- Eminent Domain and the Changing

Dimensions of the Right to Property

Constitutional Law
and Property

This Photo by Unknown Author is licensed under CC BY-SA

Structure of the Lectures
• Eminent Domain: The Concept
• Fundamental Right to Property: Position before 1978
• Right to Property: Position after 1978
• Judicial Expositions
• From Bela Banerjee’s to R.C. Cooper; and KT Plantation
• Land Acquisition Act, 1894.
• LAAR, 2013.

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Eminent Domain
Coined by Hugo Grotius in 1625 and was defined in
the following manner:

“The property of subject 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 cases of extreme necessity... but for
ends of public utility, to which ends those who found
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.”

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This Photo by Unknown Author is licensed under CC BY-SA
• Eminent Domain: Inherent power
of the State to acquire property
upon meeting certain conditions –
- Public Purpose
- Compensation
• The process must be subject to a
legal method that can withstand
judicial review.
• Executive action cannot
interfere with the rights of a
citizen unless backed by an
existing statutory provision.

This Photo by Unknown Author is licensed under CC BY-SA

 Eminent Domain v Police Powers
• The police power of the state (in contrast to eminent domain power)
allows the state to “take” without compensation.
• Police power - restrictions are imposed on private property in the
public interest.
• E.g., in connection with health, sanitation, zoning regulation etc.

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Holdout Problem: Illustration
• Waldron, a resident of India, wants to start a cooperative society to
facilitate dairy farming in Sonepat, Haryana. His business venture would
potentially provide job opportunities to 25,000 Indians and it would do a
lot in terms of economic development. He goes to the government and
submits his business proposal and requests assistance with acquisition of
100 acres of land. The said 100 acre of land is jointly owned by 10
people. 9/10 Agree to sell, but the 10th person refuses. Without the
land of Mr. Munzer, the project will be dead before it can begin.

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 7

Constituent Assembly
Debates: Competing Interests

• Opposing views/aims proposed by Constituent

Assembly
• Tussle between zamindars/property holders and
socialists.
• Zamindars - adequate protection or at least just
and fair compensation for the price of their lands
• Political thinkers - influenced by socialism - land
be redistributed equitably.

This Photo by Unknown Author is licensed under CC BY-SA

 8
Constituent Assembly
Debates contd….

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 The Fundamental Right to Property
• Article 19 (1) (f) – right to acquire, hold and dispose of property, subject
to reasonable restrictions
• Art.31 (as originally enacted)
(1) No person shall be deprived of his property save by authority of law.
(2) No property, movable or immovable, including any interest in, or in any
company owning, any commercial or industrial undertaking, shall be taken
possession of or acquired for public purposes under any law authorizing
the taking of such possession or such acquisition, unless the law provides
for compensation for the property taken possession of or acquired and
either fixes the amount of the compensation, or specifies the principles on
which, and the manner in which, the compensation is to be determined and
given…

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• (3) No such law 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, receives his assent.
(4) If any Bill pending at the commencement of this Constitution in the Legislature of a State has, after it has
been passed by such Legislature, been reserved for the consideration of the President and received his assent,
then, notwithstanding anything in this Constitution, the law so assented to shall not be called into question in any
court on the ground that it contravenes the provisions of clause (2).
(5) Nothing in clause (2) shall affect
• a. The provisions of any existing law other than a law to which the provisions of clause (6) apply
b. The provisions of any law which the State will hereafter make
• i. For the purpose of imposing or levying any tax or penalty, or
ii. For the promotion of public health or the prevention of danger to life or property, or
iii. In pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India
or the Government of In dia and that of any other country, or otherwise, with respect to property declared by law as evacuee
property.
• (6) Any law of the State enacted not more than 18 months before the commencement of the Constitution may
within 3 months of such commencement be submitted to the President for his certification; and thereupon, if the
President by public notifi cation so certifies, it shall not be called in question in any court on the ground that it
contravenes the provision of clause (2) of this article or that it has contravened the provisions of clause (2) of
section 299 of the Government of India Act, 1935.

