Holding

The Gujarat Amendment to the Bombay Land Revenue Code is constitutionally valid, falls within the State's legislative competence, is protected by Article 31A and the Ninth Schedule, and its retrospective operation and compensation scheme do not violate Articles 14, 21 or 300A.

Summary

The appellants, successors of Girasdars and Barkhalidars, challenged the constitutional validity of the Gujarat Amendment to the Bombay Land Revenue Code, which vested all mines, minerals and quarries in the State and provided compensation based on the average of three years' net income. They argued that the amendment was ultra vires the State Legislature, violated Articles 14, 21 and 300A, and that its retrospective operation and compensation formula were arbitrary. The Court examined the pith and substance of the amendment, its placement in the Ninth Schedule, and the scope of entries in the Seventh Schedule, concluding that the amendment falls within the State's power to enact agrarian reform and is protected by Articles 31A, 31B and 31C. It held that the retrospective effect was valid, the compensation method was not illusory, and that the right to property under Article 300A is not a basic feature of the Constitution. Consequently, the appeals were dismissed and the amendment upheld.

Issues considered

The amendment's pith and substance and whether it falls within the State's legislative competence under Entries 18, 23 of List II and Entry 42 of List III.
Whether the amendment is saved by Article 31A and the Ninth Schedule, rendering it constitutionally valid.
Whether the retrospective operation of Sections 69 and 69‑A from 1 May 1960 is ultra vires.
Whether the compensation formula in Section 69A(4) violates Articles 14, 21 or the principle of just compensation under Article 300A.
Whether the right to property under Article 300A constitutes a basic structure or fundamental right post‑44th Amendment.

Legislation cited

Bombay Land Revenue Code, 1879s. 69, s. 69-A, s. 69-A(4)
Constitution of Indias. Article 14, s. Article 21, s. Article 246, s. Article 300A, s. Article 31A, s. Article 31B, s. Article 31C, s. Article 39(b), s. Article 39(c)
Land Tenure Abolition Laws (Gujarat Amendment) Act, 1982s. 69, s. 69-A, s. 69-A(4)
Mines and Minerals (Regulation and Development) Act, 1957
Saurashtra Barkhali Abolition Act, 1951
Saurashtra Gharkhed Tenancy Settlement and Agricultural Land Ordinance, 1949
Saurashtra Land Reforms Act, 1951

Subjects

land reformagrarian reformeminent domaincompensationArticle 31AArticle 300Aretrospective legislationmines and mineralsconstitutional validityNinth Schedulebasic structure doctrine

Judgment

•
SH. JILUBHAI NANBHAI KHACHAR ETC ETC. A
v.
STATE OF GUJARAT AND ANR. ETC. ETC.

JULY 20, 1994

[K. RAMASWAMY AND N. VENKATACHALA, JJ.) B

Land Tenure Abolition Laws (Gujarat Amendment) Ac~ 1982:

Amendments introduced in Bombay La11d Revenue Code-Legislative
compete11ce of-Held covered by Entries 18 a11d 23 of List JI (State List) read C
with Entry 42 of List Ill (Co11cwre11t Listf-Amendment Act held part of the
scheme of agrarian refonn-Held protected by Article 31-A and 31-~ Held
Not ultra vires the power of State LegislaturHurpose of the Act discussed.
,. i
Bombay Land Revmue Code, 1879 :'
D
Section 69-A (As Introduced by Gujarat Amendment) Act, 1982-
Validicy-Girasdars and Barkhalidars-Holding. Mines and quarries--
Provision for vesting in State-Held not violative of Article 300-A-Limited
retrospective operation given to the provision--He/d not ultra vires.

Sectio11 69-A( 4 )--Compensation-Principle for quantification- E
Average of three years net annual income preceding the date of vesting-Held
not violative of Article 14.

Constitution of India, 1950: Articles 31-A, 31-B, 31-C and 39(b) and
(c).
F
Law providing for acquisition of estates-Saving oj-{.,and Tenure
Abolition Laws (Gujarat Amendment) Act, 1982- inclusion in Nint1'
Schedule-Held protected by Articles 31-A and 31-B.

Article 39(b) and (cf-'Material Resources ofCommunity'-Scope and G
meaning of-Held the concept is broad and must be interpreted broad-
ly-Held Mines Minerals and Quarries embedded in land are material resour-
ces of community-Held Amendment Act (8 of 1982) falls under Article
39(b) and is saved by Article 31 ( C).

Article 300-A-Right to property-Held not a basic feature of the Con- H
807
808 SUPREME COURT REPORTS (1994] SUPP.1 S.C.R.

A stitution--Position before and after Constitution 44th Amendment Ac~is
cussed.

'Property'-Legal connotation of-Held it must be construed in the
context in which sovereign power of eminent domain is exercised-Depriva-
tion of property-Compensation for-Principles of-State can acquire proper-
B ty in exercise ofpower of Eminent Domain--Payment of market value in lieu
of acquired property is not sine qua non for acquisition.

Property-Acquisition of-Compensatiort-Adequacy of-Held not sub-
ject to judicial review-Principle of depletion of rupee value held not relevant
C for determination of compensation.

Compensation for property acquired-Prescription of different mode9-
Held not Violative of Article 14.

Seventh Schedule-Lists I, II, and III-Entries-Interpretation of-
D Held should be given widest scope of their meaning-Duty of Court to
ascertain pith and substance of AcHleld entries in Schedule do not confer
legislative powers.

Scheduled II-List II-Entry lS-'Land'-lnterpretation of-Held in-
cludes Mines Minerals and Quarries embedded in Land-'Right in or over
E land'-lnc/Udes not only surface but everything under it.

Constitution--Principles of interpretatiort-Should not be considered in
na"ow and pedantic mannei--Construction must be beneficial to the
amplitude of Legislative powers.
F Legislature-Power to make laws-Held in the absence of express
Constitutional prohibition power can be exercised prospectively and retrospec-
tively.

Doctrine of Eminent Domai1t"""74.pplicability of Doctrine of Pith and
G Substance-Applicability of
Words and Phrases : 'Land'-Meaning of-Entry 18--List- II-Seventh
Schedule to the Constitution.

'Distribution'-Meaning and construction of-cArtic/e 39(b) of the Con-
H stitution.
J.N.KHACHARv.STATEOFGUJARAT 809

'Property'-Meaning of-Article 300-A of the Constitution. A

In these appeals the Constitutional validity of the land Tenure
Abolition Laws (Gujarat Amendment) Act, 1982 and sections 69, 69·A and
69-A (4) of the Bombay Land Revenue Code, 1879 is in question. By a
notification published in the Government Gazette the State of Gujarat B
abolished the Girasdars' and Barkbalidars right in the estates. Conse·
quently the rights of Girasdars and Barkbalidars to occupy and enjoy the
land as land-holders in terms of the grant made by the erstwhile Rules
stood extinguished and vested in the State. However, by judicial interpreta·
tion it was held that only uncultivable waste lands stoods vested in the
State and the lands with mines and minerals could not be held to be C
uncuitivable waste lands and did not vest in the State. To obviate this
Interpretation the Amendment Act, 1982 introduced Section 69-A in the
Bombay Land Revenue Code, 1879 which extinguished the right to mines
or minerals and quarries in the lands held by any person including
Girasdars or Barkbalidars and reserved them for the Government under D
Section 69 of the Code. The appellants unsuccessfully challenged the
validity of these provisions before the Gujarat High Court.

In appeals to this Court, it was contended that: (1) The Amendment
Act is void and is ultra vires the power of the State Legislature; (2) Without
amendment to the other Act. viz. (a) The Saurashtra Gharkhed Tenancy E
Settlement and Agricultural Land Ordinance, 1949: (b) The Saurashtra
Land Reorms Acts, 1951; (C) The Saurashtra Barkbali Abolition Act, 1951,
the Amendment Act becomes inoperative; (3) The limited retrospective
operation given to Section 69 and 69-A with effect from 1st May, 1960 is
illegal and ultra vires; (4) Section 69-A of the Code though included in the F
Ninth Scheduled to the Constitution is not a law relating to agrarian
reforms and therefore, it is not protected by Article 31-A of the Constitu·
lion; (5) Right to property which was abolished by Cm,stitution's 44th
Amendment Act was resurrected under Article 300-A as a Constitutional
right. Therefore, the law must meet the test of Articles 14 and 21; (6) The
Compensation provided under sub-section (4) of section 69-A of the Code G
is void as compensation was not just equivalent to the property acquired;
- '"T1 (7) In view of the erosion in the money value the ftxation of compensation
on the principle of net annual income of three years preceding the date of
vesting, namely 1st May, 1960 is arbitrary; (8) The Act and the related
provisions provided different modes of compensaHon Limn the one H
810 SUPREME COURT REPORTS (1994] SUPP. l S.C.R.

A provided in sub-section (4) or Section 69-A or the Code and that, therefore,
it is discriminatory, violating Article 14 and unfair procedure offending
Article 21.

Dismissing the appeals, this Court

B HELD : l. Jn pith and substance, the predominent purpose or the
Amendment Act is to extinguish the pre-existing rights, title and interest
in the land which includes the mines, minerals and quarries held by
Girasdars or Barkhalidars and to reserve and vest them in the State or
Gujarat for public use. It would thereby fall within Entry 18 and 23 of List
lI (State List) read with Entry 42 of List III (Concurrent List). [827-H]
c
2. The Amendment Act in pith and substance is predominently for
abolition and extinguishment or the right in lands comprising of mines,
minerals and qnarries held by Girasdar, Barkbalidar or any person under
a grant or agreement or by operation of a decree, order or judgment of a
D court and vest. them in the State by their acquisition. So the ~endment
Act g•ts the protection of Article 31-A. Thus itis not ultra vires of the power
of the State Legislature. [828-E)

India Cement Ltd. & Ors. v. State of Tamil Nadu, [1990) 1 SCC 12;
Orissa Cement Ltd. & Ors. v. State of Orissa & Ors. etc., [1991) 2 SCC 103
E and Federation of Mining Association of Rajasthan v. State of Rajasthan &
Anr., [1992] Supp. 2 SCC 239, held inapplicable.

3. The Amendment Act received its protective canopy of Ninth
Schedule in Entry 219 thereortbrougb the Constitution's 66th-Amendment
Act, 1990. It is part of the scheme of agrarian reforms envisaged under the
F Act falling within Entries 18 and 23 of List II (State List) and Entry 42 of
Concurrent List of the Seventh Schedure to the Constitution. So it is saved
by Article 31 ·A of the Constitution. Even otherwise it would fall under
Article 39(b) and (c) of the Constitution. It is saved by Article 3l(c).
[831-G-H)
G 4. Land in Entry 18 is not restricted to agricultural land alone but
includes non-agricultural land etc. The words 'rights in' or 'over land'
confer very wide power which are not limited by rights between the land
holder inter se or the land holder and the State or the land holder and the
tenant. Restriction or extinction or existing interest in the land includes
H provision for abolition and exitinguishment of the rights in or over the
.. J.N. KHACHAR v. STATE OF GUJARAT 811

land Resumption or the estate is one or the objectives or the government A
and the Act seeks to serve that object. Resumption includes all ancillary
provisions, cancellation or extinguishment or any existing grant by the ex-
Rulers or lease by grant with restrospective effect. [825-H, 826-A-B)

Land in its widest signification would therefore include not only the
surCace or the ground, cultivable, uncultivable or waste lands but also B
everything on or under it. [826-G)

Thakur Raghubir Singh & Ors. v. The State of Ajmer (now Rajasthan)
and Ors., [1959) SCR Supp. 1, 478; Jagannath Singh v. State of U.P., AIR
(1960) SC 1563; State of UP. v. Sarju Devi, [1978) 1 SCR 18; State of Gujarat c
v. Kam/a Ben liven Bha~ [1979) Supp. 2 SCC 440; Sri Ram Ram Narain
Medhi v. State of Bombay, [1959) Supp. 1 SCR 489 and Digvijaya Singh
Hamirsinhji v. Manji Savda, [1969) SCR 1 405, rererred to.

Black's Law Dictionary (Sixth edn.) page 877; Ramanatha Iyer, The
Law Lexicon (Reprint edn. 1987), p. 187, rererred to. D

5. Entries In the Seventh Schedule to the Constitution are not powers
but fields or legislation. The legislature drives its powers by Article 246
and other related Articles of the Constitution. Therefore, the power to
make the Amendment Act is derived not Crom the respective entries but
E
under Article 246 or the Constitution. The language or the respective
entries should be given the widest scope or their meaning, Calrly capable
to meet the machinery or the Government settled by the Constitution. Each
general word should extend to all ancillary or subsidiary mattars which
" can Cairly and reasonably be comprehended In it. When the vires or an
enactment is Impugned, there is an initial presumption or Its con- F
stitutionallty and IC there is any difficulty in ascertaining the limits or the
legislative power, the difficulty must be resolved, as Car as possible in
Cavour or the legislature putting the most liberal construction upon the
legislative entry so that it may have the widest amplitude. [824-D-F)

India Cement Ltd. and ors. v. State of Tamil Nadu and Ors., [1990] 1 G
~
sec 12, referred to.
6. When the court is called upon to interpret the Constitution, it
must not be construed In any narrow or pedantic sense and adopt such
construction which must be beneficial to the amplitude of legislative H
812 SUPREME COURT REPORTS [1994) SUPP.1 S.C.R.

