“One can safely assert that land is perhaps the greatest gift that God has bestowed on

human beings. All activities of man whether social, political or economic, revolve around the
beneficial enjoyment of land. Similarly, all endeavors of the Government in infusing growth and
development into the economy are also closely linked to land.”

For the leaders of the Indian independence struggle, the adoption of a Constitution constituting a
sovereign democratic republic was the first important step in marking a break from the past of
colonial domination and subordination. However, in addition to the desire to control their
destiny, the Indian independence movement was also driven by the desire to achieve a new social
and economic order premised on rapid economic development and social redistribution.

A major component of this transformative agenda was land reform,

involving zamindari abolition and redistribution of land amongst the peasants. Equally
important, however, was state planned industrial growth and encouragement of growth of private
industry. Charged with the task of balancing the interests of the individual with those of the
community, the Constituent Assembly debated both the inclusion and content of a fundamental
right to property for two and a half years before adopting Articles 19(1) (f) and 31. Article 19(1)
(f) guaranteed to all citizens the fundamental right to ‘acquire, hold and dispose of property.’
Article 19(6) made the right subject to ‘reasonable restrictions in the public interest’ by the
federal and state legislatures.

Moreover, Article 31 of the Constitution provided that any state acquisition of property must
only be upon enactment of a valid law, for a public purpose and upon payment of compensation.
This provision was taken almost verbatim from Section 299 of the Government of India Act,
1935 with exceptions for certain zamindari abolition laws. The paradox implicit in guaranteeing
a fundamental right to property, while simultaneously embarking on a socialist developmental
project of land reform and state planned industrial growth, predictably resulted in tensions
between the legislature and the executive on the one hand, that sought to implement this
development agenda, and the judiciary on the other, which enforced the fundamental right to
property of those affected.
 Article 31 was drafted with a view to reaching a just compromise between various
competing interests. On one end of the spectrum were the zamindars and industrialists who
sought protection for their property interests and, failing that, payment of market value
compensation for acquisition of their property. On the other end were the socialists who wanted
zamindari abolition without compensation, land redistribution and nationalization of key
industries, which militated against the recognition of a fundamental right to property. Also
represented in the Constituent Assembly were those who believed that property rights,
particularly those of industry, should be protected even as they believed in the legitimacy of
zamindari abolition. The views of the last group were ultimately reflected in the compromise that
was reached. Predictably, however, the compromise failed to please both the zamindars and the
socialists and merely shifted the battle arena from the Constituent Assembly to the courts.

Over the last sixty years, as India pursued a strategy of economic development and social
redistribution, more than a hundred land acquisition laws were enacted to achieve these goals. A
majority of these laws were enacted in the first decade post-independence and dealt with issues
like zamindari abolition, town planning, slum clearance and development, and resettlement of
refugees etc. Acquisitions also continue to be made under colonial laws that have remained in
force post the adoption of the Constitution pursuant to Article 13(2).

Acquisition of land by the Government is something that has existed since the British Raj. The
British Government forcibly acquired several acres of lands to facilitate their plans of
introducing the railway system in India. Back then, the compensation to be paid for such
acquisition of land was under the control of an arbitrator, whose decision on the compensation
would be final. The law makers at that time understood the fact that the arbitrator could have
been incompetent and also that there were no rules laid down to govern the procedure of work of
the arbitrator. To circumvent such lacunas taking its toll on the public revenue, the Land
Acquisition Act, 1870 was enacted. Under this Act also, the controller was bound to refer all
cases in which either the owners of land complained against the compensation or one failed to
come before him, to the court. This took lot of time and wasted money. Thus the 1984 Act was
enacted, whereby, inter alia, the controller’s award of compensation could not be challenged
except under certain circumstances.
 The objective of this Act is to amend the laws relating to land acquisition for public
purpose and for companies and also to determine the compensation, which is required to be made
in cases of land acquisition. The enactment states that the expression land includes benefits that
arise of land and things attached to the earth or permanently attached to the anything fastened to
the earth.

Further the Land Acquisition Act also specifies the public officers who are authorized for such
acquiring of land on behalf of the State. They include the Collector, Deputy Commissioner and
also any officer who is specially appointed by the appropriate government under the authority of
law. The collector prepares the declaration and copies are forwarded to the administrative
departments and all the concerned parties. This declaration is then required to be published in the
same manner as in case of the notification issued. The collector issues the awards, further allows
a time of not less than 15 days for any objections to be filed.

Moreover if the compensation given is under protest than as per the enactment the
awardees are entitled to refer the matter to the court for determination of requisite amount of
compensation.
Land Acquisition – what is?

Land Acquisition can be defined as the action of the government whereby it acquires land from
its owner in order to pursue certain public purpose or for any company. This acquisition may be
against the will of the owners but compensation is paid to the owners or persons interested in the
land. This can be distinguished from an outright purchase of land from the market. Land
acquisitions by the government generally are compulsory in nature, not paying heed to the
owner’s unwillingness to part with the land. The Land Acquisition Act, 1894 outlines the
‘purposes’ for which land may be acquired, the ‘procedure’ for acquisition, and the payment of
‘compensation’ for such acquisition.