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• Article 19(1)(f)- all Indians had a right to property, subject to reasonable restrictions.
• Article 31- no one could be deprived of their property except by law;
• the law must set a compensation or principles on which such compensation is
paid
• Article 31 codified what is often described in political and legal parlance as the
‘eminent domain’ power of the state.
• This power inherent in the exercise of a state’s sovereignty allows the state
to compulsorily acquire property belonging to private persons for a public
purpose upon payment of compensation.
• The twin requirements of PUBLIC PURPOSE AND COMPENSATION
are based on the rationale that no individual should have to
disproportionately bear the burden of supporting the public good.

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• State Laws abolishing Zamindari, challenged in 3 states – UP, MP and Bihar -
upheld by two HCs, found unconstitutional by the Patna HC – later upheld by
SC.
ØAppeal(s) to the Supreme Court à Kameshwar Singh Case

• First Amendment - 1951– Ousted judicial review of zamindari

abolition cases
• Kameshwar Singh case, SC 1952 : Bihar Land Reforms Act, 1950 –
constitutional - (Did not create the requirements of a valid test or doctrine,
and in the future, courts did not perform a public purpose test, and instead
deferred to the legislature on the question of public purpose.)
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1st Amendment
• Statement of Objects:
• The validity of agrarian reforms … formed the subject-matter of dilatory
litigation, as a result of which the implementation of these important
measures [land reform], affecting large numbers of people, has been held up.
… The opportunity has been taken to propose a few minor amendments to
other articles in order to remove difficulties that arise.”
• Inserted Art 31A and 31B.
• 31A sought to make the taking of property immune from challenges on other
grounds, like Art. 14 and 19.
• 31B made laws placed in the 9th Schedule immune from constitutional
invalidity.

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 Capsule
• Bela Banerjee Case – ‘Just’ Compensation
• Fourth Amendment – 1955 – Ousted judicial review of level of compensation in all
cases
• Vajravelu Case: Illusory compensation - judicial review possible.
• R.C. Cooper: Constitution “guarantees a right to compensation-an equivalent in money
of the property compulsorily acquired. That is the basic guarantee”
• Forty Fourth Amendment – 1978 – Abolition of Articles 19 (1) (f) & 31 +
insertion of Art.300A.
• KT Plantation: “ payment of nil compensation or nominal compensation would make the
impugned law unjust, unfair or unreasonable…”
• LARR, 2013

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State of West Bengal v. Bela Banerjee 1954
• Impugned provision :
• “(b) in determining the amount of compensation to be awarded for land acquired
in pursuance of this Act the market value … shall be the market value on the
date of publication of the notification…subject to the…condition…that…if
such market value exceeds by any amount the market value of the land on the
31st day of December, 1946, on the assumption that the land had been at
that date in the state in which it in fact was on the date of publication of
the said notification, the amount of such excess shall not be taken into
consideration.”

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State of West Bengal v. Bela Banerjee
• Judgement [Patanjali Sastri, CJI]:
• “While it is true that the, legislature is given the discretionary power of
laying down the principles which should govern the determination of the
amount to be given to the owner for the property appropriated [RJ Edit:
See Art. 31(2)], such principles must ensure that what is determined as payable
must be compensation, that is, a just equivalent of what the owner has been
deprived of. Within the limits of this basic requirement of full
indemnification of the expropriated owner, the Constitution allows free play to the
legislative judgment as to what principles should guide the determination of the amount payable.
Whether such principles take into account all the elements which make up
the true value of the property appropriated and exclude matters which
are to be neglected, is a justiciable issue to be adjudicated by the court."

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State of West Bengal v. Bela Banerjee
• Judgement [Patanjali Sastri, CJI]:
• “Considering that the impugned Act is a permanent enactment and lands may be
acquired under it many years after it came in. to force, the fixing of the market
value on December 31,1946, as the ceiling on compensation, without reference to
the value of the land at the time of the acquisition is arbitrary and cannot be
regarded as due compliance in letter and spirit with the requirement of article 31
(2).
• We accordingly hold that the latter part of proviso (b) to section 8 of the
impugned Act which fixes the market value on December 31, 1946, as the
maximum compensation for lands acquired under it offends against the
provisions of article 31 (2) and is unconstitutional and void.

