
-,,,-as not guilty of any laches the High Court was deciding a matter within
its discretion. This Court will not normally interfere with the exercise of
such discretion. [475C] Zacharia v. Republic of Cyprus  A.C. 634,
CiviL, APPELLATE JURISDICTION Civil Appeal
No. 1564 of 1966.
Appeal from the judgment and order dated
August 7, 1964 of the Bombay High Court in Misc. Petition No. 378 of 1962.
G. N. Dikshit, S. P. Nayar for R. H. Dhebar,
for the appellant.
S. Sorabji, A. J. Rana, P. C. Bhartari and J.
B. Dadachanji for respondent No. 1.
I. N. Shroff. for intervener No. J. B.
Dadachanji for intervener No. 2.
The Judgment -of the Court was delivered by
Mitter, J. This is an appeal by a certificate under Art.
133(1)(c) of the Constitution granted by the
High Court of Bombay against the judgment of that court dated August 7, 1964 in
Miscellaneous Petition No. 378 of 1962 declaring cl.
(b) of sub-s. (3) of S. 8 of the
Requisitioning and Acquisition of Immovable Property Act, 1952 (Act 30 of 1952)
including the words "whichever is less" ultra vires Art.
31(2) of the Constitution and as such void.
The facts are as follows. On May 2. 1942 a
plot of land bearing S. No. NA-29-A of Juhu, Bombay, was requisitioned for the
purposes of the Union of India under r. 75-A(1) of the Defence of India Rules
for military purposes. It is common case that this plot of land was acquired
for the construction of a road leading to a military aerodrome at Juhu during
the last war. The land originally belonged to the husband of the first
respondent who claims to have succeeded to it by virtue of a will. The owner of
the plot was receiving compensation for the requisition until December 29, 1952
when a notification was issued under s. 7(1) of the Requisitioning and Acquisition
of Immovable Property Act enacted on March 14, 1952, hereinafter referred to as
the Act. The notification was to the effect that the land was being acquired I
by the Government of India, Ministry of Works, Housing and Supply, that it
would vest in the Government from the date of the notification and there was a
declaration of vesting in the notification itself. As a result of the
notification. the owner of the 465 land became entitled to claim compensation.
The second respondent, hereinafter referred to as the Collector of Bombay,
offered compensation at the rate of Rs. 11 per sq. yard on February 20, 1961.
The petitioner, the first respondent herein, claimed at the rate of Rs. 100 per
sq. yard plus the usual 15 % solatium for compulsory acquisition. In the
absence of an agreement between the parties, the Chief Judge, Court of Small
Causes, Bombay, was appointed as arbitrator under s. 8 of the Act. The
arbitrator gave notice to the petitioner to put in her claim and also to the
Government of India to put in its statement of valuation.
The petitioner claimed compensation at the
rate of Rs. 75 per sq. yard plus 15% solatium for compulsory acquisition while
the offer of the State was only Rs. 11 per sq. yard without any solatium.
Before the arbitrator could make much headway in the matter, the first
respondent preferred a petition in the High Court of Bombay on September 18,
1962 wherein the main prayers were (1) a declaration that the provisions of s.
8(3) of the Act were unconstitutional as infringing Arts. 31(2). 19(1)(f) and
14 of the Constitution of India, and (2) the issue of an appropriate writ
directing the arbitrator to forbear from awarding compensation on the principles
laid down in s. 8(3) 'of the Act and commanding him to award just and proper
compensation in accordance with law.
The Union of India filed an affidavit in
opposition affirmed by an Executive Engineer of the Bombay Aviation Division
wherein many and diverse objections were raised to the petition. Before the
High Court, counsel for the petitioner confined the challenge to the validity
of s. 8(3) of the Act to cl. (b) only. The arguments advanced on behalf of the
Union of India were : (1) that s. 8(3) of the Act did not infringe any of the
Articles of the Constitution mentioned in the petition and (2) that the
petitioner was entitled to no relief because of the delay in presentation of
the petition to the High Court.
The High Court negatived the contentions put
forward oil behalf of the Union of India and allowed the petition holding that
cl. (b) including the words "whichever is less" of sub-s. (3) of s. 8
of the Act was ultra vires Art. 31 of the Constitution and as such void. The
court gave a direction that the assessment of compensation would have to be
made subject to this declaration. Hence the appeal.