A 1>owers. The broad and liberal spirit should inspire those whose duty Is to
Interpret the Constitution to Ond whether the impugned Act is relatable
to any entry In the relevant Ust. (824-GJ

7. The amended Sections 69 and 69-A(l) of the Code determined the
existing rights and reserved them in favour of the State of the rights in
B mines, minerals and quarries In the lands whether alienated or un·
alienated whether held by Girasdar or Barkhalidar or any others. Section
69-A(l) brought the lands covered under a grant or an agreement or a
judgment, decree or order of any court interpreted in that behalf within
Section 69 of the Act. Thereby all mines, minerals or quarries situated in •
C any land, be it alienated or Unalienated, lield by any person including
Girasdar or Barkhalidar are now governed by Section 69 and 69A of the
Code. The contention, therefore, that without amendment to the aforemen·
tloned four Acts the amendment becomes inoperative is devoid of sub·
stance. The analogy of special law prevails over Amendment Act and the
-·
Code, a general law, renders little assistance to the appellants. (829-F-H)
D
8. The power to make the law pros1>ectlvely include the power to make
the law retrospectively. It Is true that generally law intended that vested
rights or Imposition of new burden cannot be deemed to have been inade
with retrospective effect. Equally is tbe settled law that the provision which
E touched the right in existence at the passing of the statute are not to be
appiied retrospectively in the absence of an express enactment or any
necessaryintendment. It is equally settled law that every statute whkh takes
away or impairs vested rights acquired under existing laws or creates a new
obligation or imposes a new duty or burden or tonches a new right in respect
of transaction already passed must normally be presumed, unless ex·
F pressed otherwise, to be intended not to have retrospective effect. (830-C-E)

Tata Iron and Steel Co. v. State of Bihar, (1958) SCR 335 and Rama
Krishna v. State of Bihar, (1964) 1 SCR 897, referred to.

G 9. In the light of the language in section 2 of the Amendment Act, the
express retrospective operation given to the Amendment Act with effect
from May 1, 1960 retrospectively affected vested rights of the Girasdar or j_
Barkhalidars created by a grant or agreement etc. or Down from a judg- ,,.. .
ment, order or a decree of any court and stood extinguished with effect from
May 1,1960. It is true that a limited retrospective effect was given to the r~
H Amendment Act as the State was formed and became operative from May Y
J.N. KHACHARv. STATE OF GUJARAT 813

1,1960, the date on which the State was formed. So, any grant or agreement A
etc. though otherwise was valid with effect from any anterior date, would
cease and lose their validity from May 1, 1960. Any other earlier date would
have rendered the Amendment Act ultra vires. Only to obviate such an
interpretation, consistrnt with the date of existence of the State Legislature
i.e. the date on which the State legislature became competent to enact the
Code, the Amendment Act was given retrospective operation. Accordingly,
B
the retrospective operation cannot be faulted nor would it be declared ultra
vires. [830-F-H]

10. Right to property under Article 300-A is not a basic feature or
structure of the Constitution. It is only a constitutional right. [838-G] C

11. Property in a comprehensive term is an essential guarantee to
lead full life with human dignity, for, in order that a man may be able to
develop himself in a human fashion with full blossom, he needs a certain
freedom and a certain security. The economic and social justice, equality of
status and dignity of person are assured to him only through property. D
[843-H, 844-A)
12. Property in legal sense means. an aggregate of rights which are
guaranteed and protected by law. It extends to every species of valuable
right and interest, more particularly, owernship and exclusive right to a
thing, the right to dispose of the thing in every legal way, to possess it, to E
use it, and to exclude every one else from interfering with it. The dominion
or indefinite right of use or disposition which one may la\Vfully exercise over
particular thing or subjects is called property. The exclusive right of pos-
sessing, enjoing and disposing of a thing is property in legal parameters.
Therefore, the word 'property' connotes everything which is subject of
) ownership, corporeal or incorporeal, tangible or intangible, visible or in- F
visible, real or personal; everything that has an exchangeable value or

) which goes to make up wealth or estate or status. [844-D-E)

Kesavananda Bharti v. State of Kera/a, [1973) Suppl. SCR l; Waman
Rao v. Union of India, [1981) 2 SCR 36; State of West Bengal v. Mrs. Bela G
Banerjee & Ors., [1954) SCR 558; State of West Bengal v. Subodh Gopal Buse
& Ors., [1954) SCR 587; P. Vajravelu Mudaliar v. Special Deputy Collector,
Madras & Ors., [1965) 1 SCR 614; Union of I11dia v. The Metal Corporation
of India Ltd. &Anr., [1967) 1 SCR255; State of Gujarat v. Shanti Lal Mangat
Das, [1969] 3 SCR 341; R.C. Cooper v. Union of llldia, [1970) 3 SCR 530;
Golak Nath v.State of Punjan, [1967] SCR 177; Minerva Mills Ltd. v. U11iun H

I
814 SUPREME COURT REPORTS [1994] SUPP. l S.C.R.

A of India, (1981) 1 SCR 36 and State of Maharashtra v. Madhavrao Damodar
Pati/chand & Ors., (1968) 3 SCR 712.

Sanjeev Coke Mfg. Co. v. Bharat Cooking Coal Ltd., (1983) 1 SCR
1000; State of Kamataka v. Ranganatha Reddy, [1978) 1 SCR 641; State of
Maharashtra v. Basantibai Mohan/al Khetan, (1986) 2 SCC 516; Minerva
B Mills v. Union of India, (1986) 4 SCC 222; Tinsukhia Electric Supply Co.
Ltd. v. State of Assam, (1989) 3 SCC 709; Assam Sillianite Ltd. v. Union of
India, [1992) Suppl. 1 SCC 692; Union of India v. Hari Krishan Khosla
(dead) by Lrs., [1993) Suppl. 2 SCC 149 and Smt. Indira Gandhi v. Raj
Narain (1976) 2 SCR 347, referred to.
c K.K. Mathew, "Right to Property" 10, Journal of Constitution and
Parliamentary Studies I (1976); M.R. Cohen, "Property and Sovereignty" 13
Cornell Law Quarterly 8; Hidayatullah, "Right to Property and The Indian
Constitution" (Tagore Law Lectures); Karl Renner, "The Institution of
Private Law and their Functions" 1949 Edn. by Kahn-Feund; Henry Maine,
D ':Ancient Law'~ 1931-Edn.; Friedman, "Legal Theory"; Ramanatha Aiyar and
"The Law Lexicon" Reprint Ed. 1987, p. 103, referred to.

13. The term 'property' in Article 300-A receives its true colour and
reOection from the context in which State's power of eminent domain or
police power is invoked and effectuated. The word 'Property' used in
E
Article 300-A must be understood in the context in which the sovereign
power of eminent domain is exercised by the State and property ex-
. propriated. No abstract principles could be laid. Each case must be
considered in the light of its own facts and setting. The phrase 'deprivation
of the property of a person' must equally be considered in the fact situation
F of a case. Deprivation connotes different concepts. (848-A)

Article 300A gets attracted to an acquisition of taking possession of
private property, by necessary implication for public purpose, in accord-
ance with the law made by the Parliament or a State Legislature, a rule or
G a statutory order having force of law. It is inherent in every soveriegn State
by exercising its power of eminent domain to expropriate private property
without owner's consent. Prima facie, State would be the judge to decide
whether a purpose is a public purpose. [848-C]

But it is not the sole judge. This will be subject to judicial review and
H It is the duty of the court to determine whether a particular purpose is a
J.N. KHACHARv. STATE OF GUJARAT 815

public purpose or not. Public interest has always been considered to be an A
essential ingredient of public purpose. But every public purpose does not
fall under Article 300A nor every exercise of eminent domain an acquisition
or taking possession under Article 300A. Generally speaking preservation
of public health or prevention of damage to life and property are considered
to be public purposes. Yet deprivation of property for any such purpose B
would not amount to acquisition or possession taken under Article 300A. It
would be by exercise of the Police power of the State. [848•D]

14. The right of eminent domain is the right of the sovereign State,
through its regular agencies, to reassert, either temporarily or permanent·
ly, its dominion over any portion of the soil of the State including private C
property without its owner's consent on account of public exigency and for
the public good. Eminent domain is the highest and most exact Idea of
property remaining in the government, or in the aggregate lmdy of the
' people in their sovereign capacity. It gives the right to resume possession
of the property in the manner directed by the Consititution and the laws D
of the State, whenever the public interest requires it. The term
'expropriation' is practically synonymous with.the term 11eminent domain".
(841-C·D]
Dwarka Das Srinivas of Bombay v. Sholapur Spinning and Weaving Co.
Ltd., (1954] SCR 674; Chiranjit Lal Chowdhury v. Union of India, (1950] E
SCR 869; State ofBiharv. Kameshwar Singh, (1952] SCR 869 and Bisambhar
Dayal Chandra Mohan v. State of U.P., [1982] 1 SCC 39, referred to.

Ramanatha Iyer's "The Law Lexicon" Reprint 1987 p. 385; Black's Law
Dictionary 6th Edn. p. 523; referred to.
F
15. Legislat.,re has power to acquire the property of private persons
exercising the power of eminent domain by a law for public purpose. The law
may fix an amount or which may be determined in accordance with such
principles as may be laid therein and given in such manner as may be
specified in such law. However, such law shall not be questioned on the G
grounds that the amount so fixed or amount determined is not adequate.
The amount fixed must not be illusory. The principles laid to determine the
amount must be relevant to the determination of the amount. [850-G·H]

16. When the State exercises its power of eminent domain and
acquires the property of private person or deprives him of his property for H
816 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A public purpose, concomitantly fixation of the amount or its determination
must be in accordanee with such principles as laid therein and the amount
given In such manner as may be specified in such a law. However, judicial
Interpretation should not be a tool to reinduct the doctrine of compensa-
tion as concomitance to acquisition or deprivation of property under
Article 300A. This would be manifest from two related relevant provisions
B of the Consitution itself. Article 30(1A) and 2nd proviso to Article 31A as
exceptions to the other type of acquisition or deprivation of the property
under Article 300A. By necessary implication the obligation of the state, to
pay compensation for property acquired or indemnification of property
deprived under Article 300A or other public purpose is obviated.
C (851-C-D-G)
Roscoe Pound, ''.A Survey of Social Interests" 57th, Harvard Law
Review 1 (1943); Roscoe Pound, "Justice According to Law" and Rescoe
Pound, ''Theory of Justice" 1951 Edu. referred to.

D. 17. Acquisition of the property by law laid in furtherance of the
directive principles of State policy was to distribute the material resources
or the community including acquisition and taking possession or private
property for public purpose. It does not require p111yment of just compensa-
tion or Indemnification to the owner orthe property expropriate. It is the
very negation of effectuating the public purpose. Payment of market value
E in lien or acquired property is not sine qua non for acquisition. Acquisition
and payment or amount are part of the scheme and they cannot be dissected.
However fixation of the am~unt or specification of the principles and ·the
manner in which the amount is to be determined must be relevant to the
fixation or amount. The amount determined need not bear reasonable
F relationship. In other words, it Is not illusory. The adequacy of the resultant
amount cannot be question in a court or law. However, the validity of
irrelevant principles are amenable to judicial scrutiny. (852-H, 853-A-B)

Bhim Singhji v. Union of India, (1981) 1 SCC 166; Achutananda
Purohit v. State of Orissa, (1976) 3 SCR 919; State of Maharashtra v.
G Basantibai Mohan/al Khcian, [1986) 2 SCC 516 and Tinsukhia Electric
SupplyCo. Ltd. v. State of Assam, (1989) 3 SCC 709, referred to.

18. The appellants are not entitled to compensation or just
equivalent of property they are deprived of or Indemnification of the
H property expropriated (,e.111lnes, whetiier Wo.rked or not, minerals whether
. . . . - . ·._,. .. _,.·;;<.<".·"-·'.t~_..,...,..,.,,.1 .. ~'~P·•f:~\" ~,'£ ~-

•
• J.N. KHACHAR 1•. STATE OF GUJARAT 817

discovered or not or quarries deprived by law made under Article 300A of A
the Constitution. The principles under Section 69A (4) of the Code are
relevant. The resultant amount is not illusory. Thereby they are not void.
Further after the Constitution Forty fourth Amendment Act has come into
force, the right to property in Articles 19(1)(1) and 31 had its obliteration
from Chapter III. Fundamental Rights, its abridgement and curtailment B
does not retrieve its lost position, nor gets restituted with renewed vigour
claiming compensation under the garb 'deprivation of property' in Article
300A. The Amendment Act neither receives wrath of Article 13(2), nor does
section 69A become ultra vires of Article 300A. [853-C-E]

19. It is more or less the world phenomenon that the erosion in value C
of unit of currency bas been taking place. But this inevitable devaluation
due to inflationary trends does not affect the quantum of compensation
prescribed by the statute for the purpose of allowing compensation in
rupee long ago is the same as the rupee of today, although for the purpose
of market and cost of living, the housewives' answer may be different. Law D
is sometimes blind. Therefore, the loss of rupee value is not relevant
consideration to adjudge the principle laid by the statute. In normal
acquisition, the principle of depletion or rupee value has repeatedly been
held to be not relevant to determine market value. [853-H, 854-A-C]
E
Achutananda Purohit v. State of Orissa, (1976] 3 SCR 919, referred
to.