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4th Amendment
• “No Property shall be compulsorily acquired or requisitioned save for a
public purpose and save by authority of law which provides for
compensation for the property so acquired or requisitioned and either
fixes the amount of compensation or specifies the principles on which
and the manner in which the compensation is to be determined and
given, and no such compensation shall be called in question in any
court on the ground that the compensation provided by that law is
not adequate.

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Vajravelu Mudaliar v. Special Deputy Collector
• Facts: The petitioners' lands were notified for acquisition for the purpose of
housing schemes and proceedings in respect of compensation payable to them
in accordance with the provisions of the Land Acquisition (Madras
Amendment) Act, 1961, were pending. The constitutional validity Of this Act
was challenged by them on the -round that it infringed Arts. 14, 19 and 31(2)
of the Constitution.
• Issues: Whether after amendment applied only to acquisition of "estates" for
agrarian reform? (Art. 31-A) Whether after amendment compensation
required to be "Just equivalent”? Whether a law not providing for "Just
equivalent" amounted to fraud on power? [Article 31(2)] Whether issue
justiciable? [Land Acquisition (Madras Amendment) Act, 1961 placed in the
9th Schedule] Whether violative of Art. 31(2) or of Art. 14.

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Vajravelu Mudaliar v. Special Deputy Collector
• Impugned Provision: Object of the Act: "(ii) The proper planning of urban
and rural areas require the beneficial utilisation of vacant and waste lands and
the clearance of slum areas."
• "first, the market value of the land at the date of the publication of the notification
under section 4, subsection (1) or an amount equal to the average market value of
the land during the five years immediately preceding such date, whichever is
less.”
• “…The use to which the land was put at the date of the publication of the notification
under section 4, sub-section (1).”
• Sub-section (2) of S. 23 of the Principal Act was amended by substituting the
words, in respect of solatium, "fifteen per centum" by the words "five per
centum".
• Any increase to the value of the land acquired by reason of its suitability or
adaptability for any use other than the use to which the land was put at the date
of the publication of the notification under section 4, sub-section (1)."

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Vajravelu Mudaliar v. Special Deputy Collector
• Arguments of the Counsels: This aspect is elaborated by Mr. Palkhivala, who
appeared for one of the interveners in the petitions. He narrated the following
four situations;
• (i) when the law provides for adequate compensation but there is difference of opinion as
to the adequacy of it in a given case;
• (ii) where the law provides for partially inadequate consideration based on valid
principles related to the property at the time of acquisition;
• (iii) where it fixes arbitrarily the compensation based on principles unrelated to the
property or to the time of acquisition or to both;
• (iv) where the compensation fixed is illusory; and contended that in the first situation
compensation is paid, that in the second it is a moot question whether the question of
adequacy of compensation is justiciable or not, and that in the third and fourth
situations, the said question is clearly justiciable.
• Mr. Ranganadham Chetty, appearing for the State, on the other hand, argued that the
question of adequacy of consideration, however it arose, was not justiciable in a
court of law.

