ASSAM SILLIMANITE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The constitationality of the Assam Sillimanite Limited (Acquisition and Transfer of Refractory Plant) Act, 1976 (hereinafter called the "Act") has been challenged by the Assam Sillimanite Limited, a company registered under the Companies Act, 1956, the Refractory Plant of which has been acquired by the Central Government. The only grounds of challenge argued by Shri M. C. Bhandare, learned counsel for the petitioners, relate to the construction of the Constitution and are as follows : (1) That the amount of rupees one crore seven lakhs and seventeen thousand which is made payable to the company by the Central Government under section 9 of the Act and the other amounts payable under it and section 10 of the Act is arbitrary, unreasonable and illusory thus violating Article 31(2) of the Constitution as it stands after . the Constitution (Twenty-fifth Amendment) Act, 1971, and (2) That its constitutionality is not immune from attack in view of Article 31C because in reality it does not give effect to the policy of the State towards securing the principles specified in clause (b) of Article 39 despite the declaration to that effect contained in section 30 of the Act.2. Section 2 (a) of the Constitution (Twenty-fifth Amendment) Act,1971 which substituted the new clause (2) in place of the former one in Article 31 was itself challenged as being an impermissible amendment of the Constitution in Kesavananda Bharad v. State of Kerala, heard by thirteen Judges of the Supreme Court whose judgments are reported in (1973) Supp. S.C.R. 1(1). While the validity of the said amendment was upheld by the Full Court, the learned Judges differed in their reasons for this conclusion. The views of the learned Judges may be classified as below : (a) On the one hand, a minority of six learned Judges, namely, Sikri, C.J., Shelat and Grover, JJ., Hegde and Mukherjee, JJ., and Reddy, J. upheld the amendment on their own view of the meaning of the word "amount" used in it. At one extreme was the view expressed by Reddy, J. that where what is given in lieu of acquisition of property is illusory, arbitrary or cannot be regarded as compensation and bears no reasonable, relation to the property acquired, the Court can go into it (and invalidate the concerned law) and the position has not in any way been affected by the amendment by merely substituting the word "amount" for "compensation". The other five learned Judges constituting the minority recognised that after the amendment, a law acquiring property for a public purpose need not provide for the payment of a just equivalent or an adequate compensation. Nevertheless, the amount which is made payable to the owner of the property which is acquired must not be arbitrary or illusory and must have a reasonable relationship with the value of the property acquired.

(2.) The majority of the other seven learned Judges have upheld the validity of the amendment without making their decision conditional on any particular meaning to be attached to the word "amount". Three of the learned Judges, namely, Ray, J.. Mathew, J. and Dwivedi, J. completely ruled out judicial review of a law fixing the amount payable for the acquisition of property on the ground that the judgment of the Legislature enacting the law was not reviewable. Khanna, J. held the amendment valid whatever may be the connotation' of the word "amount". Palekar, J. also held that an amendment cannot become invalid because it authorises the Legislature to fix an "amount" instead of fixing the "compensation" for the acquisition of J property. The amendment has negatived the interpretation put by the Supreme Court on the concept of "compensation". Beg. J. agreed with Ray, Palekar, Mathew and Dwivedi, JJ. Chandrachud, J. also held that the amount payable under the law providing for the acquisition of property may not bear reasonable relationship with the value of the property and yet may be valid. But to say that an amount does A not bear reasonable relationship with the market value is a different thing than to say that there is no relationship at all whatsoever to the value of the property. In the latter case the payment becomes illusory and may come within the ambit of permissible challenge. Palekar, J. also observed that the question whether a particular law fixes an amount which is illusory would depend upon the law when made and is tested on the basis of clause (2) of Article 31. The possibility of abuse of a power given by an amendment of the Constitution is not, however, determinative of the validity of the legislation.

(3.) Shri Bhandare argued that six of the learned Judges, namely, Shri, C.J., Shelat and Grover, JJ Hegde and Mukherjee, JJ. and Reddy, J., have held that a law fixing an amount for the acquisition of property would be unconstitutional if the amount does not bear a reasonable relationship with the value of the property acquired or is arbitrary or illusory. According to his submission, only four of the learned Judges, namely, Ray, Mathew, Beg and Dwivedi, JJ-, ruled out judicial review of such a law, Palskar and Khanna, JJ., did not express any opinion and Chandrachud, J. held that the amount must not be illusory. He, therefore, argued that a comparative majority among the learned Judges, namely, six of the learned Judges, required that the amount payable for the acquisition of property must have a reasonable relationship with the value of the property acquired if the law is to be regarded as constitutional in the context of Article 31(2).