Public Purpose: The act provides that land may be compulsorily acquired by the government for
a public purpose. Section 3(f) of the act defines ‘public purpose’ to include the provision and
planned development of village sites, provision of land for a state owned or controlled
corporation, residential development for the poor and landless, people displaced by calamities,
educational, housing, health or slum clearance schemes and premises for public offices. Section
39 of the act provides that land may be acquired for the use of companies for the above purposes,
or if the work is ‘likely to prove useful to the public.’

The Procedure is simple: - The Appropriate Government – i.e. State Government or Central
Government – identifies that it requires a piece of land for public purpose or for a company. It
publishes a notification to that effect in the official gazette and the substance thereof is published
by the collector in a notice that he places in a conspicuous place of the land ought to be acquired.
The notification of the Government is also published in 2 newspapers one of which is the
regional language of the place where the land to be acquired is situated [Section 4(1)]. Within 30
days of such notification, the persons interested in the land can raise their objection to the
Collector, in writing, of any of issue related to the acquisition of the land. The collector shall
after making his comments forward it to the Central Government, whose decision on the matter
shall be final. (Section 5A)

After having gone through the report filed by the Collector under section 5A (as mentioned
above), the appropriate government shall publish a declaration of the intention to acquire land in
the same manner as mentioned before (Section 6).
The collector shall then issue a notice to the persons interested to an enquiry to be held before
him regarding the key aspects on to area of land, compensation etc to make claims and stating
that the Government intends to acquire the land (Section 9).

Section 11 states that the collector shall make an award under his hand of: -
# The true area of the land.
# The compensation, which in his opinion should be allowed for the land, and
# The apportionment of the said compensation among the persons interested.

This award shall be made only after conducting an enquiry as per Section 9 and after obtaining
the prior approval of the appropriate government. After having made compensation, the
Government can take possession of the land. The land shall then vest with the Government
without any encumbrances (Section 16). Section 17 states that in cases of urgency, the
Government can acquire the land without paying compensation- though compensation will have
to be paid eventually.

Compensation: Section 23(1) of the act further provides that compensation for land acquisitions
must be computed at the market value of the land acquired. In addition, it must include payments
for any damage sustained by the ‘person interested’ as a result of the acquisition, for instance due
to the severing of land from other land, the drop in profits or earnings of the person, and
reasonable expenses for relocation if that becomes necessary as a result of the acquisition.
Further, Section 23(2) provides that a solatium of 30% of the market value of the land should be
paid in addition to the compensation in light of the compulsory nature of the acquisition. Finally,
the value of any property such as buildings, irrigation works, trees, etc, must be paid. Section 24
of the act however, expressly prohibits the intended value of land from being taken into account
for computing market value. That is, if agricultural land is being acquired for commercial use,
the compensation will be based on the prevailing market price for agricultural land.

The working of the Land Acquisition Act, 1894 over the last hundred years has revealed four
major problems that have led to widespread public discontent.

 First, the act only recognizes the rights and interests of land title holders. In doing so, it
fails to take into account the interests of those who while not holding title to the land are
 nevertheless dependent on it for their livelihood. Interestingly, in 1958, the Bihar
government had raised this issue before the Law Commission during the commission’s
review of the 1894 Act. The commission noted that this was an ‘important question of
policy’ that deserved careful consideration inasmuch as the loss suffered by the person
was a ‘direct result of the acquisition of land.’1 However, the commission’s
recommendation was until recently not acted upon, and no amendments were made to the
1894 Act to broaden the definition of ‘persons interested’.

 Second, the 1894 Act contains only an inclusive definition of ‘public purpose’ and courts
have consistently deferred to legislative determination of what constitutes a public
purpose. In successive cases, the Supreme Court has held that the expression ‘public
purpose’ was ‘elastic and could only be developed through a process of judicial inclusion
and exclusion in keeping with the changes in time, the state of society and its
needs.’2 Moreover, courts have held that acquisitions benefiting particular individuals or
entities could satisfy the requirement of public purpose so long as they were in
furtherance of a scheme of public benefit or utility.3

 The third problem derives from the legal requirement that those deprived of their land
and livelihood must be paid a fair equivalent of the value of the land as compensation.
Unlike their approach on ‘public purpose’, the Supreme Court took the compensation
requirement seriously, insisting in its early decisions that the compensation payable in
case of compulsory acquisitions be the market equivalent of the value of the land.
However, through a series of constitutional amendments, Parliament has substantially
ousted judicial review of the quantum of compensation payable in individual cases.

1
Report of the Law Commission of India, 1958 available at http://lawcommissionofindia.nic.in/1-50/Report10.pdf
(visited on 20 December 2012).
2
Surya Pal Singh v. State of Uttar Pradesh, [1952] SCR 1056, at 1073; State of Bihar v. Kameshwar Singh, AIR
1952 SC 252.
3
Thambiran Padayachi v. State of Madras, AIR 1952 Mad 75; State of Bombay v. Nanji, [1956] SCR 18; Bhagwat
Dayal v. Union of India, AIR 1959 Punj 544.
  This has resulted in the payment of less than market value compensation in many cases.
The fourth problem relates to the procedure involved in land acquisition under the 1894
Act which has been criticized both by the government for delays in acquisition, and by
the people for their lack of participation in the government’s decision to take over their
land, as well as delays involved in the determination and payment of compensation.