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Vajravelu Mudaliar v. Special Deputy Collector
• Judgement: Under Art. 31(2) and (2A) of the Constitution, the State
was prohibited from making a law for acquiring land unless it was
for a public purpose and unless it fixed the amount of
compensation or specified principles for determining the amount
of compensation. But Art. 31A lifted the ban to enable the State to
implement pressing agrarian reforms and this object is implicit in Art.
31A. This was a restricted exception, as otherwise, the State would
be in a position to acquire the land of citizens without reference to
any agrarian reform in derogation of their fundamental rights and
without payment of compensation and thus deprive Art. 31(2)
practically of its content.
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Vajravelu Mudaliar v. Special Deputy Collector
• Reasoning: The effect of the amended Art. 31(2) is that a question which pertains to the adequacy of
compensation is not justiciable. For determining compensation in respect of any property
acquired, there may be many possible modes or principles of valuation; where the adoption
of one principle may give a higher and of another, a lesser value, the Court cannot say that
the law should have adopted one principle and not the other, for this would relate only to the
question of adequacy. On the other hand, if a law lays down principles which are not relevant to the
property acquired or to the value of the property at or about the time it is acquired, it may be said that they
are not principles contemplated by Art. 31(2). If a law says that though a house is acquired, it
shall be valued as land, or that though a house site is acquired, it shall be valued as
agricultural land, or that though it was acquired in 1950, its value in 1930 should be
given, or though 100 acres are required, compensation should be given only of 50
acres, the principles do not pertain to the domain of adequacy and in such cases the
validity of the principles could be scrutinized. Therefore the Court would have
jurisdiction to deal with the matter if the legislature, though ex-facie purporting to
provide for compensation or indicating the principles for its ascertainment, in fact
and substance takes away property without providing compensation, or provides for
illusory compensation, or for its ascertainment on arbitrary principles, for in that
case the legislature would be enacting a law in fraud of its power under Art. 31(2).
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 Article 14 Test
"This classification may be on different bases. It may be geographical or
according to objects or occupations or the like. Mere classification, however,
is not enough to get over the inhibition of the Article. 'The classification must
not be arbitrary but must be rational, that is to say, it must not only be based
on some qualities or characteristics which are to be found in all the persons
grouped together and not in others who are left out but those qualities or
characteristics must have a reasonable relation to the object of the
legislation. In order to pass the test, two conditions must be fulfilled,
namely, (1) that the classification must be founded on an intelligible
differentia which distinguishes those that are grouped together from
others. The differentia which is the basis of the classification and the
object of the Act are distinct things and what is necessary is that there
must be a nexus between them.”

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 Creates a Separate Class of People
The result of the Amending Act is that if the State Government acquires a land for a housing purpose,
the claimant gets only the value of the land at the date of the publication of the notification or an
amount equal to the average market value of the land during the five years immediately preceding such
date, whichever is less. He will get a solatium of only 5 per centum of such value instead of 15 per
centum under the Principal Act. He will not get any compensation by reason of the suitability of the
land for any use other than the use for which it was put on the date of publication of the notification.
The second principle is only for a solatium and it is certainly within the powers of the Legislature to fix
the quantum of solatium in acquiring the land. Nor can we say that the first principle amounts to fraud
on power. In the context of continuous rise in land prices from year to year depending upon
abnormal circumstances it cannot be said that the fixation of average price over 5 years is not a
principle for ascertaining the price of the land in or about the date of acquisition. The third
principle excludes what is described by Courts as the potential value of the land acquired. When a land is
acquired, compensation is determined by reference to the price which a willing vendor might reasonably
expect to obtain from a willing purchaser… In the, result it is hereby declared that the Amending Act is
void. We direct the issue of writs of mandamus restraining the respondents from proceeding with the
acquisition under the provisions of the Amending Act. This order will not preclude the respondents
from continuing the proceedings under the provisions of the Land Acquisition Act, 1894, in accordance
with law.

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Act Violates Article 14
…Whether the impugned Act satisfies the said two tests, three questions have to be posed, namely, (i) what is
the object of the Act ? (ii) what are the differences between persons whose lands are acquired for the housing
schemes and these whose lands are acquired for purposes other than housing schemes or between the lands so
acquired? and (iii) whether those differences have any reasonable relation to the said object?
On a comparative study of the Principal Act and the Amending Act, we have shown earlier, that if a land is
acquired for a housing scheme under the Amending Act, the claimant gets a lesser value than he would get for
the same land or a similar land if it is acquired for a public purpose like hospital under the Principal Act.
Whether this classification between persons whose lands are acquired for housing schemes and persons whose
lands are acquired for other public purposes has reasonable relation to the object sought to be achieved. The
object of the Amending Actis to acquire lands for housing schemes… However laudable the objects
underlying the Amending Act may be, it was so framed that under the provisions thereof any land, big or
small, waste or fertile, owned by rich or poor, can be acquired on the ground that it is required for a housing
scheme. The housing scheme need not be confined to slum clearance; the wide phraseology used in
the Amending Act permits acquisition of land for housing the prosperous section of the community. It need
not necessarily cater to a larger part of the population in the city it can be confined to a chosen few. The land
could have been acquired for all the said purposes under the Principal Act after paying the market value of the
land. The Amending Act empowers the State to acquire land for housing schemes at a price lower than that
the State has to pay if the same was acquired under the Principal Act.

