State of Karnataka v. Ranganatha and Others

STATE OF KARNATAKA AND ANR ETC. _v._ SHRI RANGANATHA REDDY & ANR. ETC. _October._ 11. 1977 ' [M. H. BEG, C.J., _Y._ V. CHANDRACHUD, P. N. BHAGWATI, V. R. KUISHNA IYER, N. L. UNTWALIA, JASWANT SINGH AND P. S. KAILASAM, JJ.] A B _Constitution_ _of .Irulid; -Article-31(2)-"Public_ _purpose" Scope_ _of,_ _whether_ _includes compulsory acquisition for_ _Road_ _Transport Corporation-Part acqui·_ _sition_ _pf_ _undertaking, validity_ _of-"Amount" in lieu_ _of acquired property._ _quan·_ _tum_ _and_ _principles_ _of_ _evaluation, ·whether questionable_ _under_ _Art._ -31(2). _Karnataka Contract Carriages, (Acquisition)_ _Act,_ 1976, _vis-a-vis Constilution_ - C _of_ _India, Articles_ 31(2) _and_ 39(b) _and_ _(c)_ _and__ _Schedule_ _List_ 1 _Entry_ 42 _iVhethPr_ _on_ _acquisition the State_ _Govt._ _can transfer_ _counter_ _signed portions_ _of_ _Inter-State_ _pern1its_ _td Road_ _Transport_ _Corporation-S.4(3)y_ _"deemed",_ _l,:/ietlier_ introduce~ _legal_ _fiction--S.6(1),_ _fixation_ _of_ _amount_ _by- arbitrator_ _S._ 6(1) _Schedule,_ _Para_ 1(1). _Explanation-Interpretation_ _of_ _"acquisition cost"._ The Karnataka State Ro.id Tr.trisPort Corporation published in the Karnataka Gazette dated ~lay 16, .1974 a draft scheme for nationalisation of contract· D E F H The Karnataka State Ro.id Tr.trisPort Corporation published in the Karnataka Gazette dated ~lay 16, .1974 a draft scheme for nationalisation of contract· carria~es in the State. under Chapter IV-A of the ~lotor Vehicles Act. 1939. Objections were preferred by some of the respondents, but the State Govem· ment and the Corporation dropped the idea of proceedin~ with the scheme \vithout concluding the hearing. Later, on January 30, 1976 the State Govern· n1ent pro!llulgatcd an ordinance followed by a number of notifications by which all contract carriages operating in Kamataka, and the permits specified in the notifications, vested in the State. Under Clause 20( 1) of the Ordinance. the State Government transferred them to the Corporation which seized the vehicles and the relative permits. The High 'Court stayed the seizure of six vehicles operating under lnL!r-State permits. and quashed some of the notifications, hold· ing that the ordinance did not empower the acquisition of the vehicles not covered by valid contract permits. The ordinance was replaced by the Karna- · taka contract carriages (.\.cquisition) Act,· 1976, published in the Karnataka Gazette dated l\larch 12. 1976. The Act was made effective retrospectively from January 30, 1976, and everything done under the Ordinance was deemed to have been done' under the Act. \Vrit Petitions \Vere filed by various contract carriage operators. fin."l.r..ciers and others including those who had successfully - filed the earlier \Vrit Petitions. The High Court allowed the writ petitions, struck. down. the Act as unconstitutional, and quashed the notifications. (Judg· n1ent reported in _K._ _Jayaraj Balla!_ _and_ _Ors._ v. _State_ _of_ _JCarnatakd_ _anti Ors .•_ I.LR. Karnataka 1976. Vol. 26, P. 1478). Allo\loir..g the app.ea!<J anr.l upholding the constitutional validity of the Act on merits, the Court HELD : Per UntwaEa. J. (Also on behalf of M. H. Beg. C.J., V. Y. Chandrachud, and P. S. Kailasam, JJ.) 1. whether the law of ocquisition is for public purpose or not has to be i;:athered mainly from th.e statement of Objects and Reasons of the Act and its preamble. The matter has to be examined v.·ith reference to the various provisions of the Act. it'i context and set up and then it has to be judged 'vhether the acqui5itio:i is for a public purpose, .... ithin the meaning of Article 3 t (2) and the law t:""roviJin_g ror such acquisition v.·hile establishin.!?: a Road . Transport· Corporation. L.'1.e State Government is obliged to keep in mind primarily the public interest. The acquisition for the purpose of the Corporation \\·os, therefore. in pubt:c interest. [64_8 C--E] _fl._ _JI. Keshavanand.i Bharati Sripadagalai·aru_,._ _State_ _of_ _Kera/a_ (1973] Suppl. S.C.R. I, Aprlie-1 . [1978] 1 s.c.R. 642 ~r, _'_,..