,' 20. Section 69A(4) of the Code is valid. So it is unassailable under
Article 14. It is true that different Acts provide different principles to F
determine the amount payable to the deprived owner. The principle of
average of three years net annual income received from production of the
mines and min.rats preceding the date of the vesting is a relevant and
germane principle to ·fix the amount payable to the owner. Comparative
evaluation of different principles evolved by each statute may appear to be
different and prima facie to be discriminatory from each other, but com- G
parative analogy would not furnish satisfactory test to declare a notional
principle determined by the stiituleto be discriminatory. The principle
bears just relation to the object of determining the amount or compensa-
tion payable to the owner and the principle of average of three years net
income is a reasonable classification having relation to the object of H
SJS SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A modilication of the existing rights and extinguishment thereof. [854-E-F]

21. In a welfare State envisioned in the directive principles of State
policy, the basic perquisites are that everyone is entitled to minimum
material well being, such as food, clothing, and decent housing. Expanding
living standards are possible with the existing or expanding physical
B resources and scientific knowledge etc. and the State has right and duty
to act when private initiative fails. In a democratic society, every individual
needs legal protection for the beneficial enjoyment of what he has dis-
covered and appropriated; has createri by his own labour (in wider sense);
and what he has acquired under the existing social and economic order
c subject to law and order. Equally welfare consists in adjusting individual
interests with social interest by the aid of law as social engineering, which
would mean public restraints on property designed to mitigate the
privileges which property offers in enjoyment of the things that life has to
offer. Restraints on the power to use the property as a dele1:at1:d power of
·D command, is a means of quasi-governmental private contro! over the
major assets of a nation. Property, thereby, is subject to re:~ulation.
[847-E-F]
22. TI1e expression 'material resources Or coinniuiiity' is ·.a·. \\.1,de
concept and must be broadly interpreted' to bring within its . .Weep. all ..
E resources, natural or physical moveable or immove~_ble, corporear or
incorporeal, tangible or intangible properties etc. Privat" nosources or
property are part of material resources of the community. All things that
produce wealth for the community are material resour.:es. The word
"distribution" equally must be construed broadly to include not only allot-
F ment ofresources to public use but also dispensation oflargess to the poor
to provide access to equal opportunity. (838-D-E]

Mines Minerals and quarries embedded in the laml are material
resources of ~e community amenable to public use or for distribution.
G (838-F]
Kesavananda Bharti v. State of Kera/a, (1973] Suppl. SCR 1; State of
Tamil Nadu v. L. Abu Kavu Bai, (1984] 1 SCC 515; Sanjeev Coke Mfg. v.
Bharat Coking Coal Ltd., (1983] 1SCR1000; State of Kera/av. The Gwalior
Rayon Silk Mfg. Co. Ltd., (1974) 1 SCR 671 and Gujarat Pottery Works Pvt.
H Ltd. v. B.P. Sood, [1967) 1 SCR 695, referred to.
• J.N. KHACHAR v. STATE OFGUJARAT[RAMASWAMY,J.] 819

CIVIL APPELLATE JURISDICTION : Civil Appeals No. 2211- A
15/84 and 3013 of 1990.

From the Judgment and Order dated 7/8-9-83 & 16-9-88 of the
Gujarat High Court in S.C.A. Nos. 2395, 2400, 2394, 1118, 2396 & 1763 of
1987.
B
Harish J. Jhaveri for the appellants in C.A. No. 2211 and 2213/84,
2214/84.

B.K. Mehta, Harish J. Jhaveri, D.U. Shah for the Appellants in C.A.
Nos. 2212/84 & 3013/90. ·
c
A.K. Ganguli, Pramod B. Agarwala and Satish Agarwala for the
Appellant in C.A. No. 2215/84.

D.A. Dave, Anip Sachthey, C.B. Singh,. Vivek Sharma and Ms.
Meenakshi Arora for the Respondents.
D
The Judgment of the Court was delivered liy

K. RAMASWAMY. J These five appeals raise four-pronged attack
on the Constitutioqality of the Bombay Land Revenue Code and Land
Tenure Abolition Laws (Gujarat Amendment) A,ct.8of1982 (for shmt "the
Amendment Act"f Though unsuccessful in t.he High Court of Gujar~t iii. E
Special Civil Application Nos .. 1118 of·l982 and.bati:h byjudgrilerit of the . ·.
Division Bench dated 7/8 September, 1983 and follqwed ·in Special Civil°
Application No. 763/82 dated Septembe~ 16; .1988the appellants had leave·
of this Court. A short shift of the antecedent history of land tenures in
Saurashtra region. of the State of Gujarat is neeessary to focus the foc;.i
points posed for decision, by common judgment. The appellants are sue- F
cessors of Barkhalidars and Girasdars. The erstwhile Saurashtra State
consisted of 220 princely states rules by sovereign Rulers in their own
rights:The lands in these appeals form present parts of Surendra Nagar
and Bhavnagar districts. In the State of Saurashtra, the Rulers entered into
agreements with Taluqadar and estate holders and also created a class of G
interested people known as "Barkhalidars or Girasdars. Various parcels of
lands together with all rights in or interest over those lands were granted
for cultivation on payment of revenue etc. with a right of succession in
favour of their cadets or relations or favourites known as "Girasdars11 or
"Barkhalidars". "Gharkhed", known in South India estate tenures as
"Homefarm lands", means land reserved by land holder for personal cul- H
820 SUPREME COURT REPORTS (1994] SUPP. l S.C.R.

A tivation. "Bid Land" means such lands as has been used by the land holders
for grazing his cattle or for cutting grass for the cattle. "Land holder" means
Zamindar, Jagirdar, Girasdar, Taluqadar etc. or any person who is a holder
of land or who is interested in land and whom the Government has
declared, on account of the extent and value of the land or his interests
therein, to be a landholdeL
B
The system in vogue was that the lands that were under control of
the rulers through the agriculturists, the latter had to bring their produce
to a common place "khali" meaning thereby threshing floor. The ruler or
his agent used to take stock of the total produce harvested and set apart
C towards the ruler's share according to the custom or the contract and the
remainder belong to the agriculturists. In the other system the land was
granted to the "Girasdars" or "barkhalidars", and the requirement of bring-
ing the harvest by the agriculturists to the threshing floor was dispensed
with. This anachronistic land tenure system was done away with by progres-
sive different land tenures conferring permanent ryotwari settlements on
D the tiller of the soil through "The Saurashtra Gharkhed Tenancy Settlement
and Agricultural Lands Ordinance, 1949 which later became the Act, the
Saurashtra Land Reforms Act, 1951; the Saurashtra Barkhali Abolition
Act, 1951 and the Saurashtra Estates Acquisition Act, 1952 (for short "the
Act"). Under the respective statutes the rights and liabilities of Girasdars
E or Barkhalidars have been determined. The details whernof arc not
relevant for the purpose of these appeals. Suffice it to state that Section
2(c) of the Act defines "estate" to mean 'all land of whatever description or
an undivided share thereof held by a Girasdar and .includes uncultivable
waste land etc. Section 2(a) defines land as "land of any descriplfon whatever
F and includes benefits whatsoever arise out of the land and things attached
to the earth or permanently anything attached to the earth. These defini-
tions are of wide amplitude to include mines and mineral wealth beneath
surface land of whatever description. Section 3(1) abolishes Girasdari or
Barkhalidari tenures by a notification published by the government in the
Official Gazette, from time to time declaring with effect from a specified
G date that all rights, title and interest of the Girasdars or Barkhalidars shall,
in respect of any estate or part of an estate comprised in the notification,
ceased and to be vested in the State and all the incidents of the said tenures
attaching to any land comprised in such estate or part thereof shall be
deemed to have been extinguished. Sub-Section (2) thereof empowers the
H State Government to issue notification from time to time in respect of an
• J.N. KHACHARv. STATEOFGUJARAT[RAMASWAMY,J.] 821

estate or part of an estate or in respect of any area specified in the said A
notification. The consequences of the abolition of Girasdars' and
Barkhalidars' rights in the estate have been provided in Section 4 of the
Act. Under clasue (2) of s.4 relevant for the purpose of this case, it has
been provided that consequent upon the notification issued by the govern-
ment under Section 3, with effect from the specified date, all cultivable and B
non-cultivable waste land, excluding land used for building or other non-
agricultural purposes........ which are comprised in the estates so notified
shan except in so far as any rights of any person other than the Girasdar
or the Barkhalidar may be established in and over the same ...... and shall
be deemed to be, with all rights in or over the same or appertaining thereto, C
the property of the State and all rights held by a Girasdar or a Barkhalidar
in such property shall be deemed to have been extinguished, (emphasis
supplied) and it shall be lawful for the Collector, subject to the general or
special orders of the Revenue Commissioner, to dispose of them as he
deems fit, subject always to the rights of way and or other rights of the
public or of individuals legally subsisting. Under Section 7, a Girasdar or D
Bar khalidar is entitled to compensation for the extinguishment of their
rights and the details thereof are not necessary for the purpose of this case.
At this juncture, it is relevant to note that Saurashtra Land Reforms Act,
1951 defines 'agriculture' by Section 2(2) which includes horticulture and
the raising of crops, fodder or garden produce and "agricultural land" E
means any land, including wells, which is used for the purpose of agricul-
ture and includes sites of farm buildings appurtenant to land used for
agricultural purposes and sites of dwelling houses and wades occupied by
agriculturists, agricultural labourers or artisans and land appurteMnt to
such dwelling houses. Under Section 2(15) "Girasdar" means any taluqadar,
F
bhagdar, bhayat, cadet or mulgirasia and includes any person whom the
Government may, by notification in the Official Gazette, declare to be a
Girasdar for the purpose of this Act. In the same Act, under Section 2(13)
"estate" means all land of whatever description or an undivided share
thereof held by a Girasdar and includes uncultivable waste, whether such
land is used for the purposes of agriculture or not and Section 2 (18) defines G
"land" which means any agricultural land, bid land or cultivable waste.
Section 2(7) defines "cadet" which means a brother or a son of a Ruler to
whom a grant of land was made by such Ruler after 14th day of August,
1947, and who is allowed to retain such grant by the Government or any
heir or successors of such person. Under Section 2(8) "Code" means the H
822 SUPREME COURT REPORTS [1994) SUPP. 1 S.C.R. •
A Bombay Land Revenue Code, 1879 for short "the Code" as adapted and
applied to the State. Under Section 4, all Girasdari lands are liable to
payment of land revenue. The Saurashtra Barkhali Abolition Ac:t, 1951
defines under Section 2(i) "Bharkhalidar" which means a person who holds
a tenure as Barkhalidar, Jiwaidar, Chakariyat, Kherati, or Dharmada and
ir.cludes any holder of an estate whomjhe Government may, by notification
B in the Official Gazette, declare to be a Barkhalidar for the purpose of this
Act. Section 2(iia) defines "estate" which includes a Jagir, inam or other
grant or interest or aggregate of interests of similar nature in land but shall
not include an occupancy, Section 5 of the Act abolishes Barkhali tenure ,
existing as on the date and Barkhali estate shall cease and be vested in the
C State free from all encumbrances, subject to the provisions of this Act. The
Act gives right to the Barkhalidar to make an application for P"rsonal
cultivation and the details etc. are not necessary for the purposes of these
appeals.

D As seen, consequent upon the abolition of the estate under section
3(1) of the A.ct by issuance of the notification and ensuring consequences
under Section 4, the Girasdar or Barkharidari tenures stood extinguished
and vested in the State. When questioned in Civil Application No. 689/65
in T.K.Gohi/and Ors. v. C.K Dave by a decision dated 14.8.69 J.B. Mehta,
J. held that· the.pro;,;sions ·of Se~tioi:ts 3 ·and 4 of the Act would be
E applicable only to uncUitivable waste lands which alone stood vested in tlie
State ~d the lands with Illiries and minerals could not be held .to be
uncuitivable:waste landS and did ·not vest ii:t the State. The said decision,·
was confirmed by the Division Bench ii:t L.P.A. No. 73170 dated March 15,
1971. Section 69 of the Code~ which was admittedly adapted to the
F Saurashtra region of the· Gujarat State, states that the right of the Govern-
ment to mines and mineral products in all unalienated land is and hereby
declared to be expressly reserved provided that nothing in this Section shall
be deemed to affect any subsisting rights of any occupant of such land in
respect of such mines or mineral products. Section 3(20) defines "alienated"
means 11 transfer in so far as the rights of the State Government on payment
G of rent or land revenue, wholly or partially to the ownership of any person.
Consequent upon this definition; the operation of Section 69 and the
interpretation made by the High Court, the mines and minerals in the
alienated lands stood excluded from the abolition and extinguishment of
the rights of Girasdars or Barkhalidars under Sections 3 and 4 of the Act.
H To obviate the interpretation and to be in conformity with the object and
• J.N. KHACHAR v. STATE OF GUJARAT[RAMASWAMY, J.] 823

purposes of the Ac~ initially the ordinance and later the Amendment Act · A
came to be made which was reserved for the consideration, received the
assent of the President on February 23, 1982 came into force with
retrospective effect from May 01, 1960 - the date on which the Gujarat
State was formed.

By clause (a) of s.2 of the Amendment Act the word "unalienated" B
was deleted from section 69 of the Code and clause (b) provides that the
proviso t9 Section 69 shall be and shall be deemed always to have been
deleted w.e.f. 1.5.1960. Under Section·3 thereof, Section 69 A was brought
on statute. Sub-section (1) and sub-section (4) are relevant for the purpose
of this case which read thus : - c
69.A(l) Notwithstanding anything contained in any custom, usage,
grant, sanad or order or agreement, or any law for the .time being
in force, or in any judgment, decree, or order of a court or of other
authority, with effect on and from the 1st May, 1960 all mines
)
whether being worked or not and minerals whether discovered or D
not and all quarries which are situaie within the limits of any land,
granted or recognised under any contract, grant or law for the time
being in force or decree of a court, shall vest "in and with all rights
.over the same or appurtenant ·thereto blithe property of the State
Government .and the.· State ·Government shall, subject to the E
provisions of the Mines .and Minerals (Regulation .and Develop-
ment) Ac~ 1957 have all powers necessary for the proper enjoy-
ment and disposal of such rights."

Sub-section 4 says that :
F
nAny occupant, whose rights to mines, minerals or quarries in anY
land, existing immediately before 1st May, 1960 have vested in the
State Government on that date under Sub-Section (1), shall be
entitled to compensation of an amount equivalent to the average
of the net annual income received by the occupant in respect of G
the mjnes and mineral products during the three years immediately
proceeding the date of vesting."

It is settled law that the concept 'estate' denotes that the person
holding the estate should be in direct relationship with the State paying
land revenue except what is remitted in whole or in part or exempted etc. H
824 SUPREME COURT REPORTS (1994) SUPP. 1 S.C.R.

A There may be variation in the local equation. The other sub-sections are
not relevant for disposal of these appeals. Hence omitted.