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 Aftermath : Union of India v. Metal
Corporation:
• The Metal Corporation of India (Acquisition of Undertaking Act), 1965 provided
for the valuation of plant, machinery or other equipment which has not been
worked or used and is in good condition and the same could be acquired under
the act for the actual price as paid by the Corporation. Other plant machinery and
equipment could be acquired at the written down value (RJ Edit: depreciation) in
accordance with the Indian Income Tax Act of 1961.
• Both of these principles had no principles of ascertaining compensation acquired
and the cost price/written down value for acquiring the machinery was the
criteria for doling out the compensation.
• From this it cannot be said that after the tenth year the machinery has no
value. But by the application of this rule, no compensation is given to the
owner of the machinery, and the government takes machinery for free.
• Judgement: Art. 31(2) That the law has to provide for the payment of just
equivalent, or lay down principles which are not arbitrary.

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R.C. Cooper v. Union of India
• Background: Nehruvian Socialism and its operation: Several refineries and oil companies were nationalised
and taken over by the State. Imperial Back acquired by SBI; and soon number of commercial banks were
consolidated. In 1951, there were 566 banking institution, while in 1969 there were 89.
• Facts: Ordinance promulgated, transferring and vesting the undertaking of 14 named Commercial banks
which held deposits of 50 crores and more to a new bank. Ordinance replaced by the Banking Companies
(Acquisition and Transfer of Undertakings) Act of 1969.
• Political Contestations: Money meant for nationalisation could be used for stimulating the economy;
Morarji Desai dropped as FM; resigned as Dy PM the next day. The Banking Companies Acquisition and
Transfer of Undertaking Ordinance, 1969 to nationalise 14 banks having deposits exceeding 50
crores, Ordinance promulgated on Saturday.
• with one stroke, the ordinance ensured that 75% of the banking sector came under the State control. The entire paid
up capital, all assets and liabilities, contracts and agreements were to vest with the Central Government. All directors
of the 14 banks would vacate their respective offices but the services of other employees were to continue.
• Issues:
• A. Whether the Act was violative of Articles 19(1)(f) and 31(2)— provisions pertaining to the ‘fundamental right to
acquire, hold, and dispose of property’?
• B. Whether the quantum or method adopted for payment of compensation was valid?

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R.C. Cooper v. Union of India: Compensation
• Impugned Act: Section 6 read with Schedule 2 provided for and prescribed the method of determining
compensation for acquisition of the undertaking. –
“(2) The amount of compensation referred to in sub-section (1) shall be given to every existing bank, at its
option,—
(a) in case (to be paid by cheque drawn on the Reserve Bank) in three equal annual instalments, the amount of each
instalment carrying interest at the rate of four per cent. per annum from the commencement of this Act, or
(b) in saleable or otherwise transferable promissory notes or stock certificates of the Central Government issued
and repayable at par, and maturing at the end of—
(i) ten years from the commencement of this Act and carrying interest from such commencement at the
rate of four and a half per cent. per annum, or
(ii) thirty years from the commencement of this Act and carrying interest from such commencement at the rate of
five and a half per cent. per annum, or
(c) partly in cash (to be paid by cheque drawn on the Reserve Bank) and partly in such number of
securities specified in sub-clause (i) or sub-clause (ii), or both, of clause (b), as may be required by the
existing bank, or
(d) partly in such number of securities specified in sub-clause (i) of clause (b) and partly in such number of
securities specified in sub-clause (ii) of that clause, as may be required by the existing bank.”