--:·_ -~ . ._,;· SUPRE].lE COURT REPORTS B c D E F G H _Thi?_ _court observed_ : There may be many circumstances and,facts to justify the acqui.sition. of even a movable property for a public purpose. _ A particular commercial activity of tl1e State may itself be for a public purpos~. In a larger se_nse one can say that augmentation of the coffers of the State is also for a. pubhc purpose: Acquisition of property eitber·movable or immovable,-may in such a situation be for a public purpose. [651 ~D] _ - "·- \ _The State_ _of_ _Bihar_ v. _Maliarajadhiraja Sir Kameshwar. Singh_ _of__ _Darbhangff_ _lltul_ _Ors.-_ [1952]-SCR 889, referred to. (2) The .scheme for the compulsory acquisiti-~n-may be for a i::art of the undertaking also and that would mean a part of the- property of the undertaking or_ a branch of the undertaking [651 ·F-G] l3) The··~mount p;Yable for the acquired- property either fixed by the legislature or determined on the basis of the principles engrafted in the !aw of acquisition cannot be \vholly arbitrary and illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality of the law under Article 31(2). (653 B-CJ _H._ _H._ _Kesha1:anarida Bharati Sripadagalavaru_ v. _Stale_ _of_ _K£r.n!a_ [1973] Suppl. SCR I, applied. _The_ _State_ _of_ _West- BenRal_ v. _Mrs._ _JJala_ _Banerjee_ ~nd _·ors._ [195"1.l SCR. 558, _P. Vajravelu Mudaliar_ v. _The_ _Special_ _Deputy_ _Collector,_ _Jlf11dras_ [IS651 1 SCR 614. _Union_ _of_ _India_ v. _The_ _Metal_ _Corporation_ _of_ _India_ _Ltd._ & _Anr._ [1967] l SCR _255, State_ _al_ _Gujarat_ v. _Shri_ _Shantilal Mangaldas_ _and_ _Ors._ [1969] 3 SC-R 341 and _Rustom_ _covarjee Cooper_ v. _Union_ _of Jndia_ [19i0] 3 SCR 530, referred to. (4) The Karnataka Contract Carriages (Acquisition) Act. 1975 does not seek to legislate in regard to any Inter-State trade and commerce. Iii pith and substance it is an Act to provide for the acquisition of contract c;;.rria:::e. the Inter-State permits and the other properties situated in the State of Karnataka. Any incidental encroachment on the topic of Inter-State trade and commerce car.not invalidate.the Act. (661 _D-E}"• _Prafulla_ _Kumar_ _Mukherjee_ & _Ors._ _and_ _Bank_ _of_ _Commerce_ _Ltd.-,_ _Khulna_ v • _.,,.:Ji·ocate General_ _of_ _Bengal_ (1947] Federal Court Reports • 28, _Kerala State_ _Electricity- Board_ v. _Indian_ _Aluniinium_ _Co .•_ [1976] 1 S.C.R. 552 - _S._ _K._ _Peseri_ v. _-Abdul_ _Ghafoor_ _and_ _Ors .•_ Civil Appeal No. 306/1964 decided o:i 4-5-196..J, _Z\'arayanappa_ v. _State_ _of_ _Mysore_ (1960] 3 S.C.R .. 7..i2. and _Tar1sukh_ _Ra/_ _Jain_ v. _Nilratan Prasad_ _Shaw_ _and_ _Ors .•_ (1965] 2 S.C.R. 6 applied. _A._ _S. Krishna_ v. _State_ _of_ _Madras_ [1957] S.C.R. 399, U.S.A .• Plff. in _Crr._ v. _Car. Iii/I_ 63 Law Ed. 337. _Claude_ _R._ _Wickard. Secy._ _of_ _Agriculture_ _of_ _the_ _Utbitcd States etal_ v. _Roscoe C._ _Filburn_ 87 Law Ed. 122 and _the_ _Steamer Denial_ _Ball, Bayron_ _D._ _Ball and Jessie Ganoe. Claimant's,_ _Aptt.·v._ _United States_ 19 Law EJ. 999 referred to. - . (5) The acquisition of permits of the vehides kept and registered in the State of Kamataka. in respect of which initially Inter-State permits, had been . - granted by the State. would be an acquisition of the permit operative within the territory of the State. Permits granted _by_ one regional Authority and counter-signed by another Regional Authority either in the same state Or in different states are reallv different permits rolled into one. - The counter-sigr.,ed portion of the permit is in substance and in effect a separate permit authorising the permit holder to ply the bus in another State. and cannot be acquired. Such an acquisition would fall within the extra-territorial operation of the law. The State Govt. on acquisition and the vestin.s:r of acquired permits~ therefore. cannot transfer their counter-si_gned portions to the Road Transport Corporation. Any particular vehicle which is kept and re.gistered, or is plying. on an initial permit granted by another State, also could not be acquired under the Act and the notification issued, thereundet. (662 C-D, 663 B, C-D] .