 A fifth problem arises because, as noted in the Tenth Law Commission Report, there
exists wide variation in the provisions for acquisition in various state laws, including on
the definition of public purpose, the relevant date for determination of the market value
of the land, the principles for determining compensation, and the appointment of tribunals
to determine the compensation and adjudicate disputes. This creates a situation whereby
the central and state governments can apply differential principles of compensation for
acquisition of land situated within the same state depending upon the object of
acquisition.

Right to Property

“Right to acquire a property, although is not a fundamental right, but is a constitutional and
human right. Before a person can be deprived of his right to acquire property, the law and/or a
contract must expressly and explicitly state so.”

The answer to the question, whether the property amendments violate the basic structure of our
Constitution is in negative. The answer to this question depends upon the correct interpretation
of the nature and effect of those amendments and their effect on fundamental rights and other
basic features of our Constitution.

The constitution, as it stood before the 44th Amendment in 1978, provided for the right to own
property as a fundamental right. These provision were explicit in articles 31 & 19(1) (f). The
constitution also provided that in case of any breach or an attempt thereof of any fundamental
right, the aggrieved person can approach the Supreme Court for its redressal. This was viewed as
a hurdle by the Government that could impede its ambitious plan of acquiring land for public
purpose pr for a company.

Article 19(1) (f) and Article 31 (2) dealt with different, but connected aspects of the right to
property. The above mentioned two articles were mutually exclusive. However, there was a
difference in opinion in this regard which was clarified by the 25th Amendment which
introduced in Article 31 a new clause (2-B) which provided that “Nothing in Article 19(1) (f)
shall affect any such law as is referred to in clause (2).” The validity of this amendment was
unanimously upheld in the Fundamental Rights case. The reason for this mutual exclusiveness
was that when property is acquired for a public purpose on payment of compensation, the right
of a citizen to hold property is gone, and the question of his right to hold that property subject to
reasonable restrictions does not arise.

Further Article 19(1) (f) which conferred on citizens the right to acquire, hold and dispose of
property formed part of a group of articles under the heading “Right to Freedom.” It requires no
elaborate argument to demonstrate that property is intimately connected with the right to
freedom. Article 31 appeared under the heading “Right to Property”; for the right to freedom
conferred by Article 19(1) (f) would be worth little if the property when acquired could be taken
away by law. Hence Article 31 provided that private property could be acquired only for public
purpose and on payment of compensation. There is nothing in the Statement of Objects and
Reasons to show that the Parliament no longer looked upon the right to acquire hold and dispose
of property as part of the Right to Freedom.
Challenge to certain land reform Acts –

In State of Bihar v. Kameshwar Singh4 the validity of Bihar Land Reforms Act, 1950 was
impugned, but after the Constitution (1st Amendment) Act, 1951, the basis for the challenge had
disappeared. However, it was argued that the Act was not enacted for a public purpose, and
therefore, Article 31(4) did not protect the Act. The requirement of a public purpose was
involved in the very concept of acquisition, and could not be spelt out by reading entry 36, List
II, with entry 42, List III to Schedule 7. The majority held that Article 31(2) prescribed two
conditions for the acquisition of property:

(i) a public purpose; and

(ii) payment of compensation and that public purpose could not be spelt out from the concept of
acquisition or from legislative entries.

Mahajan, J. held that Article 31(2) did not provide for a public purpose which according to him
was a part of the concept of acquisition; but he held that the impugned law acquired lands for a
public purpose, namely to bring about a reform in the land distribution system of Bihar for the
general benefit of the community, a purpose which was in accord with the Directive Principles of
State Policy embodied in Article 39(b) and (c). The general challenge to the Act therefore failed.

Kameshwar Singh’s case was followed in Raja Surya Pal Singh v. State of U.P.5 in this case the
validity of the U.P Zamindari Abolition and Land Reforms Act, 1951 was upheld. The
arguments which states that some of the provisions of this Act was a fraud on the Constitution
and resulted in non – payment of compensation was rejected on an examination of the
provisions.

Further in K. C. Gajapati Narayan Deo v. State of Orissa,6 Kameshwar Singh’s case was
distinguished and Surya Pal Singh’s case was followed. The appellant impugned the Orissa
Estates Abolition Act, 1952. In an appeal to the Supreme Court, the principal attack was on the
validity of the Orissa Agricultural Income-tax (Amendment) Act, 1950 and the Madras Estates
and Land (Amendment) Act, 1947, in so far as they affected the calculation of the net income of
an estate for determining the compensation payable under the Estates Abolition Act. It was

4
AIR 1952 1 SCR 889
5
AIR 1975 SC 1083
6
AIR 1953 Ori 185
contended that the Orissa Agricultural Income-tax (Amendment) Act, which imposed a tax on
agricultural income, was not a bona fide tax at all, but was a colorable device to reduce the
compensation payable in respect of the land by drastically reducing the income, since the
compensation was to be given on the basis of merits; but held further that even if it were
assumed that the object of the Act was to reduce the compensation payable under the Estates
Abolition Act, there was nothing colorable in the Income-tax Act, because the Abolition Act was
covered by Article 31(4), and no objection as to the amount or adequacy of compensation could
arise at all.

Again in Zamindar of Ettayapuram v. State of Madras7 the challenge to the Madras Estates
(Abolition and Conversion into Ryotwari) Act, 1948 failed because it had been reserved for the
certification of the President and had been certified in April 1950, and was therefore protected by
Article 31(6).