In order to appreciate the contention put
forward on behalf of the Union of India, it is necessary to refer to a few
sections of the Act. The preamble shows that it was an Act to provide for the
requisitioning and acquisition of immovable property for the purposes of the
Union. As originally enacted. it was to remain in force for a period of twelve
years from the date of its institution, but subsequently its life has been
prolonged till the 14th of March 1970. S. 24 of the Act repealed several
enactments therein mentioned, but any property which immediately before such
repeal J(N)6SCT-4 466 was subject to requisition under the provision of any of
the said Acts was to be deemed to be property requisitioned under s. 3 of the
Act and all the provisions of the Act were to apply accordingly. It is agreed
between the parties that the property which was originally requisitioned in
1942 was to be treated as requisitioned under s. 3 of the Act. Under s. 7(1) it
became competent to the Central Government, if it was of opinion that it was
necessary to acquire the property already subjected to requisition for a public
purpose, to acquire the same by publishing in the Official Gazette a notice to
the effect that the Central Government had decided to acquire the property in
pursuance of the section. The proviso to this sub-section is to the effect that
before such a notice is issued the Central Government must call upon the owner
or other persons interested in the property to show cause why the same should
not be acquired and the order under the section could only be made after
considering the cause, if any, shown and giving the parties an opportunity of
being heard. Under sub-s. (2) of the section, "When a notice as aforesaid
is published in the Official Gazette,, the requisitioned property shall, on and
from the beginning of the day on which the notice is so published, vest
absolutely in the Central Government free from all encumbrances and the period
of requisition of such property shall end." Sub-s. (3) of the section
mentions the circumstances which must obtain for a property to be acquired
under the section.
S.8 of the Act has a marginal note
"principles and method of determining compensation". Under cl. (a) of
sub-s. (1) of s. 8 compensation is to be paid in accordance with the agreement,
if any, reached between the owner and the Government. If no such agreement can
be reached, an arbitrator has to be appointed for the purpose in terms of cl.
(b). Under cl. (c) it is open to the Central Government to nominate a person
having expert knowledge as to the nature of the property requisitioned or
acquired to assist the arbitrator in which case the person to be compensated
has a similar right of nominating his assessor. Under cl. (d) the Central
Government and the person to be compensated must state what in their respective
opinion is a fair amount of compensation, at the commencement of the
proceedings. As the main contention hinges on the interpretation of sub-cl. (e)
of sub-s. (1) read with sub-ss. (2) and (3), it is necessary to set out the
same in extensor S. 8(1)(e) reads as follows:
"Where any property is requisitioned or
acquired under this Act, there shall be paid compensation the, amount of which
shall be determined in the manner and in accordance with the principles
hereinafter set out, that is to say,(a) to (d) .. .. .. .. .. .. ..
467 (e)the arbitrator shall, after hearing
the dispute, make an award determining the amount of compensation which appears
to him to be just and specifying the person or persons to whom such
compensation shall be paid-, and in making the award, he shall have regard to
the circumstances of each case and the provisions of sub-sections (2) and (3),
so far as they are applicable;" Sub-ss. (2) and (3) read:
"(2) The amount of compensation payable
for the requisitioning of any property shall consist of(a) a recurring payment,
in respect of the period of requisition, of a sum equal to the rent which would
have been payable for the use and occupation of the property if it had been
taken on lease for that period: and (b) such sum or sums. if any, as may be
found necessary to compensate the person interested for all or any of the
namely:(i) pecuniary loss due to
(ii) expenses on account of vacating the
(iii) expenses on account of reoccupying the
premises upon release from requisition; and (iv) damages (other than normal
wear and tear) caused to the property during the period of requisition,
including the expenses that may have to be incurred for restoring the property
to the condition in which it was at the time of requisition'.
