CONSTITUTIONALITY OF ODISHA ESTATE ABOLITION ACT

The trend of economic and political thought of the nation has insisted upon the abolition of
Zamindari tenure and the elimination of intermediaries between the State and the cultivator as
the first step in any general measure of agrarian reform. It has been considered that concentration
of large blocks of land in the hands of a limited number of Zamindars denying fair distribution
thereof to the cultivators and the existence of intermediaries between the State and the
cultivators, tending to insecurity and oppressive rents for the tillers of the soil, and the
development of absentee landlordism and sub-in-feudation of tenures, have produced deleterious
effects on the improvement of agriculture which is the main occupation of the predominantly
large rural population of the country. In consonance with this trend of ideas, quite a number of
States have taken steps to abolish the Zamindaries and for eliminating intermediaries even before
the new Constitution of India came into force. the provisional Parliament of India took it up on
hand and amended the Constitution by enacting new Articles 31A and 31B with retrospective
operation. The validity of this amendment was challenged before the Supreme Court, but it was
upheld by the judgment in --'Shankari Prasad Singh v. The Union of India', AIR 1951 S. C.
458(A). The Orissa Estates Abolition Act 1952, the validity of the entirety of which or of parts
thereof, is the question that substantially arises on these applications, is not one of the Acts
mentioned in the 9th Schedule of the Constitution. It does not, therefore, get the protection of the
new Article 31B. But the Orissa Estates Abolition bill was introduced in the State Legislative
Assembly on 17-1-1950 and was passed by the Legislative Assembly on 28-9-51. It was also
reserved by the State Governor for consideration of the President and received his assent on 23-
1-52. This Act, therefore, obtains the protection of Article 31(4) and of the new Article 31A of
the Constitution, in so far as they are applicable to the provisions thereof. It is necessary to note
that there have been some changes from the provisions of the Bill before it was passed as an Act.
The question whether and to what extent those changes are entitled to the protection under
Article 31(4) or 31A may have to be considered when it arises. It has to be mentioned that the
present applications were filed in June, 1952, and that subsequent thereto, the Orissa Act was
amended in certain respects. It will be seen that the said amendments are primarily for the
purpose of giving effect to the decision of the Supreme Court in 'AIR 1952 S. C. 252(B)', which,
while upholding the validity of the Bihar Act, held two individual provisions thereof as invalid.
There were also a few other amendments, the more important of them being a change of meaning
of "date of vesting" and an alteration of Section 4 of the Act relating to voluntary surrender of
the estates by the proprietors. The Act amending the Abolition Act was passed by the State
Legislature on 5-7-52 and assented to by the President on 27-8-1952.

The Orissa Estates Abolition Act as amended, follows in the main, the pattern of similar Acts of
the other States passed for the same purpose. It provides for the transference of the ownership of
the estate of any landed proprietor from him to the State 6n the issue of a notification for such
estate. It authorises the State Government to take over the possession and management of the
estate and converts the previous raiyat of the proprietor into a raiyat of the State. It also
transforms the temporary cultivator or tenant of the proprietor into a tenant of the State. It
provides for payment of compensation to the dispossessed proprietor on certain principles
prescribed by it. It further provides for the consequential management of the various estates, thus
taken over, by the formation of suitable administrative units, the management of which is to be
vested in local authorities called Anchal Sabha to be constituted in the prescribed manner
(presumably expected to be a democratic local body) which is to work under an Anchal Adhikari
appointed by the State Government. This Act, unlike its sister Act of Bihar, sets out the public
purpose, which inspired the legislative measure, in clear and unmistakable terms in its preamble,
as follows:

"Whereas in pursuance of the Directive Principles of the State Policy laid down by the
Constitution of India, it is incumbent on the State to secure economic justice for all and to that
end to secure the ownership and control of all material resources of the community so that they
may best subserve the common good, and to prevent the concentration of wealth and means of
production to the common detriment;

And whereas in order to enable the State to discharge the above obligation, it is expedient to
provide for the abolition of all the rights, title and interest in land and intermediaries by whatever
name known, including the mortgagees and lessees of such interest, between the raiyats and the
State of Orissa, for vesting in the said State of the said rights, title and interest and to make
provision for other matters connected therewith;

It is hereby enacted as follows: etc,"