The Constitution (1st Amendment) Act, 1951, which has a retrospective effect, inserted Article
31A which protected land reform laws, or “estates” legislation. Further it also introduces Article
31B and Schedule IX in the Constitution which retrospectively protected 13 specified Acts from
challenge under Part III. The Bihar Land Reforms Act, 1950 appeared as entry I in Schedule IX.

Doctrine of Eminent Domain and Police Power –

The power of compulsory acquisition is described by the term “Eminent Domain”. This term
seems to have been originated in 1525 by Hugo Grotius, who wrote of this power in his work

“De Jure Belli et Pacis” as follows:

“The property of subjects is under the eminent domain of the State, so that the State or he who
acts for it may use and even alienate and destroy such property, not only in the case of extreme
necessity, in which even private persons have a right over the property of others, but for ends of
public utility, to which ends those who founded civil society must be supposed to have intended
that private ends should give way. But it is to be added that when this is done the State is bound
to make good the loss to those who lose their property.”

7
1954 AIR 257, 1954 SCR 761.
In State of West Bengal v. Subodh Gopal Bose8 the West Bengal Revenue Sales (W.B.
Amendment) Act, 1950, substituted a new Section 37 in the Bengal Revenue Sales Act, 1859, and
provided by section 7 that all pending suits, appeals and other proceedings which had not already
resulted in delivery of possession should abate. One B who had filed a suit to evict certain
tenants under section 37, Bengal Act of 1859, thereupon contended that section 7 was void as
violating Article 19(1) (f) and Article 31. Under Article 228 the matter was moved to the High
Court which declared section 7 as void as violating Article 19(1) (f). Subodh Gopal’s case
involved no acquisition or requisition of property; the impugned law regulated the relation of
landlord and tenant and was in line with normal tenancy legislation in India.

Sastri, C.J., in Subodh Gopal’s case held (i) that whereas Article 19(1) (f) dealt with the abstract
right to own property, Article 31 afforded protection to the concrete right to own property; (ii)
that the doctrines of “police power” and “eminent domain” were inapplicable to the Indian
Constitution; (iii) that the derivation referred to in Article 31(1) must be read with Article 31(2)
and where such deprivation was so substantial that it amounted to acquisition or taking
possession of property, Article 31(2) was attracted; (iv) the acquisition did not involve any
transfer or vesting of title; (v) that it was unnecessary to determine the precise scope of the
expression “taking possession” except to say that it did not include “taking of property for public
use” as interpreted in the United States. Applying these tests, Sastri, C.J. held that the
deprivation and abridgment of the purchaser’s rights were not so substantial as to amount were
not as substantial as to amount to deprivation within the construction of Article 31(1) and (2).

Mahajan, J. said that he agreed with the construction put by the Chief Justice on Article 31, for
the reasons given in his own judgment in Dwarakadas Shrinivas v. Sholapur Spg. & Wvg. Ltd.9
That judgment shows that he agreed with the proposition “that the derivation referred to in
Article 31(1) must be read with Article 31(2) and where such deprivation was so substantial that
it amounted to acquisition or taking possession of property, Article 31(2) was attracted.”
However he held that Article 31 dealt with the field of “eminent domain”, the saving clause in
Article 31(5) providing for “police power” and taxes. If a law for deprivation of property was
outside Article 31(5), it fell under Article 31(2). For instance, if a law deprived a person of

8
AIR 1954 SC 92
9
AIR 1954 SC 119
property in the interest of morality, the deprivation fell outside Article 31(5), and Article 31(2)
applied with the result that compensation would have to be paid for the deprivation.

Das, J. in Dwarakadas Shrinivas’s case held that the impugned law fell under Article 19(1) (f)
and amounted to a reasonable restriction within the meaning of Article 19(5). He held that
Article 31(1) dealt with “police power” and Article 31(2) dealt with the power of “eminent
domain.” If Article 31(1) did not contain “police power”, then except for the limited extent of
police power in Article 31(5), police power was nowhere to be found in our Constitution. Such a
conclusion would lead to absurd results, e.g. that the destruction of obscene literature would have
to be compensated for in money. In Dwarakadas Shrinivas’s case he held that if there was
deprivation of property of the shareholder of a company, it was by authority of law; however he
held that the State had taken the possession of the property, and therefore, the impugned law was
void as it did not provide for compensation.

In Dwarakadas Shrinivas’s case Bose, J. condemned the use of expressions like “police power”
and “eminent domain.” He held that Article 19 did not apply and that the deprivation referred to
in Article 31(1) was that kind of deprivation which amounted to substantially acquiring or taking
possession of a man’s property and these concepts represented matters of substance and not of
form.

In Dy. Commr. Kamrup v. Durganath,10 Bachwat, J. observed that:

“From the several conflicting opinions expressed in those two cases it s difficult to say that the
Court or a majority of Judges held that Clause (5) (b) (ii) saved the police power of the State in
the strict technical sense as understood in American law. All we need to say is that if Clause
(5)(b)(ii) is construed as saving the police power of the States, such police power mist be
exercised subject to the constitutional restrictions as evolved by the American judicial decisions
that private property cannot be appropriated to public use without payment of compensation. But
we prefer to construe Article 31 and Clause (5) (b) (ii) uninfluenced by the American concepts of
eminent domain and police power.”