(3) The compensation payable for the
acquisition of any property under section 7 shall be(a) the price which the
requisitioned property would have fetched in the open market. if it had
remained in the same condition as it was at the time of requisitioning and been
sold on the date of acquisition, or (b) twice the price which the requisitioned
property would have fetched in the open market if it had been sold on the date
of requisition, whichever is less." The Act was passed before the Fourth
Amendment Act of the Constitution in 1955. Its vires is to be decided on the
anvil of the Constitution as it stood before the said amendment. Several
decisions of this Court have laid down the principles for testing the vires of
State Acts providing for compensation for acquisition of land for public
468 In The State of West Bengal v. Mrs. Bela
Banerjee and others(1) the Court examined the question as to what compensation
for property acquired meant under Art. 31(2) of the Constitution. There the
impugned West Bengal Act of 1948 in effect provided that in determining the
amount of compensation to be awarded for land acquired in pursuance of the Act,
the excess of the market value of the same on the date of the publication of
the notification under sub-s. (1) of S. 4 of the Land Acquisition Act for the
notified area over its market value on 31st December 1946, shall not be taken
into consideration. Virtually this meant that no matter when the property was
acquired, the owner could get compensation which was equivalent to its value on
31st December, 1946. This date was taken in view of the fact that large scale
immigration at people from East Bengal to West Bengal had taken place round
about that date. There, the Attorney General had argued that the word
"compensation" in the context of Art. 31(2) read with entry 42 of
List III did not mean in any rigid sense equivalence in value but had a
reference to what the legislature might think was a proper indemnity for the
loss sustained by the owner. Negativing this argument Sastri, C. J. at p. 563:
"While it is true that the legislature
is given the discretionary power of laying down the principles which should
govern the determination of the amount to be given to the owner for the
property appropriated, such principles must ensure that what is determined as
payable must be compensation, that is, a just equivalent of what the owner has
been deprived of. Within the limits of this basic requirement of full
indemnification of the expropriated owner, the Constitution allows free play to
legislative judgment as to what principles should guide the determination of
the amount payable. Whether such principles take into account all the elements
which make up the true value of the property appropriated and exclude matters
which are to be neglected, is a justiciable issue to be adjudicated by the
court." The Court held that the fixing of the market value on December 31,
1946, as the ceiling on compensation, without reference to the value of the
land at the time of the acquisition was arbitrary and not in compliance with
the requirements of Art. 31(2). The learned Chief Justice went on to add:
"The fixing of an anterior date for the
ascertainment of value may not, in certain circumstances, be a violation of the
constitutional requirement as, for instance, when the proposed scheme of
acquisitio n becomes known before it is launched and prices rise sharply in
anticipation of the benefits to be derived under it, but the fixing (1) 
469 of an anterior date, which might have no
relation to the value of the land when it is acquired, may be, many years
later, cannot but be regarded as arbitrary.................. Any principle for
determining compensation which denies to the owner this increment in value
cannot result in the ascertainment of the true equivalent of the land
appropriated." In State of Madras v. D. Namasivaya Mudaliar(1) the provision
as to compensation for compulsory acquisition of land under Madras Lignite
(Acquisition of Land) Act, 1953 came up for consideration by this Court. The
point canvassed before the Court with which we are concerned was, whether the
provision with regard to compensation to be assessed on the market value of the
land prevailing as in August 28, 1947 and not on -the date on which
notification was issued under s. 4(1) of the Land Acquisition Act was in
violation of Art.
31(2). On the assumption that April 28, 1947
was the date on which lignite deposits were discovered in the area to which the
Act was extended, the Court observed:
"........ there is no true relation
between the acquisition of the lands in these cases and fixation of
compensation based on their value on the market rate prevailing on April 28,
1947. Fixation of compensation for compulsory acquisition of lands notified
many years after that date, on the market value prevailing on the date on which
lignite was discovered is wholly arbitrary and inconsistent with the letter and
spirit of Art. 31(2) as it stood before it was amended by the Constitution
(Fourth Amendment) Act, 1955. If the owner is by a constitutional guarantee
protected against expropriation of his property otherwise than for a just
monetary equivalent, a law which authorises acquisition of land not for its
true value, but for Value frozen on some date anterior to the acquisition, on
the assumption that all appreciation in its value since that date is
attributable to purposes for which the State may use the land at some time in
future, must be regarded as infringing the fundamental right".
As learned counsel for the appellant relied
on certain observations in this judgment at page 944, the same may be quoted
"The right which is guaranteed is
undoubtedly the right to a just indemnification for loss, and appreciation in
the market value of the land because of the proposed acquisition may in
assessing compensation be ignored. Even the Land Acquisition Act provides for
assessment of compensation on the basis of market value of the land not on the
date on Which interest of the owner of land (1)  6 S.C.R. 936.