The first contention of the appellants is that, under Entry 54, of List
I of the Seventh Schedule to the Constitution, since Regulation of Mines
and Minerals Development Act, 1957 occupies the field ·of mines and
B minerals covered in Section 69A of the Amendment Act, it is void and is
ultra vires of the Constitution. We find no force in this contention. The
State Legislature under Entry 18 (land) and Entry 23 (Regulation of Mines
and mineral development) of part II of the State List of Seventh Schedule
and Entry 42 of List III of the Seventh Schedule {Acquisition of Property)
C under which the State Legislature claims to have made the Ame11dment
Act, we have to see whether it is well founded.

It is settled law of interpretation that entries in the Seventh Sr.hedule
are not powers but fields of legislation. The legislature derives its power
D from Article 246. and other related Articles of the Constitution. Therefore,
the power to make the Amendment Act is derived not from the respective
entries but under Article 246 of the Constitution. The language of the
respective entries should be given the widest scope of their meaning, fairly
capable to meet the machinery of the Govermnent settled by the Constitu-
tion. Each general word should extend to all ancillary or subsidiary matters
E which can fairly and reasonably be comprehended in it. When the vires of
an enactment is impugned, there is an initial presumption of its con-
stitutionality and if there is any difficulty in ascertaining the limits of the
legislative power, the difficulty must be resolved, as far as possible in favour
of the legislature putting the most liberal construction upon the legislative
F entry so that it may have the widest amplitude. Burden is on the appellants
to prove affirmatively of its invalidity. It must be remembered that we are
interpreting the Constitution and when the court is called upon to interpret
the Constitution, it must not be construed in any narrow or pedantic sense
and adopt such construction which must be beneficial to the amplitude of
legislative powers. The broad and liberal spirit should inspire those whose
G duty is to interpret the Constitution to find whether the impugned Act is
relatable to any entry in the relevant List.

in India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., [1990)
1 SCC 12, relied on by the appellants, a bench of seven judges held that
H "entries in the three lists of the Seventh Schedule to the Constitution, are
•
J.N. KHACHAR v. STATEOFGUJARAT[RAMASWAMY,l.J 825

legislative heads or fields of legislation. These demarcate the area over A
which appropriate legislature can operate. It is well settled that widest
amplitude should be given to the language of these entries but some of
these entries in different lists or in the same list may overlap and sometimes
may also appear to be in direct conflict with each other. Then, it is the duty
of the court to find out its true intent and purpose and to examine a
B
particular legislation in its pith and substance to determine whether it fits
in one or the other of the Lists. The Lists are designed to define and delimit
the respective areas of respective competence of the Union and the States.
They neither impose any implied restriction on the legislative power con-
ferred by Article 246 of the Constitution, nor prescribe any duty to exercise
that legislative power in any particular manner. Hence, the language of the C
Entries should be given widest scope to fmd out which of the meaning is
fairly capable in the set up of the machinery of the government. Each
general word should be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be comprehended in it. In interpreting an
Entry, it would not be reasonable to impart any limitation by comparing or D
contrasting that Entry with any other one's in the same list.

It is in this background that one has to examine the present con-
troversy. It is seen that under Entry 18 of List II (State List) "land", that is
to say, right in or over the land ....... Entry 23 (Regulation of Mines and
Mineral Development) subject to the provision of List I in respect of E
regulation and development under the control of the Union Govt. So it
relates to regulation and development of mines and minerals. Entry 42 of
List III (Concurrent List) concerns Acquisition and Requisition of proper-
ty as amended by Section 26 of the Constituion (7th Amendment Act,
1956). These specify the field of legislation given to the Gujarat State F
Legislature Subject to Entry 54 of List I (Union List). It is seen that under
Entry 18 of the State List, land, i.e. rights in or over land which includes
acquisition of the property .. Entry 23 of List II which is subject to Entry 42
of List III (Concurrent List), provides field of legislation by the Stale
legislature. Article 246(3) of the Constitution gives exclusive power to make
l~w for the State of Gujarat or any part thereof. It is seen that Amendrc.oni G
Act had received the assent of the President.
...
Lap.d in Entry 18 is not restricted to agricultural land alone but
includes non-agricultural land etc. The words 'rights in' or 'over land'
confer very wide po)"er which are not limited by rights between the. land H
826 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

A holders inter se or the land holder or the State or the landholder or the
tenant. It is seen that restriction or extinction of existing interest in the land
includes provision for abolition and extinguishment of the 1ights in or over
. the land. Resumption of the estate is one of the objectives of the govern-
ment and the Act seeks to serve that object. Resumption includes all
ancillary provisions, cancellation or extinguishment of any existing grant by
B the ex-Rules or lease by grant with retrospective effect as was upheld in
Thakur Raghubir Singh & Ors. etc. v. The State of Ajmer (now Rajasthan)
alld Ors., (1959] SCR Supp. 1, 478.

In Black's Law Dictionary (Sixth Edition) at page 877, land is defined
C to mean- "in the most general sense, comprehends any ground, soil or earth
whatsoever, including ...... rocks. "Land" may include any estate or ;interest
in lands, either legal or equitable, as well as easements and incorporeal
hereditaments. Technically, land signifies everything comprehending all
things of a permanent nature, and even of an unsubstantial provid,od they
D be permanent. Ordinarily, the term is used as descriptive of the subject of
ownership and not the ownership. Land is the material of the earth,
whatever may be the ingredients of which it is composed, weather, soil, rock,
or other substance, and includes free or occupied space for an indefinite
distance upwards as well as downwards, subject to limitations upon the use
of airspace imposed, and rights in the use of airspace granted by law.
E
The Law Lexicon (Reprint edn. 1987) by Ramanatha Iyer p. 701, the
word "land" in the ordinary legal sense comprehends everything of a fixed
or permanent nature and, therefore, gr6wing trees, land includes the benefit
arise out of the land and things attached to the earth ~r permanently means
F everything attached to the earth and also the share in or charges on, the
revenue or rent of villages or other defined portions of territory .. Land
includes the bed of the sea below high water mark ..... Land shall ext.end to
messuages, and all other hereditaments, whether corporal or incorporeal
and whether. freehold or of any other tenure and to money to be paid out
in the purchase of land. Land in its widest signification would therefore
G include not only the surface of !he ground, cultivable, uncultivable or waste
lands but also everything on or under it. In Jagannath Singh v. State of UP.,
AIR (1960) SC 1563 p. 1568, this Court held that the word "land" is wide
enough to include all lands whether agricultural or non-agricultural land.
In State of UP. v. Sarju Devi, [1978] 1 SCR 18, this court held that the
H definition of the land in Section 3 (14) shows that it is not necessary for
-
+ J.N.KHACHARv.STATEOFGUJARAT(RAMASWAMY,J.] 827

the land to fall within its purview that it must be actually under cultivation A
or occupied for purposes connected with agriculture. The requirement is
amply satisfied even if the land is either held or occupied for the purposes
connected with agriculture. The word "held" only means possession of legal
title and does not require actual connected occupation. In State of Gujarat
v. Kam/a Ben Jivan Bha~ (1979) Supp. 2 SCC 440, this Court held that
B
actual cultivation is not necessary to constitute an estate and the right to
collect grass is a right annexed to land which was held to be an estate and
abolition of the right to pay annual amount was an agrarian reform. In Sri
Ram Ram Narain Medhi v. State of Bombay, (1959) Supp. 1 SCR 489, this
Court held that the Code is a law relating to land tenures. The right in
relation to an estate .used in Article 31A has been noted in a very com- c
prehensive sense. In Digvijay Singh Hamirsinhji v. Manji Savda, (1969) 1
SCR 405, this Court interpreting Section 18 of Saurashtra Land Re-forms
Act, 1951 held that the Girasdar to whom the ruler made the grant was
bound by the provisions of that Act and that he was not entitled to have
}
his tenant evicte,d except in accordance with the provisions of the Act.
D
The aforestated respective Acts clearly deal with the rights of Giras-
dars or Barkhalidars of their occupation and enjoyment of the land as
land-holder in terms of the grant made by the erstwhile Rulers. Section 3
and 4 of the Act abolish the estate under the Act and extinguish the right,
title and interest in the lands held by them. But by interpretation of the E
Act and the Code, the alienated land with mines and minerals were held
to be outside the purview of the Act. To get over the interpretation, the
order or the decree or the judgment, of any court, applying non-obstante
clause, a magic vand to bring the law in conformity with the l<;gislative
policy, Section 69A was enacted to extinguish t!.e right to mine or mineral F
or quarry in the lands held by any person including Girasdars or
Barkhalidars and reserved them for the government under Section 69 of
the Code. Omitting the word 'alienated' from Section 69, it seeks to bring
the mines, minerals or quarries situated in any land by Girasdar or
Barkhalidar etc. within the ambit of reservation under Section 69 read with
Section 69A(l) of the Act. Thereby it is clear that, in pith and substance, G
the predominent purpose of the Amendment Act is to extinguish the
. .... pre-existing rights, title and interests in the land which includes the mines,
minerals and quarries held by Girasdars or Barkhalidars extingushed their
rights and reserved and vested them in the State of Gujarat for public use.
It would thereby fall within Entry 18 and 23 of List II (State List) read with H
828 SUPREME COURT REPORTS [1994) SUPP. 1 s.c.~.

A Entry 42 of List III (Concurrent List).

In India Cement case, the question was whether levy of cess under
Section 115 of Madras Panchayat Act on royalty is additional land revenue
or additional royalty and whether the levy is constitutionally valid. In
considering that question, a bench of seven judges, per majority, held that
B Section 9(3) of the Mines and Mineral (Development and Regulation) Act,
1957 imposes a liability to pay royalty and prohibits the State not to
enhance m!Jre than once during a period of four year; imposition of the
cess was considered to be a tax on royalty and, therefore, it is a tax on
mineral rights. Accordingly, the cess on royalty was held to be outside the
C legislative competence. It is seen that Section 69A itself envisages acquisi·
tion of the right in mines or minerals or vesting thereof, subject to the
Central Act. Therefore, the ratio in India Cement case is inapplicable.
Equally were the cases in Orissa Cement Ltd & Ors. v. State of Orissa &
Ors. etc., [1991) 2 SCC 103 and Federation of Minining Association of
D Rajasthan v. State of Rajasthan & Anr., [1992) Supp. 2 SCC 239. Accord·
ingly, it must be held that the Amendment Act in pith and substance is
predominently for abolition and extinguishment of the right in lands com·
prising of mines, minerals and quarries held by Girasdar, Barkhildar or any
person under a grant or agreement or by operation of a decree, order or
judgment of a court and vest them in the State by their acquisition. So the
E Amendment Act gets the protection of Art. 31A. Thus it is not ultra vires
of the power of the State Legislature.

The next contention is that the Code confines its operation to
revenue administration and recovery of land revenue and matters con·
F nrected therewith, as applicable to the entire State. Taluqadar Abolition
Act, etc. were made applicable to the State of Saurashtra as special laws
i.e. (a) The Saurashtra Gharkhed Tenancy Settlement and Agricultural
Land Ordinance, 1949; (b) The Saurashtra Land Reforms Act, 1951; (c)
The Saurashtra Barkhali Abolition Act, 1951; and (d) The Act.

G The Amendment Act though seeks to cover mines, minerals and
quarries reserved under Section 69 of the Code from lands engrafted in
Section 69(A) of the Code, without suitably amending the relevant
provisions in the afore-stated four Acts, Section 69-A does not affect the
rights of the appellants and the like. In other words, it is urged that these
H special laws prevail over the Code. The Amendment Act, thereby, is ultra
J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY, l.] 829

vires and does not affect the rights of the appellants to hold mines, minerals A
and quarries situated in their holdings. The question, therefore, is whether
Amendment Act, without suitable amendment to the Acts, attracts the
mines, minerals and quarries situated in the lands held by Girasdar or
Barkhalidar. It is true that the Code has been adapted to .the entire State
of Gujarat including Saurashtra region. Section 69 of the Code reserved B
the rights of the government in mines, minerals and quarries from un-
alienated lands. The pre-existing proviso saved subsisting mines and
minerals rights of any occupant of such land and therely saved the right to
mines etc. in alienated lands held under the grant etc. By operation of the
Amendment Act, by delection of the word 'unalienated' and the proviso
with retrospective effect from May 1, 1960 applying non-obstante clause. C
Section 69A(l) of the Code, rendered any grant or an agreement or a
judgment, decree or order of a Court inoperative from May 1, 1960 and
all mines whether being worked or not, all minerals whether discovered or
not and all quarries situated in any land, subject to the saving, shall vest in
,• the State. Their regulation and development is subject to Mines and D
Minerals (Regulation and Development) Act of 1957.

The aforementioned respective enactments undoubtedly dealt with
the abolition and extinguishment of pre-existing right, title and interest in
the lands had under a grant etc. by Girasdari or Barkhalidari. In particular,
the Act abolished the estates, extinguished the pre-existing rights, title and E
interest of landholders and conferred ryatwari settlement on the starvation
ryots, the tillers of the soil with permanent occupancy rights. In other
words, they are part of agrarian reforms and saved certain rights of
Girsdars and Barkhalidars. The amended Section 69 and 69A(l) of the
Code determined the existing rights and reserved them in favour of the F
State of the rights in mines, minerals and quarries in the lands whether
alienated to unalienated whether held by Girasdar or Barkhalidar or any
other. Section 69A(l), as seen earlier, brought the lands covered under a
grant or an agreement or a judgment, decree or order of any court
interpreted in that behalf within Section 69 of the Act. Thereby all mines, G
minerals or quarries situated in any land, be it alienated or unalienated,
held by any person including Girasdar or Barkhildar are now governed )Jy
Sections 69 and 69A of the Code. The contention, therefore, that without
amendment to the afore mentioned four Acts the amendment becomes
inoperative is devoid of substance. The analogy. of special law prevails over
Amendment Act and the Code, a general law," renders little assistance to H
830 SUPREME COURT REPORTS [1994] SUPP.1 S.C.R.

A the appeallants.