It is submitted (i) that the fact that Parliament nullified the effect of these decisions would itself
suggest that the interpretation out by the Supreme Court on Article 31 did not effectuate the
intention of the makers of the Constitution; (ii) that in any event, except for the proposition that
10
AIR 1968 SC 394
acquisition or taking possession of property is a matter of substance, every major proposition in
the various judgments representing the majority view has been undermined by subsequent
decision of the Supreme Court itself. Till it was finally settled that “restrictions” in Article 19
included deprivation, there might have been some reason to bring deprivation of property under
Article 31. Since it is now settled that deprivation of property which falls outside Article 31(2)
falls within Article 31(1), thereby attracting Article 19(1) (f) and (5), it is no longer necessary to
follow decisions which have been deprived of their authority by being deprived of their
foundation. However, it may be added that the orders passed in the two cases were correct.

Public Purpose –
The requirement of public purpose is implicit in compulsory acquisition of property by the State
or, what is called, the exercise of its power of ‘Eminent Domain’. The principle of compulsory
acquisition of property, is founded on the superior claims of the whole community over an
individual citizen but is applicable only in those cases where private property is wanted that
public use, or demanded by the public welfare and that no instance is known in which it has been
taken for the mere purpose of raising a revenue by sale or otherwise and the exercise of such a
power is utterly destructive of individual right.

In the State of Bombay v. R. S. Nanji,11 the Court observed that it is impossible to precisely
define the expression ‘public purpose’. In each case all the facts and circumstances will require
to be closely examined in order to determine whether a public purpose has been established.
Prima facie, the Government is the best judge as to whether public purpose is served by issuing a
requisition order, but it is not the sole judge. The courts have the jurisdiction and it is their duty
to determine the matter whenever a question is raised whether a requisition order is or is not for a
public purpose.

In the said case, the Court observed that the phrase ‘public purpose’ includes a purpose, that is,
an object or aim, in which the general interest of the community, as opposed to the particular
interest of individuals is directly and vitally concerned. It is impossible to define precisely the
expression ‘public purpose’. In each case all the facts and circumstances will require to be
closely examined to determine whether a public purpose has been established.

11
1956 AIR 294, 1956 SCR 18.
In Somawanti v. State of Punjab,12 the Court observed that public purpose must include an
object in which the general interest of the community, as opposed to the particular interest of
individuals, is directly and vitally concerned. Public purpose is bound to change with the times
and the prevailing conditions in a given area and, therefore, it would not be a practical
proposition even to attempt an extensive definition of it. It is because of this that the legislature
has left it to the Government to say what a public purpose is and also to declare the need of a
given land for a public purpose.

The Constitution Bench of this Court in Somawanti observed that whether in a particular case the
purpose for which land was needed was a public purpose or not was for the Government to be
satisfied about and the declaration of the Government would be final subject to one exception,
namely that where there was a colorable exercise of the power the declarations would be open to
challenge at the instance of the aggrieved party.

In Babu Barkya Thakur v. The State of Bombay & Others,13 the Court observed as under:
“It will thus be noticed that the expression ‘public purpose’ has been used in its generic sense of
including any purpose in which even a fraction of the community may be interested or by which
it may be benefited.”
The Constitution Bench in Satya Narain Singh v. District Engineer, P.W.D., Ballia and Anr14
while describing public service observed:-

“It is undoubtedly not easy to define what is “public service” and each activity has to be
considered by itself for deciding whether it is carried on as a public service or not. Certain
activities will undoubtedly be regarded as public services, as for instance, those undertaken in the
exercise of the sovereign power of the State or of governmental functions. About these there can
be no doubt. Similarly a pure business undertaking though run by the Government cannot be
classified as public service. But where a particular activity concerns a public utility a question
may arise whether it falls in the first or the second category. The mere fact that that activity may
be useful to the public would not necessarily render it public service. An activity however
beneficial to the people and however useful cannot, in our opinion, be reasonably regarded as
public service if it is of a type which may be carried on by private individuals and is carried on

12
AIR 1963 SC 151
13
AIR 1960 SC 1203
14
1962 AIR 1161, 1962 SCR Supl. (3) 105
by government with a distinct profit motive. It may be that plying stage carriage buses even
though for hire is an activity undertaken by the Government for ensuring the people a cheap,
regular and reliable mode of transport and is in that sense beneficial to the public”.

In Arnold Rodricks v. State of Maharashtra,15 while Justice Wanchoo and Justice Shah
dissenting from judgment observed that there can be no doubt that the phrase ‘public purpose’
has not a static connotation, which is fixed for all times. There can also be no doubt that it is not
possible to lay down a definition of what public purpose is, particularly as the concept of public
purpose may change from time to time. There is no doubt however that public purpose involves
in it an element of general interest of the community and whatever furthers the general interest
must be regarded as a public purpose.

In Bhim Singhji v. Union of India,16 as per Sen, J., the concept of public purpose necessarily
implies that it should be a law for the acquisition or requisition of property in the interest of the
general public, and the purpose of such a law directly and vitally sub serve public interest.

Broadly speaking the expression ‘public purpose’ would however include a purpose in which the
general interest of the community as opposed to the particular interest of the individuals is
directly and virtually concerned.