470 is extinguished under s. 16, but on the
basis of market value prevailing on the date on which the notification under s.
4(1) is issued. Whether this rule in all cases irrespective of subsequent
developments ensures just indemnification of the expropriated owner so as to be
immune from attack, does not call for comment in this case. But any principle
for determination of compensation denying to the owner all increments in value
between a fixed date and the date of issue of the notification under s. 4(1),
must prima facie, be regarded as denying to him the true equivalent of the land
which is expropriated and it is for the State to show that fixation of
compensation on the market value on an anterior date does not amount to a
violation of the Constitutional guarantee." After noting that it was a
matter of common knowledge that land values had risen steeply after the last
world war, the judgment proceeded :
"To deny to the owner of the land
compensation at rates which justly indemnify him for his loss by awarding him
compensation at rates prevailing ten years before the date on which the
notification under S. 4(1) was issued amounts in the circumstances to a
flagrant infringement of the fundamental right of the owner of the land under
Art. 31(2) as it stood when the Act was enacted." On October 5, 1964
judgments were delivered in two cases where the law on the subject came to be
examined again. In P. Vajravelu Mudaliar v. Special Deputy Collector(1) it was
said at p. 625:
"It may, therefore, be taken as settled
law that under Art. 31(2) of the Constitution before the Constitution (Fourth
Amendment) Act, 1955, a person whose land was acquired was entitled to
compensation i.e. a "just equivalent" of the land of which he was
deprived." It is to be noted that in Vajravelu Mudaliar's case(1) the Constitutional
validity of the Land Acquisition (Madras Amendment) Act, 1961 (Act 23 of 1961)
was before this Court.
In N. B. Jeejeebhoy v. Assistant Collector(-)
the requisite notification under s. 4 of the Land Acquisition Act was issued in
May 1948 and that under s. 6 in August 1949, the possession of the land being
taken in December 1949. The Land Acquisition Officer and the District Court
awarded compensation in accordance with the Land Acquisition (Bombay Amendment)
Act, 1948 on the basis of The value of the lands as on January 1, 1948 and not
upon (1)  1 S.C.R. 614.
(2)  1 S.C.R. 636.
471 the value on the date of the s. 4
notification. A reference was made,, to the earlier cases and it was said that
Bela Banerjee's case(1) laid down the following principles : (1) The expression
"compensation" in Art. 31(2) of the Constitution meant just
equivalent of what the owner has been deprived of; (2) The principles laid down
by the legislature shall be only for the determination of the compensation so
defined; (3) Whether the principles have taken into account the relevant
elements to ascertain the true value of the property acquired is a justiciable
and (4) The fixation of an anterior date for
the ascertainment of the value of the property acquired without reference to
any relevant circumstances which necessitated the fixing of an earlier date for
the purpose of ascertaining the real value is arbitrary.
With regard to Art. 31(2) a twofold argument
was put up before us by learned counsel for the appellant. It was argued that
cl. (b) of s. 8(3) should be construed with reference to s. 8(1)(e). It was
urged that the first portion of sub-s. (1) cl. (e) reading "the arbitrator
shall, after hearing the dispute, make an award determining the amount of
compensation which appears to him to be just and specifying the person or
persons to whom such compensation shall be paid;" was mandatory while the
succeeding portion reading:
"and in making the award, he shall have
regard to the circumstances of each case and the provisions of subsections (2)
and (3). so far as they are applicable;" was merely directory. It was said
that the use of the expression " shall have regard to" so far as
sub-ss. (2) and (3) were concerned ,only indicated that the arbitrator was to
keep the said provisions .in mind but he was not bound to guide himself
strictly thereby. According to the shorter Oxford Dictionary the phrase
"have regard to" is used when 'reference to a person or thing' is'
intended. The exact significance of this phrase will depend on the context and
the setting in which it is used. The phrase finds a place in numerous sections
of the Madras Estates Land Act discussed -elaborately in Ryots of Garabandho v.