The third contention that limited retrospective operation of Sections
69 and· 69A with effect from May 1, 1960 is illegal and ultra vires, lacks
force.· Formation of the State of Gujarat became effective from May 1,
B 1960. In Tata Iron and Steel Co. v. Sta(e of Bihar, [1958] SCR 335 and Rama
Krishna v. State of Bihar, [1964] 1 SCR 897, this Court held that the power
to make law on an Entry in the Seventh Schedule of the Constitution could
be exercised both prospectively and retrospectively unless there is an
express constitutional prohibition to make an enactment in th.at behalf. It
is also equally settled law that 'the power to make law prospectively would
C include the power to make the law retrospectively. The interpretation in
Chapter VI at pp.293-94 in the Principles of Statutory Interpretation by
Justice G.P. Singh is of no avail in the factual backdrop. It was stated
therein that every statute is prima facie prospective unless it is expressly or
by necessary implication made to have retrospective operation. It is true
D that generally law intended that vested rights or imposition of new burden
cannot be deemed to have been made with retrospective effect. Equally is
the settled law that the provisions which touched the right in existence at
the passing of the statute are not to be applied retrospectively in the
absence of an express enactment or by necessary intendment. It is equally
settled law tha< every statute which takes away or impairs vested rights
E acquired under existing laws or creates a new obligation or imposes a new
duty or burden or touches a new right in respect of transaction already
.passed must normally be presumed, unless expressed otherwise, to be
intended not to have retrospective effect. In the light of the language in s.2
of the Amendment Act, the express retrospective operation given to the '
F Amendment Act, with effect from May 1, 1960 retrospectively effected
vested rights of the Girasdar or Barkhalidars created by a grant or agree-
ment etc. or flown from a judgment, order or a decree of any court and
stood extinguished with effect from May 1, 1960. It is true that a limited
retrospective effect was given to the Amendment Act as the State was
formed and became operative from May 1, 1960, the date on which the
G State was formed. So, any grant or agreement etc. though otherwise was
valid with effect from any of the anterior date, would cease and lose their
validity from May 1, 1960. Any other earlier date would have rendered the
Amendment Act ultra vires. Only to obviate such an interpretation, con-
sistent with the date of existence of the State legislature, i.e. the date on
H which the State legislature became competent to enact the Code, the
,. J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY, J.] 831

Amendment Act was given retrospective operations. Accordingly, it must A
be held that the retrospective operation cannot be faulted nor would it be
declared ultra vires.

The prinnacle contention is that s. 69A of the Code though was
included in the Nineth Schedule, is not a law relating to agrarian refo<ms B
and, therefore, it does not get the protection of Article 31A. it is a law
relating to acquisition of mines and min<;rals belonging to the appellants
1
and others which had come into force from December 8, 1982 and is not
a law made under Article 39 (b) and (c) and does not get the protection
under Article 31C. Even otherwise since it was a post Kesavananda Bharti's
case. Section 69A should stand the test of basic structure of the Constitu- C
tion. Though the right to property lost its protective armour as fundamental
right after Constitution's 44th Amendment Act, 1978, it was resurrected
under Article 300A as constitutional right. Th~ law must meet the test of
Articles 14 and 21 of the Constitution also. Since it was given retrospective
operation from May 1, 1960, the compensation provided under sub-section D •
(4) of Section 69A of the Code is void as compensation was not just
equivalent to the property acquired or full indemnification to the owner of
the mines and minerals expropriated. It must not be arbitrary and unjust.
The quantification or principles in Section 69A(l) & ( 4) therein are illusory
offending Articles 14 and 21 of the Constitution. Section 7 of the Act and
other related statutes provide compensation different from the one E
provided under sub-section (4) of Section 69A and that it is discriminatory
and bears no reasonable relation to the object of acquisition and that,
therefore, it is unjust, unfair violating Article 14 and unfair procedure
offends Article 21 of the Constitution. The acquisition under Section
69A(l) is in violation of Article 300A as it is not for public purpose and F
no market value is being paid and so it is void. Sri Dave, .learned counsel
for the State refuted the contentious contentions in chorus of M/s. Zaveri,
Ganguli, T.U. Mehta and D.U. Shah, the learned counsel represented the
appellants.

The Amendment Act received its protective canopy of Ninth G
Schedule in Entry 219 thereof through the Constitution's 66th Amendment
.. Act, 1990, with effect from June 7, 1990. While dealing with the first
contention, we have held that the Amendment Act is part of the scheme
of agrarian reform envisaged under the Act falling within Entry 18 and 23
of List II (State List) and Entry 42 of Concurrent List of the Seventh H
832 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A Schedule to the Constitution. So it is saved by Article 31A of the Constitu-
tion.

This Court in State of West Bengal v. Mrs. Bela Banerjee & Ors. [1954]
SCR 558, State of West Bengal v. Subodh Gopal Bose & Ors., [1954] SCR
B 587, interpreted the word 'compensation' in clause (2) of Article 31. as just
equivalent or indemnification for the property expropriated which led to
the Constitution 4th Amendment Act, 1955 suitably amending Artie.le 31(2)
that no law providing for compulsory acquisition or requisition 'shall be
called in question in any court on the ground of compensation provided by
that law is not adequate." Its effect was considered in P. Vajravelu Mudaliar
C v. Sp/. Deputy Collector, Madras & Ors., (1965) 1 SCR 614 and th1e Court
reiterated the interpretation put up in Bela Banerjee's case. This court also,
on that score, struck down the Metal Corporation (Acquisition of Under-
taking) Act, 1965 in Union of India v. The Metal Corporation of India Ltd.
& Anr., [1967] 1 SCR 255, for violating Article 31(2) read with Article 19(1)
D (!). These two decisions were reconsidered by a Constitution bench in State
of Gujarat v. Shanti Lal Mangat Das, (1969] 3 SCR 341 and overruled the
metal corporation's case and upheld and accepted the principles laid down
in the 4th Amendment Act. Thereafter, in R.C. Cooper v. Union of India,
known as Bank Nationalisation case [1970] 3 SCR 530, per majority this
Court overruled Mangaldas and held that even after the 4th Amendment,
E compensation meant "the equivalent in terms of money of the property
compulsorily acquired" according to "relevant principles which principles
must be appropriate to the determination of compensation under par-
ticular class of property sought to be acquired.' The Partilament again
amended by Constitution's 25th Amendment Act, 1971, wherein the word
F 'compensation" was substituted with the word "amount". This had become
the subject of consideration in Kesavanand Bhani v. State of Kera/a, [1973]
Suppl. SCR 1, known as Fundamental Rights case Full Court of 13 Judges
per majority of 7 Judges, held, after considering the validity of 25th
Amendment Act, that substituting the wurd 'amount' for 'compensation' in
Article 31(2) of the Constitution, the quantum of amount, if directly fixed
G by law, or the principles for its quantification are matters for legislative
judgment. The principles made or laid down are general guiding rules
applicable to all persons or transactions covered thereby. In fixing the
amount the court will not sit over the general nature of the legislative •
purpose. The principle may be specified in fixing the amount which may
H include consideration of social justice as against the equivalent in value of
,.
J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY,J.] 833

the property acquired. Consideration of social justice will include the A
relevant directive principles particularly in Articles 39 {b) and (c). These
principles are to subserve the common good and to prevent common
detriment. The question of adequacy had been excluded by Constitution
4th Amendment Act obviating the necessity to provide a standard or rule
to measure adequacy with reference to fixing the amount. The ground of B
adequacy of the amount as to how the amount has to be given otherwise
in cash is not amenable to judicial review. The quantum cannot be a matter
for judicial review but the principles to determine the compensation must
be relevant to the consideration and must not be illusory. The fundamental
rights are subject to reasonable restrictions and rational discrimination and
that, therefore, are amendable under Article 368 and they are not basic c
features or basic structure of the Constitution. The agrarian reforms
.covered under Art. 31A brought by Constitution First Amendment Act and
saved by Art. 31B as well as Art. 31C brought by Constitution 25th
Amendment Act were upheld. Khanna, J. who constituted the majority
• held that right to property did not pertain to the basic structure of D
Constitution and it was subordinate to the common good as explained in
Indira Gandhi's. case. According to Hidayatullah, J. in his concurrent
judgment in Golak Nath v. State of Punjab, [1967) SCR 177 and reiterated
in his "Right to Property and the Indian Constitution", the right to property
is an acquired right and it is the weakest right fit to be placed along with
commerce clauses. The Constitution 42nd Amendment Act, 1976 had given E
primacy to law made to implement any or all directive principles and
provided protective umbrella under Article 31C and placed in Ninth
Schedule enlarging its width that "a law made to give effect to directive
'.
principles does not become void violating fundamental rights and shall not
be questioned in a court of law. In Minerva Mills Ltd. v. Union of India, F
[1981) 1 SCR 36 per majority it was held that any law made by the
Parliament or the Legislature, the latter received the assent of the Presi-
dent, other than the one to give effect to the principles of Article 39(b)
and (c) violates Art. 14 of the Constitution. Accordingly clause 4 of Art.
368 was declared ultra vires.
G
In State of Maharashtra v. Madhavrao Damodar Patilchand & Ors.,
.. [1968) 3 SCR 712 a Bench of seven judges held that the Maharashtra
Agricultural Lands (Ceiling on Holdings) Act, 1961 does not violate Arts.
14, 19 and 31 of the Constitution as it had received protection under Ari.
31A by being included in the Ninth Schedule. In Waman Rao v. Union of H
v

834 SUPREME COURT REPORTS (1994) SUPP.1 S.C.R.

A India, [ 1981] 2 SCR 36, this court upheld the validity of the Bombay
Agricultural Lands (Ceiling on Holdings) Act, 1961 holding that it does
not violate Art. 14 of the constitution though any post Kesavananda
Bharti's Act is liable to attack on the ground of violating basic features or
structure of the Constitution. Right to property was held to be not a basic
feature. Sanjeev Coke Manufacturing Co. v. Bharat Cooking Coal Ltd.,
B
(1983} 1 SCR 1000, had upheld the dissenting view of Bhagwati, J in
Minerva Mil/s's case and it was held that nationalisation of coal industries
does not violate Article 14. In State of Kamataka v. Ranganatha
Reddy,(1978} 1 SCR 641, a Bench of seven judges per majority upheld the
constitutional validity of the nationalisation of the contract carriages and
C held that it did not violate Article 14. In State of Maharashtra v. Basantibai
Mohan/a/ Khetan, (1986} 2 SCC 516, this court held that the Maharashtra
Housing and Area Development Act, 1976, even if it was assumed to be
post 25th Amendment Act, did not violate Articles 14, 19 and 31. In
Minerva Mills v. Union of India, (second Minerva Mill's case) [1986] 4 SCC
D 222, a Bench of two judges held that the Sick Industries Nationalisation
Act did not violate the basic structure nor did it violate Art: 14 of the
Constitution. In Tinsukhia Electric Supply Co. Ltd. v. State of Assam, (1989]
3 SCC 709, another constitution bench upheld the acquisition of Electrical
Undertakings holding that it did not offend Art. 14 of the Constitution. In
Assam Sillianite Ltd. v. Union of India, (1992] Suppl. 1 SCC 692 and in
E Union of India v. Hari Krishan Khos/a (dead) by Lrs., [1993] Suppl. 2 SCC
149, benchu of two and three judges respectively held that s.8(3)(a) of the
Requisitioning and Acquisition of Immovable Property Act, 1952 was not
violative of Art. 14 nor damage nor destroy the basic structure of the
Constitution.
F
In Smt. Indira Gandhi v. Shri Raj Narain, (1976] 2 SCR 347, Mathew
J. held that to be a basic structure it must be a terrestrial concept having
its habitate within the four corners of the Constitution and Art. 14 is not
a basic structure. After the deletion of the right to property omitting of
Arts. 19(1)(f) and 31 of the Constitution by the Constitution 44th Amend-
G ment Act, the right to property, which was hitherto a fundamental right
was dethroned from Part III and became a constitutional right under Art.
300A resaucitating only Art. 31(1) of the Constitution as originally made.

The question, therefore, is whether right to property is a basic
H structure, after Constitution 44th Amendment Act, 1978. Indian society is
J.N. KHACHARv. STATEOFGUJARAT[RAMASWAMY,J.] 835

predominantly agrarian and about 3/4th of its population is living in rural A
areas on agriculture and other ancillary occupations. In pre-independent
period, the land tenures were in vogue on Zamindari, Jagirdari,
"faluqadari, inamdari or settlement systems in diverse forms. The tenure
and holding by the tiller of the soil was insecure and was exploited by
intermediaries. On January 26, 1950, the Independence Day, the Congress B
Party affirmed in its pledge that the inalienable right of the people is "to
have freedom and to enjoy the fruits of their toil and have the necessities
of life so that they may have full opportunity of growth". In 1931 in Karachi
Congress, Resolution on Fundamental Rights envisaged that "the organiza-
tion of economic life must conform to the principles of justice" emphasising
to reform "the system of land tenure and revenue and rent" ............ relief C
from agricultural indebtedness ....... ownership or control of land .......... .

The debates in the Constituent Assembly on the lines of Section 299
of the Government of India Act, 1935 and the resultant right to acquire
and, hold to the property in Article 19( 1) (f) and deprivation and acquisi- D
tion of the property under Article 31, as fundamental rights in Part III of
the Constitution, find their habitation like in every constitution of modern
democracies. Equally the debates in the Constituent Assembly and the
unanimous animation of the founding fathers was that the tiller of the soil
should be conferred with right to hold the property directly under the State
and to abolish the estates, elimination of the intermediaries and conferment E
of right, title and interest in the land in the estate on the cultivator. There
was, however, division in opinion on payment of compensation to the
deprived Zamindars etc. The Constitution assures to every citizen social
and economic justice apart from political justice, equality of status and of
opportunity and dignity of person as basic postulates for successfufworking
F
of political democracy. Establishment of economic and social democracy
and agrarian reform as its ingrained facet_ was the nation's chartered
mission for economic restructure of the social order. Land Reform laws
;. were made on its anvil to distribute surplus lands to the landless poor etc.

