Judges: S.H. Kapadia, C.J.I., Mukundakam Sharma, K.S. Panicker Radhakrishnan,Swatanter Kumar and Anil R. Dave, JJ.

Facts:

The Appellant's father has acquired proprietary right in an Estate known as Beni Tal Fee Simple Estate situated in Pargana Chandpur, Tehsil Karan Prayag, District Chamoli, Uttarakhand (the property in question) which comprised of large tracts of forest spanning in and around 1600 acres. On the death of Shri P.N. Sarin, Appellants succeeded to the property in question. By a Gazette Notification dated 21st December, 1977 under Section 4-A of the Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960 (KUZALR Act), the rights, title and interest of every hissedar in respect of forest land situated in the specified areas ceased with effect from 01st January, 1978 and the same were vested in the State Government. A notice to said effect, issued by the Assistant Collector under Rule 2 of the Kumaun and Uttrakhand Zamindari Abolition and Land Reform Rules, 1965 (KUZALR Rules) was served upon the Appellants.

Assailing the aforesaid notice, the Appellants preferred a writ petition under Article 32 of the Constitution before this Court. On 13th December 1978, while disposing the aforesaid writ petition, the Court has directed the Petitioner to file a petition under Article 226 of the Constitution in the High Court.

Subsequently, on 02nd April 1979 the Appellants filed objections to the notice issued by the Assistant Collector challenging the vires of the KUZALR Act and also stating that no profit was being made from the property in question. By an order dated 11th April 1988, the Assistant Collector dismissed the objections of the Appellants by observing that that he had no jurisdiction to consider the legal validity of the KUZALR Act. With regard to the issue of compensation, the Assistant Collector held that since the KUZALR Act does not provide for a method to compute compensation in cases where no income has been derived from the forests, the Appellants were not entitled to any compensation.

Feeling aggrieved, the Appellants preferred a writ petition in the High Court of Allahabad questioning the legality and validity of the order of the Assistant Collector and also challenging the constitutional validity of Sections 4A, 18(1)(cc) and 19(1)(b) of the KUZALR Act. By impugned judgment dated 12th August 1997, the High Court dismissed the writ petition.

Being aggrieved, the Appellants preferred a Special Leave Petition in which leave was granted by this Court and this appeal was directed to be listed before the Constitution Bench. This matter was thereafter listed before the Constitution Bench alongwith other connected matters wherein also the issue of scope and extent of right under Article 300A of the Constitution of India was one of the issues to be considered.

Issues:

(i) Whether provisions of KUZALR Act are directly linked with the agrarian reforms?

(ii) Whether there is a repugnancy between Indian Forest Act, 1927 and the KUZALR Act?

(iii) Whether Article 254(2) of the Constitution is applicable?

(iv) Whether the High Court was justified in holding that the Appellants were not entitled to any compensation even when their forest land is acquired by the government, merely because the Appellants had not derived any income from the said forest?

Law:

KUZALR Act, 1960 - Section 12 - States that every hissedar whose rights, title or interest are acquired under Section 4, shall be entitled to receive and be paid compensation.

KUZALR Act, 1960 - Section 4A - Makes it clear that the provisions of Chapter II (Acquisition and Modifications of existing rights in Land), including Section 12, shall apply mutatis mutandis to a forest land as they apply to a khaikhari land.

KUZALR Act, 1960 - Section 19 - Prescribes that the compensation payable to a hissedar under Section 12 shall, in the case of private forest, be eight times the amount of average annual income from such forest.

Contentions:

Appellants

(i) The original KUZALR Act, 1960 excluded private forests [Section 6(1)(4)], since the vesting of private forests in the State would not be by way of agrarian reform.

(ii) The provision for agrarian reforms, therefore, should be a part of the Act, but, in the present case, the private forests so acquired under Section 4A of the KUZALR Act becomes the property of the State which is untenable.

(iii) In any event, under Section 4A of the KUZALR Act, it is only the provisions of Chapter-II and Chapter-V which shall apply to forests land while Rule 41 of KUZALR Rules occurs in Chapter IV and has no application to the forests covered by Section 4A, and hence Rule 41 will not apply to forests acquired under Section 4A of the KUZALR Act.

(iv) Further, if Article 31A of the Constitution has no application, then the law has to be tested against the Constitution as it stood on the date of its enactment, i.e. the U.P. Amendment Act, 1978 bringing forth amendment to KUZALR Act has to stand the test of Articles 14, 19 and 21 of the Constitution. Thus, the said Amendment Act would be invalid since the mere transfer of the private forests to the State would by itself not be a public purpose and, furthermore, non-grant /total absence of compensation to the Appellants, while granting full compensation to other owners of private forests who have mismanaged the forests or clear-felled the forests, would be violative of Article 14 of the Constitution.