In Laxman Rao Bapurao Jadhav v. State of Maharashtra17 this Court observed that “it is for
the State Government to decide whether the land is needed or is likely to be needed for a public
purpose and whether it is suitable or adaptable for the purpose for which the acquisition was
sought to be made. The mere fact that the authorized officer was empowered to inspect and find
out whether the land would be adaptable for the public purpose, it is needed or is likely to be
needed, does not take away the power of the Government to take a decision ultimately”

In Scindia Employees’ Union v. State of Maharashtra & Others18 reported in, this Court
observed as under:

“The very object of compulsory acquisition is in exercise of the power of eminent domain by the
State against the wishes or willingness of the owner or person interested in the land. Therefore,
15
AIR 1966 SC 1788.
16 Writ Petition (civil) 350 of 1977
17
Writ Petition No.1417/84 dated February 25, 1987.
18
SLP (C) No. 11043 of 1996.
so long as the public purpose subsists the exercise of the power of eminent domain cannot be
questioned. Publication of declaration under Section 6 is conclusive evidence of public purpose.
In view of the finding that it is a question of expansion of dockyard for defence purpose, it is a
public purpose.”

The right of eminent domain is the right of the State to reassert either temporarily or permanently
its dominion over any piece of land on account of public exigency and for public good. In the
case of Coffee Board v. Commissioner of Commercial Taxes 19 reported in, the Court observed
that the eminent domain is an essential attribute of sovereignty of every State and authorities are
universal in support of the definition of eminent domain as the power of the sovereign to take
property for public use without the owner’s consent upon making just compensation.

The power of eminent domain is not exercisable in Anglo-Saxon jurisprudence except on

condition of payment of compensation. In United States, the power of eminent domain is
founded both on the Federal (Fifth Amendment) and on the State Constitutions. The scope of the
doctrine in America stands considerably circumscribed by the State Constitutions. Now, the
Constitution limits the power to taking for a public purpose and prohibits the exercise of power
of eminent domain without just compensation. The process of exercising the power of eminent
domain now is commonly referred to as ‘condemnation’ or ‘expropriation.’

A seven-Judge Bench of this Court in the State of Karnataka & Another v. Shri Ranganatha
Reddy & Another20 reported in, explained the expression ‘public purpose’ in the following
words:

It is indisputable and beyond the pale of any controversy now as held by this Court in several
decisions including the decision in the case of His Holiness Kesavananda Bharati
Sripadagalaveru v. State of Kerala21 popularly known as Fundamental Rights case - that any
law providing for acquisition of property must be for a public purpose. Whether the law of
acquisition is for public purpose or not is a justifiable issue. But the decision in that regard is not
to be given by any detailed inquiry or investigation of facts. The intention of the legislature has
to be gathered mainly from the Statement of Objects and Reasons of the Act and its Preamble.
The matter has to be examined with reference to the various provisions of the Act, its context and

19
1988 AIR 1487, 1988 SCR Supl. (1) 348.
20
1978 AIR 215, 1978 SCR (1) 641.
21
[1973] Supp. 1 S.C.R. 1
set up, the purpose of acquisition has to be culled out therefrom and then it has to be judged
whether the acquisition is for a public purpose within the meaning of Article 31(2) and the law
providing for such acquisition.

When we ascertain the content of ‘public purpose’, we have to bear the above factors in mind
which mean that acquisition of road transport undertakings by the State will undoubtedly be a
public purpose. Indeed, even in England, ‘public purposes’ have been defined to mean such
‘purposes’ of the administration of the government of the country.22 Theoretically, or even
otherwise, there is no warrant for linking up public purpose with State necessity, or in the court
throwing off the State’s declaration of public purposes to make an economic research on its own.
It is indeed significant that in Section 40 (b) of the Land Acquisition Act, 1894, the concept of
‘public use’ took in acquisition for the construction of some work even for the benefit of a
company, provided such work as likely to prove useful to the public. Even the American
Constitution, in the 5th Amendment, uses the expression ‘public use’ and it has been held in
India in Kameshwar that ‘public purpose’ is wider than ‘public use’.”

Ambiguity, indefiniteness and vagueness of public purpose are usually the grounds on which
notifications under Section 4(1) of the Land Acquisition Act are assailed.

Public purpose cannot and should not be precisely defined and its scope and ambit be limited as
far as acquisition of land for the public purpose is concerned. Public purpose is not static. It also
changes with the passage of time, need and requirements of the community. Broadly speaking,
public purpose means the general interest of the community as opposed to the interest of an
individual.

The power of compulsory acquisition as described by the term ‘eminent domain’ can be
exercised only in the interest and for the welfare of the people. The concept of public purpose
should include the matters, such as, safety, security, health, welfare and prosperity of the
community or public at large.

The concept of ‘eminent domain’ is an essential attribute of every State. This concept is based on
the fundamental principle that the interest and claim of the whole community is always superior
to the interest of an individual.

22
pg. 228, Words & Phrases Legally defined, II Ed.
Principle of Determining Compensation –

Both under amended and unamended Article 31(2), legislatures have an option either to fix the
compensation in the law itself, or to lay down principles for determining compensation to be
paid. Confining to the first option, if after the 4th Amendment, Parliament passed a law fixing
compensation ranging from 90 to 50 per cent, or less, of the full and fair money equivalent
(market value) of the property to be acquired, no court could set aside the law, for the challenge
would be to the adequacy of compensation. In the result, the law would be a valid law although
the compensation provided fell short, or far short, of the market value.