Whether right to property is the basic structure was pointedly G
projected for the first time assailing the imposition of ceiling on agricultural
holdings in Maharashtra Agricutural Lands (Ceiling on Holdings) Act,
1961 as amended up to 1976 in Waman Rao's case. Chandrachud. CJ.
speaking for the unanimous Constitution Bench, that decided first Minerva
Mills fase prior to Constitution 44th Amendment Act, 1978, considered H
836 SUPREME COURT REPORTS (1994) SUPP. 1 S.C.R.

A the constitutionality of the First Constitution Amendment Act, 1951 intro-
ducting Article 31-A and Article 31-B traced the history of land tenures,
the debates in the Constituent Assembly, need for the agrarian reforms and
stated that in our predominantly agricultural society, there is a strong
linkage between ownership of land and the person's status in the social
B system. Those without land suffer not only from an economic disadvantage,
but also a concomitant social disadvantage. In the very nature of things, it
is not possible to provide land to all landless persons but t!1at cannot
furnish an.alibi for not undertaking at all a programme for the redistribu-
tion of agricultural land. Agrarian reform therefore requires, inter alia, the
C reduction of the larger holdings and distribution of the excess land accord-
ing to social and economic considerations............ We embarked upon a
constitutional era holding forth the promise that we will secure to all
citizens justice, social, economic and political, equality of status and of
opportunity, and, last but not the least, dignity of fue individual. Between
D these promises and the ls! Amendment there is a discernible nexus, direct
and immediate. Indeed, if there is one place in an agriculture-dominated
society like ours where citizens can hope to have equal justice, it is on the
strip of land which they till and love, the land which assures to fuem dignity
of their person by providing to them a near decent means of livelihood ........
The First Amendment has thus made the constitutional ideal of equal
E justice a living trufu. It is like a mirror that reflects the ideals of the
Constitution; it is not the destroyer of its basic structure. The provisions
introduced by it and the-4th-Amendment for the extingui,hment or
modification of rights in lands held or let for purposes of agricul1ture or for
purposes ancillary thereto, strengthen rather than weaken the basic struc-
F ture of the Constitution ............. It seems to us ironical indeed that the laws
providing for agricultural ceilings should be stigmatized as destroying the
guarantee of equality when their true object and intendment was to remove
inequalities in the matter of agricultural holdings. The Constitution (First
Amendment) Act and the (4th Amendment) Act do not destroy or damage
G the basic structure of the Constitution. This Court in Kesavananda Bharti's
case held that Article 31-C brought by Constitution 25th Amendment Act,
1971 has to be given full play as it fulfills the basic purpose of restructuring
the economic order. Each word in Article 39 has a strategic role and the
whole Article has a social mission. It embraces the entire material resour-
H ces of t~_e community. Its task is to distribute such resources. Its goal is\so
J.N. KHACHAR v. STATE OFGUJARAT[RAMASWAMY,J.] 837

to undertake distribution as best to subserve the common good. It reor- A
ganizes, by such ·distribution, the ownership and control of material resour-
ces of the Community. Resources is a sweeping expression and covers not
only cash sources but even ability to borrow credit resources ........ In State
of Tamil Nadu v. L. Abu Kavu Ba( [1984) 1 SCC 515, another Constitution
Bench interpreting Article 39(b) and (c) (material resources) held that the B
concept is wide enough to cover not only natural or physical resources but
••
also movable or immovable properties such as the vehicles, tools, imple-
ments and the workshops, etc. The mere fact that the resources are
material will make no differences in the concept of the word 'resources'.
The word 'distribution' used in Article 39(b) must be broadly construed so C
that a court may give full and comprehensive effect to the statutory intent
contained in Article 39(b). It should not be construed in a purely literal
sense so as to mean only division of a particular kind or to particular
persons. The word 'distribution' will include various facets, aspects,
methods and terminology of a broad-based concept of distribution . .It does·
not merely mean that property of one should be taken over· and distributed D
to others like land reforms. It is. on!y'O'n;;'~f the modes of distribution but
not the only mode. Nationalisation of the transport as also the units, the
vehicles would be able to go to the farthest. ......... "as possible and provide
better and quicker and more efficacious facilities". Nationalisation of con-
tract carriages were thus upheld. E

In Sanjeev Coke Manufacturing Co.'s case, it was held that 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 F
public possessions. Everything of value or use in the material world is
material resources and the individual being a member of the community
his resources are part of those of the community to exclude ownership of
private resources from the coils of Article 39(b) is to cipherise its very
purpose of redistribution on the socialist way. 'Material resources of the
community' means all things which are capable of producing wealth for the G
community. There is no warrant for interpreting the expression in so
narrow a fashion and to confine it to public owned material resources, and
exclude private-owned material resources. The expression involves no
dichotomy. The words must be understood in the context of the Constitu-
tional goal of establishing a sovereign, socialist, secular, democratic H
838 SUPREME COURT REPORTS (1994] SUPP. l S.C.R.

A republic. Nationalisation of coking units were upheld.

In State of Kera/a v. The Gwalior Rayon Silk Manufacturing co: Ltd.
[1974] 1 SCR 671 and 690, 691-A, another Constitution Bench had held
that the concept of agrarian reform is a complex and dynamic one promot-
ing wider interests than conventional reorganisation of the land system or
B distribution of land. It is intended to realise the social function of the land.
In Gujarat Pottery Works Pvt. Ltd. v. B.P. Sood, [1967] 1 SCR 695 another
••
Constitution Bench held that in the interest of the national economy this
court considering modification, held that the State shall have full control
over the minerals and metal resources of the factory including the power
c to cancel or modify the terms and conditions of prospective licences or
mining lease. It was further held that they were not violative of Arts. 14,
19 and 31. Since they are saved by the Ninth Schedule, they are immuned
by operation of Art. 31. · · ·

D It is, therefore, clear and we so hold that the material resources of
community is a wide concept and must be broadly interpreted to bring
within its sweep all resources, natural or physical moveable or immovable,
corporeal or incorporeal, tangible or intangible properties etc. Private
resources or property .are part of material resources of the community. All
things that produce wealth for the community are material resources. The
E word "distribution" equally must be construed broadly to include not only
allotment of resources to public use but also dispensation of largess to the
poor to provide access to equal opportunity. In other words .it is a broad
·based concept and it should not be confined within narrow confines. Mines,
minerals and quarries embedded in the land are material resources of the
F community amenable to public use or for distribution.

Thus it is clear that right to property under Art. 300A is not a basic
feature or structure of the Constitution. It is only a constitutional right. The
Amendment Act having had the protective umbrella of Ninth Schedule
habitat under Art. 31B, its invalidity is immuned from attack by operation
G of Art. 31A. Even otherwise it would fall under Arts. 39(b) and (c) as
contended by the appellants. It is saved by Art. 31C. Though in the first
Minerva Mill's case, per majority, Article 14 was held to be a basic struc-
ture, the afore-referred and other preceding and subsequent to the first
Minerva Mill's case consistently held that Art. 14 is not a basic structure.
H ArticleA4 of the Constitution in the context of right to property is not a
'>
J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY, J.] 839

basic .feature or basic structure. The Constitution 66th Amendment Act, A
1990 bringing the Amendment Act 8/1982 under 9th Schedule to the
Constitution does not destroy the basic structure of the Constitution.

Even agreeing with the contention that after the Constitution Forty-
fourth Amendment Act, 1978, which had come into force from June 19,
1979, the right to property engrafted in Chapter IV, Part 17, namely Art.
B
300A that the appellants are entitled to its protection, whether Section 69A
is uncons(itutional? The heading "Right to Property" with marginal note
reads thus :

"Art. 300A : Persons not to be deprived of property, save by c
authority of law : - No person shall be deprived of his property
save by authority of law" which is restoration of Article 31(1) of
the Constitution.

In Subodh Gopal's case Patanjali Sastri, CJ, held that the word D
'deprived' in clause (1) of Art. 31 cannot be narrowly construed. No cut
and d_ry test can be formulated as to whether in a given case the owner is
deprived of his property within the meaning of Art. 31; each case must be
decided as it arises on its own facts. Broadly speaking it may be said that
an abridgement would be so substantial as to amount to a deprivation
within the meaning of Art. 31, if, in effect, if withheld the property from E
the posession and enjoyment by him or materially reduced its value. S.R.
Das, J, as he then was, held that Clauses (1) and (2) of Art. 31 dealt with
1•
the topic of 'eminent dom~in', the expressions itaken possession of or
'acquired' according to Clause (2) have the same meaning which the word
'deprived' used in clause (1). In other words, both the clauses are con- F
cerned with the deprivation of the property; taking possession of or ac-
quired, used in Clause (2) is referable to deprivation of the property in
Clause (1). Taking possession or acquisition should be in the connotation
of the acquisition or requisition of the property for public purpose.
Deprivation specifically referable to acquisition or requisition and not for
any and every kind of deprivation. In Dwarka Das Srinivas of Bombay v. G
Sholapur Spinning and Weaving Co. Ltd., (1954] SCR 674, Mahajan, J., as
).
he then was, similarly held that the word 'deprived' in clause (1) of Art. 31
and acquisition and taking possession in clause (2) have the same meaning
delimting the field of eminent domain, namely, compulsory acquisition of
the property and given protection to private owners against the State H
840 SUPREME COURT REPORTS [1994] SUPP. I S.C.R.

A action. S .R. Das, J. reiterated his view laid in Subodh Gupal's case. Vivian
Bose, J. held that the word 'taken possession or or 'acquired' in Art. 31(2)
have to be read along with the word 'deprived' in clause (1)1. Taking
possession or acquisition amounts to deprivation within the meaning of
clause (1). No hard and fast rule can be laid down. Each case must depend
on its own facts. The word "law" used in Art. 300A must be an Act of
B Parliament or of State Legislature, a rule or statutory order having force
of law. The deprivation of the property shall be only by authority of law,
be it an Act of Parliament or State Legislature, but not by executive fiat or
an order. Deprivation of property is by acquisition or requisition or taking
possession of for a public purpose.
c
It is true as contended by Sri Javery that clause (2) of Art. 31 was
· not suitably incorporated in Art. 300A but the obligation to pay compen-
sation to the deprived owner of his property was enjoined as an inherent
incident of acquisition uoder law is equally untenable for the following
D reasons. Ramanatha Aiyar's 'The Law Lexicon' Reprint Edition 1987, p.
385, defined 'eminent demain' thus : "The right of the State or the sovereign
to its or his own property is absolute while that of the subject or citizen to
his property is only paramount. The citizen holds his property subject
always to the right of the soverign to take it for a public purpose. This right
is called "eminent domain". At p. 386 it was further stated that the sovereign
E power vested in the State to take private property for the public use,
providing first a just compensation therefore. A superior right to apply
private property to public use. A superior right inherent in society; and
exercised by the sovereign power, or upon delegation from it, whereby the
subject matter of rights of property may be taken from the ·owner and
F appropriated for the general welfare. The right belonging to the society or
. to the sovereign, of disposing in cases of necessity, and for the public safety,
of all the wealth contained in the state is called eminent domain. The right
of every government to appropriate, otherwise than by taxation and its
police authority, private property for public use. The ultimate right of
sovereign power to appropriate not only the public property but the private
G property of all citizens within the territorial sovereignty, to public purpose.
Eminent domain is in the nature of a compulsory purchase of the property
of the citizen for the purpose of applying to the public use." In 'Black's
Law Dictionary' 6th edition, at p. 523 'eminent domain' is defined as 'the
power to take private property for public use by the state, municipalities
H and private persons or corporations authoritised to exercise functions of
)>
J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY,J.j 841

public character. in United States the power of eminent domain is founded A
in both the Federal (Fifth Amendment) and State Constitutions. The
Constitution gives the power to take for public purpose and prohibits the
exercise of the power of eminent domain without just compensation to the
owners of the property which is taken. The process of exercising the power
of eminent domain is commonly referred to as 'condemnation' or
B
'expropriation'.

The right of eminent domain is the right of the sovereign State,
through its regular agencies, to reasert, either temporarily or permanently,
its dominion over any portion of the soil of the State including private
property without its owner's consent on account of public exigency and for c
the public good. Eminent domain is the highest and most exact idea of
property remaining in the government, or in the aggregate body of the
people in their sovereign capacity. It gives the right to resume possession
of the property in the manner directed by the Constitution and the laws of
the State, whenever the public interest requires it. The term 'expropriation'
D
is practically synonymous with the term "eminent domain".

This Court in Chiranjit Lal Chowdhun" v. Union of India, [1950] SCR
869, held that eminent domain is a right inherent in every sovereign to take
and appropriate private property belonging to individual citizens for public
use. The limitation imposed upon acquisition or taking possession of E
private property which is implied in the clause (2) of Art. 31 is that such
taking must be for public purpose. The other condition is that no property
can be taken, unless the law which authorises such appropriation contains
a provision for payment of compensation in the manner as laid down in
the clause. In State of Bihar v. Kameshwar Singh, [1952] SCR 869, the F
'eminent domain' was held to be a right inherent in every sovereign to take
and appropriate private property belonging to individual citizens for public
use without owner's consent. The limitation imposed upon acquisition or
taking possession of private property which is implied in the clause (2) of
Art. 31 is that such taking must be for public purpose. The other condition
is that no property can be taken, unless the law which authorises such G
appropriation contains a provision for payment of compensation in the
;. manner laid down in the clause. Mahajan, J., as he then was, quoting from
Thayer's cases on Constitutional Law stated that "Shorn of all its incidents,
the simple definition of the power to acquire compulsorily or of the term
'eminent domain' is the power of the sovereign to take property for public H
842 SUPREME COURT REPORTS (1994) SUPP. 1 S.C.R. <( . .

A use without the owner's consent. The meaning of the power in its ir-
reducible term is, (a) power to take, (b) without the owner's consent, (c)
for the public use. The concept of the public use has been inextricably
related to an appropriate exercise of the power and is considered essential
in any statement of its meaning. Payment of compensation, though not an
essential ingredient of the connotation of the term, is an essential element
B of the valid exercise of such power.'