(v) The action taken by the Respondents must satisfy the twin principles viz. public purpose and adequate compensation. Whenever there is arbitrariness by the State in its action, the provisions of Article 14, 19 and 21 would get attracted and such action is liable to be struck down.

Respondent

(i) The entry "Acquisition and Requisitioning of property" which was earlier in the form of Entry 36/List-II of the Seventh Schedule of the Constitution [which was subject to Entry 42/List-III of the Seventh Schedule of the Constitution] and Entry 33/List-I of the Seventh Schedule of the Constitution provided only the field of legislative power and did not extend to providing or requiring compensation. The requirement of compensation in the event of "taking" flows only from Article 31(2) of the Constitution, which was repealed by the Constitution (44th Amendment) Act, with effect from 26th September, 1979.

(ii) The issue of repugnancy does not arise at all in the instant case as there is in fact no repugnancy between the Central Act i.e. the Indian Forest Act, 1927 and KUZALR Act in as much as the Central Act and KUZALR Act in pith and substance operates in different subject matters.

(iii) As far as the question of alleged discrimination i.e. giving compensation to other owners and nil compensation to the Appellants is concerned, merely because there may be two compensation laws, which may be applicable, one of which provides for a higher compensation than the other, would not by itself make the provisions discriminatory or violative of Article 14 of the Constitution.

(iv) The statutory scheme under the UPZALR Act, 1950 is provided in Section 39(1) (e) in respect of forests. The said section provides for two methods for computation of compensation, namely, the average annual income of last 20 to 40 years as provided in Section 29(1) (e) (i) and the estimate of annual yield on the date of vesting as provided in Section 39(1) (e) (ii). In respect of KUZALR Act, the same U.P. Legislature which had the example of Section 39(1)(e) deliberately dropped the second sub-clause and limited the compensation only to the average annual income of the last 20 years. Thus, where there is no annual income, there would be no compensation.

Analysis:

KUZALR Act - Agrarian reforms

(i) It is settled law that Agrarian Reforms fall within Entry 18/List-II read with Entry 42/List-III of the Seventh Schedule of the Constitution.

(ii) It cannot be denied that KUZALR Act, 1960 is a statutory enactment, dealing with the agrarian reforms. Section 4 of the KUZALR Act provides that in respect of non-forest land,State Government may by notification take over the rights, title and interests of hissedar. The land so released is then dealt with by giving bhumidhari rights/asami rights to the tillers and thereby effectuating the purpose of agrarian reforms.

(iii) It clearly brings out that the vesting of forest land under the KUZALR Act are directly linked with the agrarian reforms, as the land as also the forest are managed by the Goan Sabha or any local authority dealing with the rights of villagers for betterment of village economy. So, where the land acquired by the State is to be transferred to a Goan Sabha/Village Panchayat for its management and use of land leading to betterment of village economy, the legislation is in the nature of agrarian reforms.

(iv) It is true that Section 4A of KUZALR Act, 1960, as amended by the UP Amendment Act 1978, provides that Chapter II and Chapter V of the KUZALR Act would apply mutatis mutandis and Rule 41 of the KUZALR Rules is relatable to Chapter IV of the KUZALR Act. However, the necessary consequence of Section 4A of the KUZALR Act is that the forest land vests in the State and all that Rule 41 of the KUZALR Rules does is to provide how the lands vested in the State including forest and non-forest land is to be dealt with. Thus, Rule 41 of the KUZALR Rules clearly applies to forest lands as it has been specifically so mentioned in the said Rules as well which are vested in the State under Section 4A of the KUZALR Act and therefore, have become the land/property of the State, which would be managed by the Goan Sabha.

Repugnancy between Indian Forest Act, 1927 and the KUZALR Act and application of Article 254(2) of the Constitution

(i) In respect of the Concurrent List under Seventh Schedule to the Constitution, by definition both the legislatures viz. the Parliament and the State legislatures are competent to enact a law. Thus, the only way in which the doctrine of pith and substance can and is utilised in determining the question of repugnancy is to find out whether in pith and substance the two laws operate and relate to the same matter or not. This can be either in the context of the same Entry in List III or different Entries in List III of the Seventh Schedule of the Constitution. In other words, what has to be examined is whether the two Acts deal with the same field in the sense of the same subject matter or deal with different matters.

(ii) The answer in the instant case is in the negative, as the Indian Forest Act 1927 deals with the law relating to forest transit, forest levy and forest produce, whereas the KUZALR Act deals with the land and agrarian reforms.