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 Compensation
• Compensation
• To determine the quantum of compensation, two methods were
specified:
• a. Where the amount of compensation could be fixed by an agreement, it would be
determined in accordance with such agreement;
• b. Where no such agreement could be reached, the Central Government had to refer
the matter to a Tribunal within a period of 3 months from the date on which the
Central Government and the existing bank failed to reach an agreement regarding
the amount of compensation.
• The compensation so determined was to be given not in cash but in
marketable Central Government securities after 10 years. — The
shareholders therefore would consequently get nothing. A senior citizen
may not be alive to see his bond uncashed.
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Compensation under the Act
• The Principles laid down for the payment of compensation in the Ordinance
and the Act are as follows—
• no provision for valuing the entire undertaking as a unit but only a provision for valuing
some of the components
• Goodwill of the banks was not even included as an asset for the purpose of valuation
• No compensation for the rent paid for the unexpired period of the longterm lease
• Value of land and buildings was deemed to be 12 times of the annual rent or reasonably
expected rent.
• Interest payable on certain mortgages and capital charges were to be deducted twice for
determining the quantum of compensation
• The total compensation was determined after applying these principles and then payable
after 10 years.
• Recall: Article 31(2) had placed two major restrictions on the power to acquire private
property:
• Acquisition had to be for public purpose, and;
• Compensation had to be paid for the same.

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R.C. Cooper v. Union of India: Compensation
The Act, instead of providing for valuing the entire undertaking as a unit
provided for determining the value, reduced by the liabilities, of only
some of the components which constituted the undertaking… provided
different methods of determining compensation in respect of each such
component. This method is prima facie not a method relevant to the
determination of compensation for acquisition of the undertaking, for,
the aggregate value of the component is not necessarily the value of the
entirety of a unit of property acquired, especially, when the property is a going
concern with an organised business. On this ground alone acquisition of the
undertaking was liable to be declared invalid for it impaired the
constitutional guarantee for payment of compensation for acquisition of
property by law.

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R.C. Cooper v. Union of India
Reasoning: The Act violated the guarantee of compensation under Art. 31(2) in
that it provided for giving certain amounts determined according to principles
which were not relevant in the determination of compensation… and by the
method prescribed the amounts so declared could not be regarded as compensation. In
P. Vajravelu Mudalkar v. Special Deputy Collector and in the cases…arising under
statutes enacted after… Fourth Amendment…this Court held that the expression
compensation in Art. 31(2) after the Fourth Amendment continued to have the same
meaning it had in Art. 31(2) before it was amended viz., "just equivalent" or "full
indemnification”… In Shantilal Mangaldas it was observed that compensation payable
as compulsory acquisition of property was not by the application of any principles,
determinable as a precise sum and by calling it a "just" or "fair" equivalent…that the
rules relating to determination of value of lands, buildings, machinery and other classes
of property differed…that principles could be challenged on the ground that they
were irrelevant to the determination of compensation but not on the plea that
what was awarded as a result of the application of those principles was not just
or fair compensation.

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R.C. Cooper v. Union of India
The deficiencies in the Act did not result merely in inadequate compensation
within the meaning of Art. 31(2). The Constitution 'guarantees a right to
compensation-an equivalent in money of the property compulsorily
acquired. That is the basic guarantee. The law must, therefore, provide
compensation and for determining compensation relevant principles
must be specified : if the principles are not relevant the ultimate value
determined is not compensation. Therefore, determination of compensation
to be paid for the acquisition of an undertaking as a unit after awarding
compensation…Further, by giving the expropriated owner compensation
in bonds of the face value of the amount determined maturing after
many years and carrying a certain rate of interest, the constitutional
guarantee was not necessarily complied with. If the market value of the
bonds is not approximately equal to the face value, the expropriated
owner may raise a grievance that the guarantee under Art. 31 (2) is
impaired.
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 Violation of Article 14
1. The Act prohibited nationalised banks from carrying out banking business. This could not be
challenged as violating their right to carry on business in banking: under the constitution, the State
could always create partial or complete monopoly.
2. As companies, the 14 banks were prohibited from using the word bank or banking in their corporate
name.
3. The nationalised banks were deprived of their entire assets, including the premises, their corporate
names, their managerial staff and the pitiful compensation was payable after 10 years.
4. The ban on banking business violated the right to equality under Article 14.
5. The SC observed that while the 14 banks were prohibited from carrying out banking business other
banks including the foreign banks could continue to carry on banking business in India and abroad.
6. There was also no bar on new banks being formed. The Court ruled that this was a flagrant hostile
discrimination that impaired the guarantee of equality.
7. Therefore, the 14 banks were permitted to carry on non-banking business.
8. The Court had therefore no hesitation in holding that the theoretical right to carry on business was
an empty formality and was liable to be struck down as being unreasonable. The Court also ruled
that prohibitions violated the right to equality under Article 14.