In Bisambhar Dayal Chandra Mohan v. State of U.P., [1982) 1 SCC
39 at p.66 paragraph 41, this Court had held that the State Govt. cannot
while taking recourse to the executive power of the State under Art. 162,
C deprive a person of his property. Such power can be exercised. only by
authority of law and not by a mere executive fiat or order. It is, therefore,
necessarily subject to Art. 300A. Eminent domain, therefore, is a right
inherent in every sovereign State to expropriate private property for public
purpose without its owner's consent which inheres in Art. 300A and it
D would be exercised by the authority of law and not by executive fiat or
order. +.
The question then is what is the meaning of the word 'property' used
in Art. 300A and whether it is amenable to eminent domain. At the cost
of repetition, we reiterate that the Constitution assures to secure to all its
E citizens economic and social justice and of equality of status and of
opportunity and the dignity of the individual. Article 51A{h) & (j) enjoins
on him, a fundamental duty, to develop scientific temper, humanism and
the spirit of inquiry and reform. Every citizen shall strive towards excel-
lence in all spheres of individual and collective activity so that the nation
F constantly rises to higher levels of endeavour and achievement.

In Waman Rao's case this court held that 'there is a strong linkage
bet.ween owner.ship of land and person's status in social system''. Private
ownership entails political and legal power. Control over property amounts
to control over people and their lives. Dominion over things is an imperium
G over fellow human beings. Property, thorefore, accords status. Due to its
lack man suffers from economic disadvantages and disabilities to gain
social and economic inequality leading to his servitude. Providing facilities
and opportunities to hold property furthers the basic structure of
egalitarian social order guaranteeing economic and social equality. In other
H words, it removes disabilities and inequalities, accords status, social and
• J.N.KHACHARv.STATEOFGUJARAT[RAMASWAMY,J.J 843

economic and dignity of person. A
Quoting Prof. Ginsberg. Mathew J, in Kesavananda Bharati's case
held that :-

"It is necessary to distinguish at least three forms of private proper-
ty: (i) property in durable and non-durable consumer's good; (ii) B
• property in the means of production worked by their owners; and
(iii) property in the means of production not worked or directly
managed by their owners, especially the accumulation of masses
of property of this kind in the hands of a relatively narrow class.
While the first two forms of property can be justified as necessary
conditions of a free and purposeful life, the third cannot. For this
c
type of property gives power not only over things, but through
things over persons. It is open to the charge made by socialists
again and again that any form of property which gives man power

... over man is not an instrument of freedom but of servitude 11 •

Justice K.K. Mathew in his 'Right to Property', Dr. Rajendra Prasad
D

Memorial Lectures (second series) delivered on December 9, 1975 [Jour-
nal of Constitutional & Parliamentary Studies, Vol. 10, 1976. p.l] stated
that democracy is not a mere mechanism of choosing and running the Govt.
The egalitarian principle of democracy requires not only one man one vote
but also the equal effective right of each man to live a full human life.
E
Democracy must, therefore, be seen as a whole complex of relations
between individuals. An individual to live his secular life, as he may wish,
would owe duties towards society and fellow citizens. Each must have an
opportunity to prove, exert, develop and enjoy his human faculties. There-
fore, each must allow others to have equal effective access to opportunity F
to develop and lead a full human life. Lack of access to opportunity to
exercise his capacities as means of producing utilities is an impediment, as
it must be described as lack of access to man's liberty. If we take labour
in its broader sense of human energy, it is property. This theory of property
assumes importance in a democratic society.
G
When we consider right to life to be meanigful deprivation of proper-
ty needs to be considered from broad constitutional spectrum. Property in
;I.
a comprehensive term is an essential guarantee to lead full life with human
dignity, for, in order that a man may be able to develop himself in a human
fashion with full blossom, he needs a certain fre_edom and a certain H
844 SUPREME COURT REPORTS [1994] SUPP.1 S.C.R.

A security. The economic and social justice, equality of status and dignity of
person are assured to him only through property. Roscoe Pound has
argued that a system of individual property on the whole conduces to
maintaining and furthering of civilisation. Sir Henry Maine wrote that .
nobody is at liberty to attach (amass) several property and to say at the
same time he values civilization. The history of the two cannot be disen-
B tangled. (See Village Community, p.230). Granting facilities and oppor-
tunites to hold the property furthers the basic structures of egalitarian
social order guaranteeing equality and it would remove disabilities and
inequalities and accords status and dignity of person. The term 'property'
in Art. 300A receives its true colour and reflectrion from the context in
C which State's power of eminent domain or police power is invoked and
effectuated.

Property in legal sense means an aggregate of rights which are
guaranteed and protected by law. it extends to every species of valuable
D right and interest, more particularly, ownership and exclusive right to a
thing, the right to dispose of the thing in every legal way, to possess it, to
use it and to exclude every one else from interfering with it. The dominion
•
or indefinite right of use or disposition which one may lawfully exercise
over particular things or subjects is called property. The exclusive right of
E possessing, enjoying, and disposing of a thing is property in legal
parameters. Therefore, the word 'property' connotes everything which is
subject of ownership, corporeal or incorporeal, tangible or intangible,
visible or invisible, real or personal; everything that has an exchangeable
value or which goes to make up wealth or estate or status. Property,
therefore, within the constitutional protection, denotes group of rights
F inhering citizen's relation to physical thing, as right to possess, use and
dispose of it in accordance with law. In Ramanatha Aiyar's The Law
Lexicon, Reprint Ed. 1987 at p. 1031 it is stated that the property is the
most comprehensive of all terms which can be used, inasmuch as it is
indicative and descriptive of every possible interest which the party can
G have. The term property has a most extensive signification, and, according
to its legal definition, consists in free use, enjoyment, and disposition by a
person of all his acquisitions, without any control or diminution, save only
by the laws of the land. in Dwarkadas Srinivas's case this court gave
extended meaning to the word property. Mines, minerals and quarries are
H property attracting Article 300A.
'·'
tI'
J.N.KHACHAR v. STATEOFGUJARAT[RAMASWAMY,J.) 845

Hidayatullah, Chief Justice, in his "Right to Property and the Indian A
C01;stitution ·~ Tagore Law Lectures reiterated as to what he had laid the
law in Golaknath's case that right to property, quoting Grotius, who had
treated the right as an acquired right (ius quaesitum) and ownership
(dominium) as either serving individual interests (vulgare) or for the public
good (eminens). According to him, the acquired right had to give way to
B
eminent domain (ex vi super-eminentis dominiji), but there must be public
interest (Public utilities) and it possible compensation. In the social con-
tract theory also the contract included protection of property with recog-
nition of the power of the ruler to act in the public interest and emergency.
Our constitutional theory treated property rights as invoilable except
through law for public good and ·on payment of compensation. Our Con- c
stitution saw the matter in the way of Grotius but over-looked the pos-
sibility that just compensation may not be possible.

Karl Renner in his 1'The Institution of Pn·vate law their Functions",
. 1949-Edition by Kahn-Feund, pages 105-08 and 114-22, stated the "Proper- D
ty in modern conditions has become a means of control over other people's
I labour and life." Private property ownership requires reconciliation with

public interest balancing public needs against private needs. M.R. Cohen
in his essay on "Property an.i Sovereignty" [13 Cornell Law Quarterly 8]
stated that right is a relation, not between an owner and a thing, but
I between the owner and other individuals in reference to things. Therefore, E
' property as a right over things resolves it into component right such as the
jus utendi, ) s disponendi, etc. Justice Mathew opined in his right to
1

... property that in law, control of property means control of matter, and, it
I becomes control over human beings. The institution of private law imply

the total power of doing with the thing what one likes, has, in fact become F
an institution of public law (power of command) and its main functions are
exercised by complementary legal institutions developed from the law of
1
obligations. According to Justice Mathew the law eventually takes account
of this change of function by giving property an increasing public law
character.
G
According to Sir Henry Maine, in his ''Ancient law, 1931-Edition,
11
"ancient law knows next to nothing of individuals. Individual is an impor-
tant and distinct part of the 'social compact' quoting the village community
in I11dia as an instance of an organised patriarchal society and an as-
1 scmblage of co-proprietors, he stated thus 1'the personal relations to H
846 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A each'/other of the men who compose it are indistinguishably confounded
with their proprietary rights ....... The village community is known to be of
immense antiquity. In whatever direction research has been pushed into
Indian history, general of local, it has always found the community in
, existence at the farthest point of progress. Friedman in his "Legal Theory"
B stated that in modern democracy, by the same process, which has lead to
the increasing modification of individual rights by social duties towards
neighbours and community., has everywhere has to temper freedom of
property with social responsibilities attached to property. He quoted power
of taxation, police power and the power of expropriation subject to fair
compensation are examples of public restrictions on freedom of property.
c He also stated that another kind of interference touches the freedom to
use property through the growing number of social obligations attached by
law, i.e., use of industrial property or contact of employment. Justice
Mathew, therefore, drew the distinction between the individual side and
the social side of the property, The social side of the property finds
D illustration in the right of eminent domain and taxation. It is not regarded
as something exceptional. It is an essential of the institution of property
itself The Social side limits the institutional side and it is not an absolute
private property itself. The two necessarily must go togethei so that, if one
perishes, the other must perish. In the words of Prof. Van Ihering, it would
E result in "the destruction of the society". In the words of Prof. Towney the
property becomes functionless. Justice Mathew at p.12 stated that all
property might be described as government largesse given on conditions
and subject to law. At P.14 he stated that "property is an essential guaran-
tee of human dignity for, in order that a man may be able to develop
himself in a human fashion, he needs a certain freedom and a certain "'·
F security, the one and the other are assured to him only through property.
In his concluding observations at p.19 Justice Mathew had stated that the
"property is the greatest source of friction in a community, extreme ine-
quality in the distribution of property has been and will be a cause of
revolution in states. I am not sure the problem will be solved by transferring
G the ownership of property in the means production to the state. This will
add economic power to political power and will render the individual more
helpless than in the capitalistic system where power and responsibility are
diffused. This does not mean that the final directing power over economic
system should not be in the hands of the community. An individual has a
H right to conditions of well being and that consists in the case of many
J.N. KHACHAR v. STATE OFGUJARAT(RAMASWAMY,J.] 847
I

individuals of the right as well as the duty to work. The system should be A
so organized that no individual can, through possession of property, have
power over the lives of others."

I Hidayatullah, C.J., in his 'Right to Property - at p.88 stated that
Socialism envisaged reform which would disturb this right and make B
provision for the resources to be employed in aid of the suffering classes,
lis it is contemplated as the common happiness. In this the will of the
individual was made subordinate to that of the community. The ine-
9ualities of wealth were the main objects of the socialistic doctrines. It was
considered that the legitimate function of the State was to reduce this
inequality even by taking from those who had to little. This was to be a c
permanent arrangement and not merely an ameliorative measure in some
c;alamity. This equality was to be achieve not only by public opinion and
forces but by law and the force of the State.
I ,

D
It is accordingly clear that in a welfare State envisioned in the
directive principles of State policy, the basic perquisites are that everyone
is entitled to minimum material well being, such as food, clothing, and
decent housing. Expanding living standard are possible with the existing or
expanding physical resources and scientific knowledge etc., and the State
has right and duty to act when private initiative fails. In a democratic E
society, every individual needs legal protection for the beneficial enjoyment
of what he has discovered and appropriated; has created by his own labour
(in wider sense); and what he has acquired under the existing social and
• economic order subject to law and order. Equally welfare consists in
adjusting individual interests with social interest by the aid of law as social F
engineering, which would mean public restraints on property designed to
mitigate the privileges wh~ch property offers in enjoyment of the things that
life has to offer. Restraints on the power to use the proµerty as a delegated
power of command is mearis as of quasi-governmental private control over
the major assets of a nation. Property, thereby, is subject to regulation. The
directive principles enjoin the State to reorganise the economic system by G
law or administrative means and the Fundamental rights are means to that
end to make right to life meaningful, equality of opportunity and of status
and dignity of person a reality. The fundamental rights and the directive
principles are the two wheels of the chariot as an aid to make social and
economic democracy a truism. H
848 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