(iii) Thus, no case of repugnancy is made out between the Indian Forest Act, 1927 and the KUZALR Act as both the Acts operate in two different and distinct fields. Accordingly, both the Acts are legally valid and constitutional. That being so, there was no requirement of obtaining any Presidential assent. Consequently, Article 254(2) of the Constitution has also no application in the instant case.

Grant of Compensation

(i) The incident of deprivation of property within the meaning of Article 300A of the Constitution normally occurred mostly in the context of public purpose. Clearly, any law, which deprives a person of his private property for private interest, will be amenable to judicial review.

(ii) Under Indian Constitution, the field of legislation covering claim for compensation on deprivation of one's property can be traced to Entry 42 List III of the Seventh Schedule of the Constitution. The Constitution (7th Amendment) Act, 1956 deleted Entry 33 List I, Entry 36 List II and reworded Entry 42 List III relating to "acquisition and requisitioning of property". The right to property being no more a fundamental right, a legislation enacted under the authority of law as provided in Article 300A of the Constitution is not amenable to judicial review merely for alleged violation of Part III of the Constitution.

(iii) Article 31A was inserted by the Constitutional (1st Amendment) Act, 1951 to protect the zamindari abolition laws. The right to challenge laws enacted in respect of subject matter enumerated under Article 31A(1) (a) to (g) of the Constitution on the ground of violation of Article 14 was also constitutionally excluded.

(iv) Further, Article 31B read with Ninth Schedule of the Constitution protects all laws even if they are violative of the Part III of the Constitution. However, it is to be noted that in the Constitutional Bench decision in I.R. Coelho v. State of Tamil Nadu MANU/SC/0595/2007 : (2007) 2 SCC 1, this Court has held that the laws added to the Ninth Schedule of the Constitution, by violating the constitutional amendments after 24.12.1973, would be amenable to judicial review on the ground like basic structure doctrine.

(v) The Government is empowered to acquire land by exercising its various statutory powers. Acquisition of land and thereby deprivation of property is possible and permissible in accordance with the statutory framework enacted. Acquisition is also permissible upon exercise of police power of the State. It is also possible and permissible to acquire such land by exercising the power vested under the Land Acquisition Act.

(vi) This Act mandates acquisition of land for public purpose or public use, which expression is defined in the Act itself. This Act also empowers acquisition of land for use of companies also in the manner and mode clearly stipulated in the Act and the purpose of such acquisition is envisaged in the Act as not public purpose but for the purpose specifically enumerated in Section 40 of the Land Acquisition Act. But, in case of both the aforesaid manner of acquisition of land, the Act envisages payment of compensation for such acquisition of land and deprivation of property, which is reasonable and just.

(vii) In view of the aforesaid position the entire concept to right to property has to be viewed with a different mindset than the mindset which was prevalent during the period when the concept of eminent domain was the embodied provision of fundamental rights. But even now as provided under Article 300A of the Constitution the State can proceed to acquire land for specified use but by enacting a law through State legislature or by Parliament and in the manner having force of law.

(viii) When the State exercises the power of acquisition of a private property thereby depriving the private person of the property, provision is generally made in the statute to pay compensation to be fixed or determined according to the criteria laid down in the statute itself. It must be understood in this context that the acquisition of the property by the State in furtherance of the Directive Principles of State Policy was to distribute the material resources of the community including acquisition and taking possession of private property for public purpose. It does not require payment of market value or indemnification to the owner of the property expropriated. Payment of market value in lieu of acquired property is not a condition precedent or sine qua non for acquisition. It must be clearly understood that the acquisition and payment of amount are part of the same scheme and they cannot be separated. It is true that the adequacy of compensation cannot be questioned in a court of law, but at the same time the compensation cannot be illusory.

(ix) It is to be clearly understood that the stand taken by the State that the right, title or interests of a hissedar could be acquired without payment of any compensation is contrary to the express provisions of KUZALR Act itself.

Conclusion:

(i) The present appeal is partly allowed while upholding the validity of the Act and particularly Sections 4A, 18(1) (cc) and 19 (1) (b) of the KUZALR Act.

(ii) Second Respondent, i.e. Assistant Collector has been directed to determine and award compensation to the Appellants by following a reasonable and intelligible criterion evolved on the aforesaid guidelines provided and in light of the law enunciated by this Court hereinabove.

(iii) The Appellants will also be entitled to interest @ six percent per annum on the compensation amount from the date of dispossession till the date of payment provided possession of the forest was handed and taken over formally by the Respondent physically and provided the Appellant was totally deprived of physicalpossession of the forest.

(iv) However, in case the physical/actual possession has not been handed over by the Appellants to the State government or has been handed over at some subsequent date i.e. after the date of vesting, the interest on the compensation amount would be payable only from the date of actual handover/physical possession of the property in question and not from the date of vesting.