~Is _Bundelk/land 'Afotor Transport_ _Company._ _Nowgaon_ v. _Behari_ _Lal_ _Chaurasia_ _and_ _Anr._ [1966] 1 S.C.R. 485, and _Punjab_ _Sikh Regular_ _Motor_ _S,·rvice, 1'.foudhapara_ v. _The Regional Transport_ _Authority,_ _Raipur_ _and_ _Anr._ [1966) 2 S.C.R. 221; applied • A ###### ## KARNATAKA _V._ RANGANATHA 643 _The Bengal lmn1unity Co. Ltd._ v. _Tile Stale_ _of_ _Bihar_ _and_ _Ors._ [1955] 2 S.C.R. 603, _R.1'1.D._ _Chan1arbaugwa!a_ v. _Union_ _of_ _India_ _and_ _Ors._ [1957} S.C.R. 930, _Gulabha: Vallab/lbhai Desai etc._ v. _Union_ _of_ _India and Ors.,_ [1967] 1 S.C.R. 602; and _In_ _re. a Special Reference. under Section_ 213 of the Go.vt. of India Act, 1935 [1941] Federal Court Reports 12; referred to. (1) The purpose of a public body to run a public transport service for the E benefit of the people, operating it in a responsible manner through exercise of public power 'vhich is controlled <1nd controllable by society through its organs like the le.e:islature and, at times, even the court, is manifestly a public purpose. If the purpose subserves some public use or interest, or produces some public good or utility then everything considered for subserving such public purpose falls under the broad and expanding rubric. Tf the purpose is a private or nonpublic one, the mere fact that the hand that acquires or requires is Government or a public corporation, does not make the purpose automatically a public purpose. The acquisition of road transport undertakings by the State \Vill un- F doubtedly be a public purpose, and it is a fallacy to deny the presence of public purpose merely because its satisfaction by readily available private purchase is possible. [672 D-E, 673 B. 676 DJ Black's Le_gal Dictionary, ;The Supreme Court of India' by Raieev Dhavan (Tripathi Publications), 'Words and Phrases Lecally defined' TT Ecln. P. 228; Sir Alladi KrishnaS\\-ami Ayyar's speech irr the Constituent _\ssen1bly; ~fr. Justice Mathev/s speech in the second Kerala· State Lawyer's Conference; _JI._ _F._ _Pcti_ v. _Secy._ _of_ _State for India._ 42 LA. 44; _The_ _State_ _of_ _Biliar_ v. _Maharaiadhiraia_ G _Sir Kanieshwar Singh_ _of_ _Darbltanga_ & _Ors._ [19521 SCR 889; _Tllt_ _Stare_ _of_ _Bomba}'_ v. _Ali Gulshan,_ AIR 1955 SC 810; _A._ _K._ _Gopala11_ v. _State_ _of_ _i\1'1.dtas,_ AIR 1950 SC 27; _The_ _State_ _of_ _West_ _Benual_ v. _Anwar_ _Ali_ _Sarkar_ l1952l SCR 284 and _The_ _Stale_ _of_ _lVest_ _Ber!Ral_ v. _S._ _B. Bose_ & _Ors._ / 19541 SCR _5'8.7._ referred to. (2) The nmount payable when private property is taken bv the State is a matter of le.e;islative policy and not of judicial fixation. The 25th Amendment H of the Constitution, while restructuring Article 31 and bringin_g in Article 31 C, has exc1uded judicial examination even of the principles of evaluation. The Court can only satisfy itself about the amount not being a monstrous or unprincipJed under-value. The payment may be substantially less than the ( 6) Section 4 (3) of the Karnataka contract carriages (Acquisition) Act, 1976, is worded with the object of putting the challenge to the factum of public purpose beyond the paJe of any attack. _r_ The use of the '\'Ord "deemed" does not in\-ariably and necessarily imply an introduction of a legal fiction, but it B has to be read and understood in the context of the w-hole statute. r651 A-BJ (7) Jn the absence of an agreement, the State Government shall appoint an arbitrator for fixing the amount payable in lieu of the acquired property. The arbitrator, reading section 6(1) of the Karnataka Contract Carriages (Acquisition) Act:, as a whole, is not obliged to fix the amount as specified in the Schedule, but he has to fix an amount '"hich appears to him just and