If the question is asked “why the law has fixed the compensation amounting to 60%, and not 70
or 50 per cent of the market value?” the answer would be that in the legislative judgment the
amount fixed by the law was a fair and just compensation for the acquisition of property under
that law. And if a law fixing compensation at amounts ranging from 90 to 50 per cent, or less, of
the market value of the property acquired cannot be struck down by a court, equally, “principles
of compensation” cannot be struck down when they produce the same result. The consequence of
the transformation brought about by the 4th Amendment is that “principles of compensation do
not mean the same thing before and after the 4th Amendment. The 4th Amendment clearly
explained the meaning of “principle of compensation” as rules, the application of which would
enable a person to determine the full and fair money equivalent. The 4th Amendment took away
the yardstick of full and fair money equivalent and put no determinate yardstick in its place.

After the 4th Amendment, principles of compensation only meant general rules, the application
of which would produce an amount which the legislature considered was just and fair
compensation for the property acquired. The framers of the Constitution knew that to substitute
the fixed yardstick of a full and fair equivalent by the changing yardstick of the legislative
judgment of what is fair and just to the individual whose property is to be acquired, was to put
wide powers in the hands of Parliament which were capable of abuse. But the framers considered
it necessary that Parliament should have those powers, and that necessary powers cannot be
withheld because they can be abused. As regards the State legislatures, the requirement of
obtaining the President’s assent [i.e. approval of the Union Government] was considered a
sufficient safeguard. As years went by, it was seen that the presumption that the elected
representatives of the people would not enact unfair laws of acquisition was seen to be
unfounded, because the power was gravely abused and at times, the power became a weapon of
blackmail.

The above analysis shows that the 4th Amendment expressly made compensation and principles
of compensation non-justifiable. One question still remain open to judicial review, namely,
whether the amount fixed or the amount derived from the principles laid down for determining
the compensation could be described as compensation at all. If, for example, a law fixed Re. 1
for acquiring property of the market value Rs. 1 lac, it is obvious that the legislature was
observing the form but denying the substance of compensation. Such compensation would be
struck down as illusory, i.e. in a practical sense, as no compensation at all. Where illusory
compensation ends and grossly inadequate compensation begins, is a matter of difficulty which
would have to be solved on the facts and circumstances for which the law provides. But apart
from this limitation, the 4th Amendment was designed to exclude judicial review of
“compensation” or principles of compensation for the acquisition of property.

In Vejravelu’s case, the petitioner impugned the Land Acquisition (Madras Amendment) Act,
1961 which amended the Land Acquisition Act, 1894, by providing that for acquisition of land
for housing purposes the compensation to be paid was to be the market value at the date of
acquisition or the amount equal to the average market value during the five years immediately
preceding the date of acquisition, whichever was less. The Amendment Act also excluded
potential value of land. Since Subba Rao, C.J. struck down the impugned Act for violating
Article 14, it was wholly unnecessary for him to go into the challenge to the said Act under
Article 31. In fact, in the view which Subba Rao, C.J. took of the impugned Act under Article
14, he himself found it unnecessary to go into the challenge to the said Act under Article 19. The
discussion in Vajravelu’s case of the effect of 4th Amendment is confused and self-
contradictory. At one place Subba Rao, C.J. observed that if the 4th Amendment is amending
Article 31(2) retained the word “compensation”, the word must be treated as having the meaning
of “just equivalent.” However, he realized that to put this meaning would be to destroy the very
object with which the 4th Amendment was enacted, namely, to nullify Bela Banerjee’s case. He
therefore inconsistently upheld the grossly inadequate compensation provided for in the
impugned Act. This judgment need not detain us further because Subba Rao, C.J.’s observation
that “compensation” as used in the 4th Amendment means “a just equivalent” was treated in
State of Gujarat v. Shantilal Magaldas23 as not merely obiter but also erroneous.

In Shantilal Magaldas’s case Shah, J. held that the Transfer of Property Act laid down a relevant
principle when it provided for compensation being determined on the basis of market value
prevailing on a date anterior to the extinction of interest of the property acquired. The value of
Shantilal’s land was determined as on 18th April, 1927. The draft scheme was not sanctioned by
Government till 7th August, 1942, (that is, not till after 15 years). The compensation payable was
communicated to Shantilal on 23rd August, 1957 (that is, not till after 30 years). Yet Shah, J.
held that after the 4th Amendment the Act and the scheme were valid under Article 31(2).

The common features of the five provisions laying down the principles of compensation which
Shah, J. held were “relevant” (not irrelevant) are as under:

Firstly, they did not profess to aim at a just equivalent or the market value of the property at or
about the time of acquisition; i.e. to say that the standard of just equivalent was discarded.

Secondly, the compensation actually awarded was grossly inadequate, judged by the value of the
property in the open market, at or about the time of acquisition.

Finally, the compensation was not illusory.

In addition to these principles Shah, J. showed that the principles of compensation are “relevant”
if they deliberately omit an admitted element of market value, or disregard the continuous rise in
the market value by taking the average of 5 years, or disregard the rise by taking the actual cost.