Zemindar of Parlakimedi(2) There it was observed by the Judicial Committee of
the Privy Council that the expression "have regard to" or expressions
very close to this were scattered throughout this Act, but the exact force of
each phrase must be considered in relation to its context :and to its own subject
matter. Consequently in considering the matters to which the arbitrator
appointed under s. 8 of the Act is to have regard, we must examine the language
of the provision to find out whether a mere reference to the matter mentioned
is aimed at or whether the legislature wanted the arbitrator to be guided
(1)  S.C.R. 550 (2) 70 I.A. 129 472
From the language used in s. 8, learned counsel for the appellant Wanted to
draw the inference that the expression "have regard to" only meant
that the arbitrator was to keep the matters referred to in mind or be conscious
of the same but that he was not compelled to guide himself thereby. In other
words, the contention was that although the arbitrator had to consider the
various circumstances mentioned in subs. (2) and modes prescribed in sub-s.
(3), those circumstances or modes nowhere fettered his powers of awarding
compensation. We cannot accept this proposition.
The circumstances mentioned in sub-s. (2) are
not related at all to the just equivalent for the land compulsorily acquired.
These are only incidental to the requisitioning of the property and provide for
the expenses, loss or damage to which the owner may be put as a result thereof;
the measure of a just equivalent is indicated in sub-s. (3) alone. This
sub-section leaves no choice to the arbitrator as to which of the two modes of
assessing the compensation he is to accept. The words of sub-s.(3)are mandatory
and compel the arbitrator to accept only the smaller figure arrived at after
assessment on the two modes of valuation.
No exception is taken to the mode prescribed
in cl. (a) of sub-s. (3) but the mode prescribed in cl. (b) must be held to be
arbitrary. It has no relation to the value of the land at the date of the
notice under s. 7 which may be many years after the date of requisition. In the
present case, the original requisition was made in 1942. By the deeming
provision of s. 24 of the Act the property was to be treated as requisitioned
under s. 3 of the Act The notice under s. 7 was given on April 2. 1953. No
grounds were shown and no circumstances were brought to our notice which
necessitated the fixing of the date of requisition as the one for ascertaining
the real value of the property. The property might have continued in requisition
for years and it is impossible to say that the date of requisition has or can
have any connection with the date of acquisition under s. 7.
In Bela Banerjee's case(1) is also in the
other cases mentioned, viz., State of Madras v. D. Namasivaya Mudaliar(2),
Vajrevalu Mudaliar v. Special Deputy Collector(:') and Jeejeebhoy v. Assistant
Collector(4), the date for the assessment of compensation was mentioned in the
Act itself. In this case it is not so mentioned but such date is dependent on
the original requisition. In any case it does not give the person to be
compensated a just equivalent of the property he was losing at the date of
acquisition. In this case too, it can be said that the just equivalent was
frozen at the minimum of twice its value on, the date of requisition. It is
common knowledge that all over India there has been a spiralling of land prices
after the conclusion of the last world war although the inflation has been
greater in urban areas, especially round about the big cities. than in the (1)
 S.C.R. 558.
(2)  6 S.C.R. 936.
(3)  1 S.C.R. 614 (4)  1 S.C.R.
636 473 mofussil. .Land values in post-war India are many times the
corresponding values before the conclusion of the last war.
In assessing the just equivalent of the value
of the property at twice the price which the requisitioned property would have
fetched in the open market if it had been sold on the date of requisition, the
arbitrator would be acting arbitrarily inasmuch as he would be proceeding on a
formula for which there is no rational basis.
Clause b) of sub-s. (3) of s. 8 leaves the
arbitrator no choice of assessing the value in terms of cl. (a) even if he was
of opinion that the mode fixed thereunder afforded a just equivalent of the
property to its owner. He had to make his assessment in terms of cl. (b). The
expression "have regard to" in sub-cl. (e) of sub-s. (1) of s. 8
therefore does not give the arbitrator any freedom of considering the two modes
laid down in sub-s. (3) and accepting the one which he thought fair.
The first point about the opening portion of
cl. (e) being mandatory and the latter portion being directory cannot therefore
be accepted. So far as sub-s. (3) is concerned.
it is couched in terms which are mandatory.
The second head of argument of learned
counsel for the appellant that the impugned clause stood by itself and
satisfied Art. 31(2) and the tests formulated in Bela Banerjee's case(1), is of
no Substance. The passage in the judgment of this Court in State of Madras v.