The transference of the ownership of the estates from the proprietors to the State is brought about
by the definition of the words "estate", "intermediary" and "date of vesting" taken with the
provisions of Section 3 of the Act, which empowers the State Government to declare by
notification from time to time that the estates specified in those notifications have passed to and
become vested in the State free from all encumbrances. Under Section 4, the State Government
can invite from proprietors, proposals for surrender of their estates and if, such proposals are
accepted the estate vested in the Government accordingly. Otherwise, on the issue of notification
under section 3, the estate vests in the Government, the date of vesting being the date of
publication of notification. The legal consequences of such vesting are elaborately specified* in
Section 5 of the Act. Broadly speaking, the consequences are as follows: All the lands cultivated
or uncultivated or non-cultivable, within an estate including waste lands, trees, orchards, pasture-
lands, forests, mines, minerals, quarries, rivers, streams, etc., as also fisheries, ferries, Hats,
Bazars and buildings or structures comprised within the estate, shall vest in the Government. The
proprietor, however is allowed to keep such of the land which is in his own personal cultivation.
He can also keep such of the buildings which are 'not' in use for estate or office purposes, that is
to say, he can remain in the possession of residential buildings, or buildings which are under use
for other personal purposes, such as for instance those used for storing personal grains or for
keeping personal cattle or implements as also buildings used for factories or mills or for purposes
of trade, manufacture, or commerce. Mines which are under the actual direct operation and
working of the proprietor also are allowed to remain in his possession. The possession of all the
rest of the items of property comprised within the estate passes or. to the State. In respect of such
of the items of property left in the possession of the proprietor, he becomes a statutory tenant of
the State paying same rent to the Government as determined.

The broad principle for assessment of compensation that has been adopted is that it is to be
calculated at a certain number of years' purchase of the net annual income of the estate during the
previous agricultural year, i.e., the year immediately preceding that in which the date of vesting
falls, which means the date when the notification relating to the vesting was issued.

One noticeable feature of the assessment of compensation is that what is taken into account, is
generally only the actual income derived in the previous year from the various sources, subject to
various deductions, but not any potential income from undeveloped resources of the estate.
'The objections to the validity of the Act as a whole':-- The main contention in this respect is
based on the assumption that what has in fact been decided by the Supreme Court is that the
Estates Abolition Acts are not open to challenge only on the grounds that the scheme of
acquisition of zamindaries is not for a public purpose or that the compensation provided is
grossly inadequate or in some instances illusory or on the ground that the same is arbitrarily
discriminatory. It is, therefore, strenuously argued that the scheme of compensation provided
under the Act is open to challenge in other respects. The argument, if I understood it aright, was
put in this way. Article 31(2) enjoins that "No property shall be acquired for public purposes
under a law authorising such acquisition, unless the law provides for compensation, and either
fixes the amount thereof, or specifies the principles on which and the manner in which the
compensation is to be determined and given."

Article 31(4) and Articlev 31A taken together provide that 'such a law' relating to estates shall
not be called in question on the ground that it contravenes the provisions of Article 31(2) or of
any other fundamental rights in Part III, if it satisfies the requirement of the said Articles. It is
urged, that what is cured thereby is the iaw only 'in so far as' it relates to the acquisition or taking
possession, but not in respect of the provisions relating to compensation, except in so far as such
provisions are in conflict with the express provisions relating to fundamental rights.

It is urged, therefore, that if it can be shown that the scheme of compensation contemplated by
the Act under challenge produces no compensation in the sense that it lacks the attributes of what
is considered 'compensation' as understood under the law of 'Eminent Domain" the scheme of
compensation is invalid in its entirety and, therefore, thn Act as a whole must go. It is said that
while an Act for compulsory acquisition providing some real scheme of "compensation" is
protected by Articles 31(4) and 31A, though) the compensation is inadequate, such an Act with a
scheme which results in no compensation is a fraud on the law and hence invalid. To reinforce
this argument, learned counsel took us through what are generally understood as attributes
necessarily flowing out of the concept of "compensation for compulsory acquisition."

"Article 31(4) protects a law of the description mentioned therein against the provisions of
Article 31(2). It follows, therefore, that what is sought to be protected by -Article 31(4) is a law
for the acquisition or taking possession of property which does not amongst other things, provide
for compensation or does not fix the amount or specify the principles on which and the manner
in which the compensation is to be determined and given, for otherwise there would be no
necessity for any protection." While Article 31 no doubt recognizes the principles that private
property can be compulsorily acquired only under the authority of law and that such law must
provide for compensation, some of the ideas relating to what may be called the "fundamental
attributes of private property" are in the process of undergoing some change under the impact of
socialistic thought.

hat may be the reason why the fundamental rights provided for under Article 31 (1) and (2) are in
the negative but elastic terms in which they have been couched. The guarantee contained in this
fundamental right may well be taken to have been satisfied so long as the law authorising the
acquisition provides for the amount of the compensation or specifies the principles on which and
the manner in which the compensation is to be determined and given, so long as the scheme of
compensation which emerges therefrom results in compensation, and not negation thereof,
having regard to all the circumstances of the contemplated compulsory acquisition.

Article 31(2) requires only that the law must provide for compensation 'for' the property and
must either 'fix' the amount of compensation or specify the 'principles' on which the
compensation is to be determined arid 'given'.