A The word "property" used in Article 300A must be understood in the
context in which the sovereign power of eminent domain is exercised by
the State and Property expropriated. No abstract principles could be laid.
Each case must be considered in the light of its own facts .and setting. The
Phrase 'deprivation of the property of a person' must equally be considered
in the fact situation of a case. D~privation connotes different concepts.
B Article 300A gets attracted to an acquisition or taking possession of private
property, by necessary implication for public purpose, in accordance with
the law made by the Parliament or a Stale legislature, a rule or a statutory
order having force of law. It is inherent in every sovereign State by
exercising its power of eminent domain to expropriate private property
C without owner's consent. Prima facie, State would be the judge to decide
whether a p1;1rpose is a public purpose. But it is not_ the sole judge. This ·
will be subject to judicial review and it is the duty of the Court to determine
whether a particular purpose is a public purpose or not. Public interest has
always been considered to be an essential ingredient of public purpose. But
D every public purpose does not fall under Article 300A nor every exercise
of eminent domain an acquisition or taking possession under Article 300A.
Generally speaking preservation of public health or prevention of damage
to life and property are considered to be public purposes. Yet deprivation
of property for any such purpose would not amount to acquisition or
possession "taken under Article 300A. It would be by exercise of the Police
E power of the State. In other words, Art. 300A only limits the powers of the
State that no person shall be deprived of his property save by authority of
law. There has to be no deprivation without any sanction of law. Depriva-
tion by any other mode is not acquisition or taking possession under Article
300A. In other words, if there is no law, there is no deprivation. Acquisition ..
of mines, minerals and quarries is deprivation under Art. 300A.
F
The question then is whether the owner of the property is entitled to
compensation i.e., just equivalent or indemnification to the owner of the
property expropriated. It is common knowledge that when the State exer-
cises its executive power to acquire private property, it is under the land
G Acquisition Act, 1894 or similar State laws. Acquisition thereunder though
is for public purpose, payment of compensation at the prevailing market
value as on the date of the relevant notification published in the Official
Gazette, is sine qua non. The State when exercises the power of eminent
•
domain under. Art 300A and acquires or requisitions or taken possession
H of the property of a citizen to give effect to any of the directive principles
J.N. KHACHAR v. STATE OFGUJARAT(RAMASWAMY.J.] 849

envisaged in Part IV of the Constitution, the question emerges whether the A
same yardstick of payment of just equivalent or indemnification to the
owner of the property expropriated should be applicable or Art. 300A per
force bring it in operation? Since Art. 30(2) itself provided payment of
compensation, when property was acquired preceding 25th Constitution
An1endment Act, 1971,,this Court interpreted the word "coril.pensationn as B
aforesaid, but when Article 30(2) itself was omitted from the Constitution,
the question arises whether payment of compensation is a sine quo non for
deprivation of property under Article 300A?. In any democracy governed
by rule of law, Constitution is the supreme law of the land. Roscoe Pound,
a sociological jurist whose writings have virtually opened new vistas in the
sphere of justice, Stated that 'the justice meant not as an individual or idea C
relations among men but a regime in which the adjustment of human
relations and ordering of the human conduct for peaceful existence'.
According to him, 'the means of satisfying human claims to have things and
to do things should go around, as far as possible, with least friction and
waste. In his ''1 Swvey of Social Interests'~ 57th, Harvard Law Review, 1 D
at 39(1943), he elaborated thus : 'Looked at functionally the law is an
attempt to satisfy, to reconcile, to harmonize, to adjust these overlapping
and often conflicting claims and demands, either through securing them
directly and immediately, or through securing certain individual interests
or through delimitations or compromises of individual interests, so as to
give effect to the greatest total of interests or to the interests that weigh E
more in our civilization with the least sacrifice of the scheme of interests
as a whole". In his 'theory of justice', 1951 Edition, at page 31 he stated
that "the law means to balance the competing interests of an individual
along with the social interests of the society." In his work, "justice according
to Law/1 he observed : "We come to an idea of maximum satisfaction of p
human wants or expectations. What we have to do in social control and so
in law, is to reconcile and adjust these desires or wants or expectations, so
far as we can, so as to secure as much of the totality of them as we can."
According to him, therefore, that the claims or interests, namely, in-
dividual, physical, social or public interest should harmoniously be recon-
ciled "to the balancing the social interests through the instrument of social G
control; a task assigned to public law for that matter."

All modern constitutions of democratic character provide payment
of compensation as the condition to exercise the right of expropriation.
Commonwealth of Autralia Act, a French Civil Code (Article 545), the 5th H
\

850 SUPREME COURT REPORTS (1994] SU?P. 1 S.C.R.

A Amendment of the Constitution of U.S.A. and the Italian Constitution
provided principles of 'just terms' 'just indemnity', 'just compensation' as
reimbursement for the property taken, have been provided for. As pointed
in Halsburry's laws of England that "when parliament has authorized the
compulsory acquisition of land it is almost invariably provided for payment
of a money compensation to the person deprived of his interest in it."
B Exception for the interest of the owner was of as much nominal value as
an owner's interest in the subsoil of the streets.

The Constitution of India, on the other hand in its historical back-
ground provided Directive Principles vis-a-vis the fundamental rights to
C realise social and economic democracy for successful working of political
democracy in wh;ch the state in bound to provide to every person in the
society equality of opportunity in economic arrangements. Material resour-
ces and operation of the economic system shall be so organised as to
established the egalitarian social order. Though Articles 31 and 19(1)(f) of (
D the Constitution accorded to "property" the status as a fundamental right,
there emerged conflict between the animation of the founding fathers and
the judicial interpretation on the word ncompensation" when private
property was expropriated to subserve common good or to prevent com-
mon detriment.

E
The constitution history of the interpretation of the power of the
Parliament to amend the constitution under Art. 368 form Kameshwar
Singh v. Kesvananda Bharti to give effect to the directive principles in Part
JV vis-a-vis the right to property in Arts. 19(1)(f) and 31 as .well as the
interpretation, compensation' from Ms. Bela Banerji to Banks
11 1

F Nationalisation's case do establish that the Parliament has ultimately
wrested the power to amend the Constitution, without violating its basic
features or structure. Concomitantly legislature has power to acquire the
property of private person exercising the power of eminent domain by a
law for public purpose. The law may fix an amount or which may be
G determined in accordance with such principles as may be laid therein and
given in such manner as may be specified in such law. However, such law
shall not be questioned on the grounds that the amount so fixed or amount
determined is not adequate. The amount fixed must be not be illusory. The
principles laid to determine the amount must be relevant to the determina·
H tion of the amount. The doctrine of illusory amount or fixation of the
J.N. KHACHAR,·. STATEOFGUJARAT[RAMASWAMY.J.] 851

principles to be arbitrary were evolved drawing support from the language A
originally couched in the unamended Entry 42 of List IJJ which stood
amended by the Constitution 7th Amendment Act with the words merely
11
"Acquisition and Requisition of Property Nevertheless even thereafter
•

this court reiterated this same principles. TherefOre, the amendment to
Entry 42 of List III has little bearing on the validity of those principles. We B
are conscious that the parliament omitted Art. 31(2) altogether. However
when the State exercises its power of eminent domain and acquires the
property of private persun or deprives him of his property for public
purpose, concomitantly fixation of the amount or its determination be must
in accordance \Vith such principles as laid therein and the amoun[ given in
such manner as may be specified in such a law. However judicial inter~
c
pretation should not be a tool to reinduct to doctrine of compensation as
concomitance to acquisition or deprivation of property under Article 300A.
This would be manifest from two related relevant provisions of the Con-
stitution itself. Articles 30(1A) and 2nd proviso to Art. 31A as exceptions
" to the other type of acquisition or deprivation of the property under Article D
300A.

For acquisition of the property of a minority educational institution,
the measure is that the State shall ensure that "the amount fixed or
determined under such law" would not "restrict or abrogate the right E
guaranteed" by Art. 30(1). This was simultaneously brought on the Con-
stitution by Section 4 of the Forty-fourth Constitution Amendment Act
while omitting Arts. 19(1)(1) and 31 from Part III. Equally when the land
• 11 11
of a person within the ceiling limit and " in his personal cultivation is 11

acquired, law shall provide "for payment of compensation at a rate which
F
shall not be less then the market value thereof', this was brought by
Constitution Seventh Amendment Act. By necessary implication the obliga-
tion of the state, to pay compensation for property acquired or indem-
nification of property deprived under Article 300A or other public purpose
is obviated.
G
The question then is whether the principles laid in Section 69A(4) of
the Code are ultra vires. In Bhim Singhji v. Union of India, [1981] 1 SCC
166, per majority, the Constitution Bench considered Section 11(6) of the
Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) and fixation
of amount of Rs. 2.00 lacs as maximum limited under sub-s. (6) of the H
852 SUPREME COURT REPORTS [1994) SUPP. 1 S.C.R.

A property worth Rs. 2.00 Crores, it was held to be not illusory and the
provisions is not confiscatory, and that therefore, it does not violate Art.
14 and Art. 31(2) of the Constitution (proceeding Constitution 44th
Amendment). Jn Achutananda Purohit v. State of Orissa, [1976] 3 SCR 919,
it was held that fixation of compensation on slab system does not violate
B Article 14 and 31(2) of the Constitution. Jn Basant Bai's case this court
held that the.provision in s.44(3) of the Maharashtra Housing and Develop-
ment Act that in t'ie absence of agreement, the amount shall be equal to
100 times .the net average monthly income actually derived from such land
during the period of five consecutive years immediately preceding the date
c of the publication of the notification referred to in s. 41, as may be
determined by the Land Acquisition Officer, was held to be not violative
of Art. 14. Article 21 was held to have no application to the determination
of such amount. In Tinsukhiya's case a Constitution Bench held that the
limitation of the amount on the basis of the written down book value of the
D assets was held to be not violative of Art. 14 and such principle was held
/
to be not illusory nor arbitrary. The determination of the amount was held
to be an integral and inseparable part of the scheme of nationalisation
which cannot be cancelled as a distinct provision independent of the
scheme. It was also further held that the material resources of the com-
E munity mentioned in Art. 39(b) must be widely interpreted and nationalisa-
tion and acquisition is one of the methods of distribution of material
re"-ources of the community. The economic cost of social and economic
reforms is amongst the most vexed problems of social and economic
change. The need for constitutional mandates for such legislative efforts at
social and economic change recognises otherwise unaffordable economic •
F burden of reforms. It is not possible to diverse the economic constitutions
or components from the scheme of nationalisation. The main cause of the
scheme of the nationalisation lies on its cost and it cannot be isolated. The
quantification, therefore, forms part of the integrated scheme and cannot
be considered in isolation.
G
It would thus be clear that acquisition of the property by law laid in
furtherance of the directive principles of State policy was to distribute the
material resources of the community including acquisition and taking pos-
session of private property for public purpose. It does not require payment
H of just compensation or indemnification to the owner of the property
J.N. KHACHAR v. STATEOFGUJARAT[RAMASWAMY,J.] 853

expropriated. It is very negation of effectuating the public purpose. Pay- A
ment of market value in lieu of acquired property is not sine qua non for
acquisition. Acquisition and payment of amount are part of the scheme and
they cannot be dissected. However, fixation of the amount or specification
of the principles and the manner in which the amount is to be determined
must be relevant to the fixation of amount. The amount determined need B
not bear reasonable relationship. In other words, it is nut illusory. The
adequacy of the resultant amount cannot be questioned in a court of law.
However, the validity of irrelevant principles are amenable to judicial
scrutiny.

c
It is, therefore, clear that the appellants are not entitled to compen-
sation or just equivalent of property they are deprived of or indemnification
of the property expropriated i.e., mines. whether worked or not, minerals
whether discovered or not or quarries deprived by law made under Article
.. 300A of the Constitution. The principles under Section 69A(4) of the Code
are relevant. The resultant amount is not illusory. Thereby they are not D
·void. We further hold that after the Constitution forty fourth Amendment
Act has come into force, the right to property in Arts. 19 (l)(f) and 31 had
its obliteration from Chapter III, Fundamental Rights. Its abridgement and
curtailment does not retrieve its lost position, nor gets restituted with
renewed vigour claiming compensation under the grab 'deprivation of E
property' in Art. 300A. The Amendment Act neither receives wrath of Art.
13(2), nor does s.69A become ultra vires of Art. 300A.

}
The further contention that money value of the rupee from three
years preceding May 1, 1960 till date, has considerable been eroded and
that, therefore, the foration on the principle of net annual income of three
F
years preceding the date of vesting, namely 1st May, 1960 is arbitrary and
amount so determined is illusory is also devoid of substance. In
Achutananada's case, it was contended that compensation money should
be so calculated that the purchasing power of the amount of compensation
to be paid on the date of the actual payment will not be less than its G
purchasing power on the date of vesting. Repelling the contention this
court held that on the date of vesting which was well over two decades ago,
the purchasing powers of rupee was mnch higher than its present value. It
is more of less the world phenomenon that the erosion in value of unit of
currency has been taking place. But this inevitable devaluation due to H

•
854 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R. '
A inflationary trends does not affect the quantum of compensation prescribed
by the statute for the purpose of allowing compensation in rupee long ago
is the same as the rupee of today, although for the purpose of market and
cost of living, the housewives' answer may be different. Law is sometimes
blind. Therefore, the loss of rupee value is not relevant consideration to
B adjudge the principle laid by the statute. Giving acceptance to the conten-
tion renders every statute ultra vires by the nature of the litigation that the
time lag inevitably intervenes an rupee value, during the interregnum gets
eroded and every Act thereby because, on its account, unworkable. In
normal acquisition, the principle of depletion of rupee value has repeatedly
C been held to be not relevant to determine market value. The contention,
therefore, is rejected.

It is next contended that the act and the related provisions provided
different modes of compensation than the one provided in sub-s.(4) of
Section 69A of the Code and that, therefore, it is discriminatory, violating
D Art. 14 and unfair procedure offending Art. 21. We find no substance in
this contention. It is true that different Acts, provide different principles
'
to determine the amount payable to the deprived owner. The principle of
average of three years net annual income received from production of the
mines and minerals preceding the date of the vesting is a relevant and
E germane principle to fix the amount payable to the owner Comparative
evaluation of different principles evolved by each statute may appear to be
different and prime facie to be discriminatory from each other, but com-
. parative analogy would not furnish satisfactory test to declare a national
principle determined by the statute to be discriminatory. It is seen that the
F principle bears just relation to the object of determining the amount or
compensation payable to the owner and the principle of average of three
years net annual income is a reasonable classification having relation to the
object of modification of the existing rights and extinguishment thereof.
Section 69A(4) of the Code is, therefor•, valid. So it is unassailable under
G Art. 14. The principle of unfairness of the procedure attracting Art. 21 does
not apply to the acquisition or deprivation of property under Article 300A
giving effect to the directive principles, are not concerned in these appeals
of the effect of mining and mineral lease or leases granted by the appel:
!ants to third parties, since that question was neither canvassed in the-High
H Court, par any factual foundation laid before us. We declined to go into
J.N. KHACHAR v. STATE OF GUJARAT [RAMASWAMY, J.] 855

that question. For well over twelve years the appellants worked the mines A
etc. by obtaining stay of operation of law and had appropriated the mines
or minerals or quarries from the respective lands.

The appeals are accordingly dismissed with quantified costs at
Rs. 1,00,000 in each set. Compensation or amount payable under Section B
69A(4) of the Code may be worked out and the costs be set off in working
out the amount and the balance, if any, be recovered from the appellants.
This exercise should be done within three months from the date of the
receipt of the judgment. Working the mines etc. should be stopped
forthwith by either the appellant, their lessees, or any body in the feigned
camouflaged or coloured shoes. The State should take immediate action C
is this behalf.

T.N.A. Appeals dismissed.