D. Namasivaya Mudaliar(2) at p. 944 where reference was made to the fact that
even under the Land Acquisition Act of 1894 notification under s. 4 might be
followed by a long interval before acquisition under s. 16 took place does not
support the contention of the appellant. There this Court observed that the
fixing of an anterior date for arriving it the market value of the land did not
is facto invalidate the acquisition, but that there might be circumstances
which would justify such a fixation; and it was there pointed out that it was
for the State to show that fixation of compensation at the market value of an
anterior date did not, amount to violation of the constitutional guarantee.
This. in our opinion, the appellant has
signally failed to do.
This case cannot be compared with the case of
West Ramnad Electric Distribution Co. v. The State of Madras(3) where the
person to be compensated was given the right to choose among several methods of
valuation prescribed by s. 5 of the Madras Electricity Supply Undertakings
(Acquisition) Act of 1954. In that case also, the validity of the Madras Act
had to be examined with reference to Art. 31(2) before its amendment in 1955.
Section 5 of the Madras Act provided that the compensation payable to a
licensee on whom an order had been served under s. 4 or whose (1)  S.C.R.
558 (2)  6 S.C.R. 936.
(3)  2 S.C.R. 747.
474 undertaking had been taken over before
the commencement of the Act, would be determined under any of the Bases A, B
and C specified by the section as might be chosen under s. 8.
Then followed detailed provisions about these
The Court found that "in none of the
three bases does the Legislature refer to the market value of the
undertaking." But according to the ,Court "that itself cannot justify
the argument that what is in.tended to be paid by way of compensation must
necessarily mean much less than the market value. The failure ;of the
legislature to refer to the fair market value cannot, in our opinion, be
regarded as conclusive or even presumptive evidence of the fact that what is
intended to be paid under S.
5 does not amount to a just equivalent ;Of
the undertaking taken over. After all, in considering the question as to
whether compensation payable under one or the other of the Bases amounts to
just equivalent, we must try to assess what would be payable under the ,,said
basis." The argument on behalf of the appellant that tile basis did not
provide for the payment of just equivalent could not be accepted by this Court
because of the fact that the appellant had produced no material on which its
plea could be sustained. In this case, however there is no such difficulty.
Clause (a) of s. 8(3) lays down a principle aimed at giving the owner of the
land somethinwhich approximates its just equivalent on the date of acquisition.
Clause (b) however directs the arbitrator to
measure the price arrived at in terms of cl. (a) with twice the amount of money
which the requisitioned property would have fetched if it had been sold on the
date of requisition and to ignore the excess of the price computed in terms of
cl. (a) over that in terms of cl. (b). The position bears a close similarity
with the facts in Bela Banerjee's case(1), where the legislature directed that
the excess of the value of the land arrived at in terms of the Land Acquisition
Act over the value as on the 31st December, 1946 was to be ignored.
The basis provided by cl. (b) has nothing to
do with the just equivalent of the land on the date of acquisition nor is there
any principle for such a basis. We cannot therefore accept the proposition that
the impugned clause satisfies the requirements of Art. 31(2) of the
The only other contention which remains to be
noted is that ..the High Court should have refused relief on the ground of
delay in making the. application under Art. 226 of the Constitution. This was
turned down by the High Court and it was pointed out that although the original
acquisition was made on 4th April 1953, so far as compensation was concerned,
the arbitrator was appointed on 21st June, 1961. We were informed that the
Collector assessed (1)  S.C.R. 558.
475 the compensation on July 2 1962 and the
petitioner approached the Court on September 18, 1962. It was held by the High
Court that in the case of an infringement of a fundamental right under the
Constitution, mere delay would hardly affect the maintainability of the
petition. The High Court was not satisfied that there was delay and said:
"In any case having regard to the importance
of the points raised and, assuming that there was delay, we would certainly
condone the delay." In appeal we do not feel disposed to take a different
If the High Court had any discretion in the
matter-and it is not suggested that it had not-the exercise of such discretion
ought not to be over-ruled by US Unless we are satisfied that the High Court
had "acted on some wrong principle or committed some error of law or
failed to consider matters which demand consideration". This is-the
principle which the House of Lords in England have always followed as observed
by Viscount Simonds in Zacharia v. Republic of Cyprus(1) and nothing has been
shown to us as to why we should adopt a different principle.
The appeal therefore fails and is dismissed
(1)  A.C. 634 at 661.