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Legislature’s Reaction to the Bank
Nationalisation Case
• Constitution (25th Amendment) Act, 1971.
• Article 31(2) amended, and the word ‘compensation’ replaced with the word
‘amount’.
• Constitution (44th Amendment) Act, 1978 repealed Article 19(1)(f)
and Article 31.
• Article 300-A inserted which reads as: Persons not to be deprived of
their property save by authority of law– No Person shall be deprived
of his property save by authority of law.

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K.T. Plantation & anr.
v. State of Karnataka
• Facts: Dr. Roerich & Mrs. Devika Rani Roerich had owned an
Estate called Tatgunni Estate covering 470.19 acres in
Bangalore South Taluk, out of which 100 acres were granted
to them by the State Government in the year 1954 for
Linaloe cultivation. Deputy Commissioner, Bangalore Rural
District reported on 26.6.1993 an excess of 60.04 acres ought
to have been surrendered by them to the Government. The
petitioner Company in the case had allegedly purchased the
land from the Roerichs in two separate transactions but the
same was disputed by Mrs. Roerich. The Personal Secretary of
the Couple also claims that the Roerich bequeathed their
property in their will.
• The Chief Secretary of the State of Karnataka on 1.4.92 to
take effective and proper steps to preserve the paintings,
artefacts and other valuables expressed the Government’s
willingness to purchase the paintings and other valuables so as
to set up a Roerich Gallery. The State Cabinet in its meeting
held on 09.04.92 also discussed about the desirability of
acquiring the landed properties of Roerichs and also for setting
up an Art Gallery-cum-Museum, in public interest. Following
that meeting, the Roerich and Devika Rani Roerich Estate
(Acquisition and Transfer) Ordinance, 1992 was drafted, but
could not be issued.

37
 3
8

K.T. Plantation v. State

of Karnataka
• The Commissioner and Secretary to the Government,
Revenue Department taking note of the above
mentioned facts wanted to acquire the valuable
lands, jewellery and paintings held by the late
Roerichs through the ordinance. The vehicle of
withdrawing the exemption given to the lands used
for Linaloe cultivation to enable the resumption of
land by the State, before lands changed hands was
used. The Ordinance was eventually passed and the
Act came into being in 1996.
• Issues:
• Can the exemption be withdrawn without giving reasons?
• Is the Roerich acquisition act protected by article 31C?
K.T. Plantation v.
State of Karnataka
• Issues: What is the Scope of Article 300-A? Whether the
act is in violation of the true interpretation of Article 300-
A of the Constitution, in so far no specific compensation
for acquisition of 468 acres of Linaloe plantation ? After
the deduction of liabilities and payment of such
compensation for artefacts, as a result of which, whether
the Act really is expropriatory in nature?
• If Article 300-A of the Constitution is providing for
deprivation of Property without any compensation at all, or
illusory compensation of property, whether the said Act
would violate the rule of law and would be arbitrary and
unconsionable violation of Article 14 of the Constitution,
thus violating the basic structure of the Constitution?