The judgment given in Shantilal’s case vanished when the same learned judges delivered the
judgment in the Bank Nationalization Case which nullified the 4th Amendment. Following
propositions emerged from the majority decision:

Compensation being the equivalent n terms of money of the property acquired the principle for
determination of compensation is intended to award to the expropriated owner the value of the
property acquired. The Constitution guarantees a right to compensation – an equivalent in money
of the property acquired. That is the basic guarantee. The law must therefore, provide

23
1969 AIR 634, 1969 SCR (3) 341.
compensation, and for determining compensation relevant principles must be specified; if the
principles are not relevant the ultimate value determined is not compensation.

If appropriate method or principle is applied, the fact that by the application of another principle
which is also appropriate a different value is realized, the court will not be justified in
entertaining the contention that out of the two appropriate methods, one more generous to the
owner should have been applied.

Both the lines of thought (i.e. Vajravelu’s case and Shantilal’s case) which converge in the
ultimate result, support the view that the principles specified by the law for the determination of
compensation is beyond the pale of challenge, if it is relevant to determination of compensation
and is recognized principle applicable in the determination of compensation for property
compulsorily acquired and the principle is appropriate in determining the value of the class of
property sought to be acquired.

The value determined by the exclusion of important components of the undertaking such as
goodwill and the value of unexpired period of leases, will not, in our judgment, be compensation
for the undertaking.

Cases under Land Acquisition Act Held Violative Of Article 31(2)

Following Vejravelu’s case it was held that in Assam, the Land Acquisition Act, 1894, was in
force side by side with the Assam Acquisition of Land for Flood Control and Prevention of
Erosion Act, 1955. As the latter Act did not provide for just compensation as required by Article
31(2) before the Constitution (4th Amendment) Act, 1955, the Act violated Article 14 because
“… the classification of land required for works and other measures in connection with flood
control and prevention of erosion and land required for other public purposes has no reasonable
relation to the object sough to be achieved, viz. acquisition of the land by the State. In either
case, the owner loses his land and in his place, the State becomes the owner. There is unjust
discrimination between the owners of land being required for purposes mentioned in Assam Act
No. 6 of 1955 and some land being required for other purposes.”

In Balaji Industries v. Land Acquisition Commissioner,24 following Vejravelu’s case it was

held that section 40-B, A. P. (Telengana Area) Housing Board Act, 1956, as amended in 1962

24
AIR 1968 AP 141.
violated Article 14 as the basis provided for assessing compensation under that section was
different from that provided by Section 23 of the Land Acquisition Act, 1894.

Article 31(3) provides that no law such as is referred to in Clause 2, made by the legislature of a
State , shall have effect unless such law having been reserved for the consideration of the
President has received his assent.

Non-compliance with Article 31(3) has this effect, that unless a law is protected by Articles
31(4), (5) and (6), a law for the acquisition or requisition of property has no effect, and such
purported law must be held invalid. Accordingly, it was held that the Hyderabad Tenancy and
Agricultural Lands Act, 1950, was a post-Constitution law providing for the acquisition and
requisition of land and was inoperative as it had not received the President’s assent as required
by Article 31(3).

In Rameshwar Kumar v. R. P. Mishra,25 it was held that Land Acquisition (Bihar Amendment)
Act, 1958, was a law of the description contemplated by Article 31(2) and as it had not been
reserved for the consideration of the President and had not received his assent it had no legal
effect and the proceedings started under it were illegal and ultra vires.

In Kodarap Laxmiah v. State of Hyderabad26 it was held that as the Hyderabad City
Improvement Board (Land Acquisition) Act, 1951, was not protected by Article 31(5) (b) (ii) it
was governed by Article 31(2) and as it had not received the President’s assent, it was invalid.

In Jatindernath v. Jadhavpur University,27 it was held that though Article 31(3) is not attracted
unless the law falls within Article 31(2) therefore Jadhavpur University Act did not contravene
Article 31(3) because it was not a law for acquisition or requisition of property within the
meaning of Article 31(2A). Article 31A is available not only to laws which themselves provide
for compulsory acquisition of property for public purposes, but also to laws amending such laws,
provided that such amendments has received the President’s assent. The assent of the President
to the Orissa Estates Abolition Act, 1952, brought in the protection of Article 31A. In assenting
to such a law, the President assents to new categories of properties being brought within the
operation of existing law and he, in effect, assents to a law for the compulsory acquisition for
public purposes of these new categories of property.

25
AIR 1959 Pat 488.
26
AIR 1955 Hyd 41.
27
AIR 1960 Cal 120.
In Venkatrao v. State of Bombay,28 the Supreme Court held that if the assent of the President
had been given to amending Acts, it would be difficult to hold that the President had never
assented to the parent Act. Even if such assent had not been accorded earlier, it must be taken to
have been granted when he assented to the first of the amending Acts.

In S. N. Medhi v. State of Maharashtra,29 the Supreme Court held that the protection of Article
31A was available “not only to Acts which come within its terms but also to Acts amending such
Acts to include new items of property or which change some details of the scheme of the Act
provided firstly that the change is not such as would take it out of Article 31A or by itself is not
such as would not b protected by it and secondly that the assent of the president had been given
to the amending statute.”

28
1970 AIR 126, 1970 SCR (1) 317
29
1971 AIR 1992, 1971 SCR 661