Property is real, and so should the ‘compensation’


‘The requirement of paying compensation. i.e., money’s worth of the property acquired, which was the original position in the Bela Banerjee case has now been reinstated’

‘The requirement of paying compensation. i.e., money’s worth of the property acquired, which was the original position in the Bela Banerjee case has now been reinstated’
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An oft-quoted maxim in relation to property rights is that of President John Adams: “Property is surely a right of mankind as real as liberty”. The right to property — initially envisaged as a fundamental right and later as a constitutional right — has witnessed an interesting history in the post-colonial era. No other right as enshrined in the Constitution has witnessed a tussle as fierce as between courts and the legislature.

The genesis of this power struggle dates back to the case of Bela Banerjee which involved the interpretation of Articles 19(1)(f) and 31(2) of the Constitution (prior to amendment). The Supreme Court of India held that the word compensation in Article 31(2) postulated “a just equivalent of what the owner has been deprived of”. To undo this interpretation, the Constitution (Fourth) Amendment was passed in 1955 amending, inter alia, Article 31(2) to expressly state that the courts could not delve into the question of inadequacy of compensation.

To retaliate, the courts then devised an ingenious plan: they held that although the final compensation was non-justiciable, the principles fixed by the legislature to arrive at such determination would be open to scrutiny.

Word substitution

Parliament, for its part, realised that the word “compensation” in Article 31(2) was the source of all mischief. Vide the Constitution (Twenty-Fifth) Amendment Act, 1971 the word “compensation” was substituted by the word “amount” which kept the interpretation of the courts at bay. Thus, acquisition of property could now be effected through the medium of eminent domain (the state) by paying the landowner an “amount” (as distinguished) from “compensation”. The adequacy of such “amount” was consequently not open to judicial review.

Though the validity of the Constitution (Twenty-Fifth) Amendment Act, 1971 was upheld in Kesavananda Bharati, the Supreme Court watered down the intended effect of the amended Article 31(2) by an interpretive process .

The majority in Kesavananda Bharati took the view that though the adequacy of the amount paid was not justiciable, the courts could still examine whether the principles fixed for determining such compensation were relevant which in effect, reinstated what Justice Shah had said in the bank nationalisation case. After this decision, Parliament was convinced that the right to property remained a proverbial thorn in the goal of achieving a socialist state. This was because the right to property, from a socialist point of view, was very much a citadel of the bourgeoisie.

A significant change

After the defeat of the Congress in the general election of 1977, the Janata Party, which came to power, passed the Constitution (44th Amendment) Act, 1978. The right to property under Article 19(1)(f) was deleted from Part III and rehabilitated in the form of a constitutional right under Article 300-A. Article 31, which had witnessed much controversy in the matter of the determination of compensation was also deleted. The ripple was felt instantly.

Justice K.K. Mathew, who was one of the dissenting judges in Kesavananda Bharati, observed that ownership of property has a direct co relation to the quality of the civilisation and its culture and hence opined that “…there is no justification to exclude the fundamental right to own and acquire property from the category of basic features of the Constitution even if it be assumed that the concept of basic structure is a tenable one”.

In 1980, Professor P.K. Tripathi wrote an influential article, arguing that the deletion of Article 31 was a folly and further that: “The power granted by Entry 42 of the concurrent list is the power to ‘acquire’ and not the power to ‘confiscate’. As long as these two conditions — namely, that acquisition can be for a public purpose only and that acquisition must be accompanied by compensation — were expressly incorporated in the provision of Article 31(2), it was not necessary, and perhaps not even permissible, to invoke them as inherent parts of the grant itself…”

Article 300A reads that “no person shall be deprived of his property save by authority of law”. This, according to Prof. Tripathi, still meant that the “law” cannot be valid unless the acquisition or requisitioning is for a public purpose and there is also a provision in the law for paying compensation.

In that sense he believed that “compensation” will continue to have the same meaning given in the case of Bela Banerjee, namely, which is the market value of the property concerned at a time not too remote from the date of period of acquisition.

In the years that have followed the deletion of Articles 19(1)(f) and 31, the Supreme Court has held that the right to property is not only a constitutional right but also a human right. In the case of M.C. Mehta, the Supreme Court held that to be a valid law, it must be just, fair and reasonable. In other words, though the right to property was not a fundamental right, a law which deprived a person of his property must answer to the requirements of Articles 14,19 and 21. In B.K. Ravichandra, the Court went a step further and observed that the phrasing of Article 300A had a striking resemblance to Articles 21 and 265 and hence its guarantee could not be read down.

Facets that are protected

The recent decision of the Supreme Court in Kolkata Municipal Corporation has fleshed out seven different facets which are protected under Article 300-A. These are: The right to notice; the right to be heard; the right to a reasoned decision; the duty to acquire only for public purpose; the right of restitution or fair compensation; the right to an efficient and expeditious process; the right of conclusion.

The Court has concluded that the absence of even one of these features would render the law susceptible to challenge. The right to restitution or fair compensation judicially affirms the position prevailing when the unamended Article 31 was in force, and the interpretation expounded in the Bela Banerjee case on the aspect of payment of compensation. A person deprived of land by the state in the exercise of its power of eminent domain is entitled to be paid compensation which is just and reasonable. The Court, in Kolkata Municipal Corporation, has reiterated that deprivation or extinguishment of that right is permissible only upon restitution, be it in the form of monetary compensation, rehabilitation or similar means. Thus, the requirement of paying compensation. i.e., money’s worth of the property acquired, which was the original position in the Bela Banerjee case has now been reinstated. The wheel has come full circle.

The decision in Kolkata Municipal Corporation vindicates the prophetic words of Prof. P.K. Tripathi, that in enacting the Forty-Fourth Amendment and deleting Articles 19(1)(f) and 31, Parliament has unwittingly given the property of a citizen the kind of protection it has never enjoyed before either in British or in independent India.

N. Anand Venkatesh is Judge, Madras High Court

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