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KT Plantation v. State of Karnataka
• Judgement: Requirement of public purpose for deprivation of
property under Article 300-A is a precondition but no
compensation or nil compensation has to be justified by the State
on judicially justiciable standards. Measures designed to achieve
greater social justice may call for lesser compensation and such a
limitation by itself will not make legislation invalid or unconstitutional or
confiscatory. In other words, the right to claim compensation or the
obligation to pay, though not expressly included in Article 300-A, it
can be inferred in the Article and it is for the State to justify its
stand on justiciable grounds which may depend upon the
legislative policy, object and purpose of the Statute and host of
other factors.
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KT Plantation v. State of Karnataka
• Judgement: While enacting Article 300A Parliament has only borrowed
Article 31(1) [the "Rule of law" doctrine] and not Article 31(2) [which
had embodied the doctrine of Eminent Domain]. Article 300A enables
the State to put restrictions on the right to property by law. That law has
to be reasonable. It must comply with other provisions of the
Constitution. The limitation or restriction should not be arbitrary
or excessive or what is beyond what is required in public interest.
The limitation or restriction must not be disproportionate to the
situation or excessive. The legislation providing for deprivation of
property under Article 300A must be "just, fair and reasonable" as
understood in terms of Articles 14, 19(1)(g), 26(b), 301.
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KT Plantation v. State of Karnataka
• Judgement: At this stage, we may clarify that there is a difference between
"no" compensation and "nil” compensation. A law seeking to acquire private
property for public purpose cannot say that "no compensation shall be paid".
However, there could be a law awarding "nil" compensation in cases where the
State undertakes to discharge the liabilities charged on the property under
acquisition and onus is on the government to establish validity of such law. In
the latter case, the court in exercise of judicial review will test such a law keeping in mind
the above parameters. Right to property no more remains an overarching
guarantee in our Constitution... The law is…that a legislation enacted
under the authority of law as provided in Article 300A is not immune
from challenge before a Constitutional Court for violation of Articles 14,
21 or the overarching principle of Rule of Law, a basic feature of our
Constitution, especially when such a right is not specifically
incorporated in Article 300A, unlike Article 30(1A) and the 2nd proviso
to Article 31A.
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Problems with the Land Acquisition Act of
1894
• Monetary compensation only
• No commitment/obligation to rehabilitate and resettle people
• Absence of requirement of consent
• Powers of Collector:
• Disregard for the consent of people involved / lack of creating a participative framework
• No inclusive decision making- govt decides everything
• No provisions for vulnerable groups

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 Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
• Objective: to transform the process of land acquisition into a “humane,
participative, informed and transparent” process.
• Land may be acquired for:
• Public purpose: includes strategic purposes, infrastructure
development (incl. industrial corridors, mining, manufacturing
zones), housing, planned development, education, transportation,
tourism
• Public-private partnership projects
• Private companies for public purposes.

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Changes by the New Act
• Consent: May be required from a certain percentage of affected parties
(depending upon the nature of the project)
• Affected persons: inter alia owners, tenants, persons whose primary
source of livelihood stands affected by acquisition and were working for
three years in the affected area, forest dwellers.
• Compensation: hiked up to four times market value (rural) and twice
the market value (urban areas)
• Possession: to be taken after payment of compensation and
rehabilitation and resettlement.

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Social Impact Assessment
• Social Impact Assessment: Upon there being an intention to acquire a SIA is to be
conducted in consultation with the Panchayat/Municipality / Municipal Corporation.
What does the SIA study entail?
• consultation with local panchayat/ municipality.
• public hearing
• publication of study
• appraisal by expert committee (whether for public purpose, costs outweigh
benefits).
• Urgency Clause

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Procedure for Acquisition
• Preliminary Notification
• Updating Records & Survey
• Objections after Preliminary Notifications
• Preparation of Rehabilitation & Resettlement Scheme
• Second Public Hearing
• Declaration for Acquisition and Summary of R&R Report
• Award
• Resettlement & Rehabilitation Award
• Possession

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End Week 2: Agenda for Next Lecture
• Section 3 of the Transfer of Property Act. Read S. 3 TPA, S. 3(26)
General Clauses Act and the Registration Act
• Types of Property.
• Definition of Immoveable and Moveable Property
• Ananda Behera v. State of Orissa (1955) 2 SCR 919
• Shantabai v State of Bombay, AIR 1958 SC 532
• Suresh Chand v. Kundan (2001) 10 SCC 221
• Duncan Industries Ltd. v State of Uttar Pradesh, (2000) SCC 633
• Triveni Engineering & Industries Limited v. Comm. of Central Excise
(2000) 7 SCC 29

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