reasonable on: the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule occurring in Sec. 611). [657 E-F, 658 D-E] _Sara.nrati Industrial_ _Syndicate_ _Ltd., etc._ v. _Union_ _of_ _Jndia_ [19751 l S.C.R. 956, _Illingworth_ v. _Walnsley_ (1900) 2 Q.B. 142 and _Perry_ v. _Wright_ (1908) 1 K. B. 441; referred to. (8) The correct meaning of ';acquisition cost'', used in the Explanation in the light of Para 1 ( 1) of the Schedule of Sec. 6 ( 1) of the Karnataka Act. would mean, the cost of the chassis fixed by the manufacturers for their dealers to charge from the purchasers. The acquisition cost _qua_ the purchaser is the price which he pays to the manufacturer's dealer from whom he purchases an<l not the n1anufacturer's actual cost of manufacturing the chassis. The acquisition cost of the body of a schedule would be the actual cost charg;ed by the body builder. [659 B-C] Per Tyer. J. (i\..lso on behalf of P. N. Bhagwati and Ja<;want Singh, J.J.) c D A B c D E F G II _644_ SUPREME COURT REPORTS [1978] l S.C.R market value and the principles may not be all-inclusive. but the court can upset the taking 011lv \vhere the principles of computation are· too arbitrary and illusory to be unconscionably shockin~. The quantum of the amount or the reasonableness of the principles are out of bounds for the court. [680 B. 682 C', 685 A, C, G, H.J ' _H._ _H._ _Kesava11anda Bliarati Sripada,;alavaru_ v. _Srate_ _of_ _Kera/a_ (supra) follOVi'ed. Speech by M~·hatma Gandhi at the Round Table Conference; Fundamental Rights & Socio-Economic Justice by K. P. Krishna Shetty. pp. 123 and 127-128; The 46th Report of the Law Commission and _R._ _S._ _Cooper_ v. _Union_ _of_ _India_ (supra), referred to. (3) Article 39(b) fulfils the basic purpose of re-~lructuring th~ cconumtc order an:l undertakes to distribute the entire material resources of the comn1unity, as best to subserve the common good. To exclude ownership of privat~ resources fron1 its coils. is to cipberise its very purpose of redistribution the socialist \Vay. Article 39(b) is ample enough to rope in buses. as motor vehicles, are part of the material resources of the operators. Socially conscious economists \Vill find little difficulty in treating nationalisation of transport as a distributive progress for the good of lhe community. [689 C-b. E-··f. 690 01 _The_ _Court_ _obsen·ed_ : ( 1) The State symbolises, represents and acts for the good of societv. [ts concerns are the ways of n1eeting the wants of the community, directly or otherwise, and the public sector in our constitutional system. is a strategic tool in the national plan for transformation from stark poverty _to_ social justice, transcending administrative and judicial allergies. r672 D-E] (2) Serious constitutional problems cannot be studied in a socio-economic vacuum, since socio-cultural changes are the source of new values. Our em·· phasis is on abandoning formal legalistics or sterile logomachy in assessing the vires of statutes regulating vital economic areas, and adopting instead, a dynamic, goal-based approach to problen1s of constitutionality. Our nation has, as its >dynamic doctrine, economic democracy _sans_ which political democracy is chimerical. The Constitution ensouls suCh a value system in Parts III and IV and elsewhere, and the dialectics of social justice should not be missed if their synthesis is to influence State action and Court pronouncement. Illusory ccmpensation, nexus doctrine and 'distributed to subserve the con1mon good, should not reduce lofty constitutional considerations into hollo\v concepts. [666 F. 667 Al _R._ _S,_ _Cooper_ v. _Union_ _of_ _111dia_ (Supra); _Town<:_ v. _Eigner_ 245 U.S. 418= 62 L. ed. 372, 376; Dias Jurisprudence 4th Edn. p. 625 _H._ _H._ _Kesal·ananda_ _Bharati_ _Srfpadaga/a1·aru_ v. _State_ _of_ _Kerala_ (supra); Legal Theory and Social Evolution 5th Edn. p. 81 and Dr. A.mbedkar's speech in the Constituent Assem-bly. referred to. ( 3) Bills without sufficient .study of their economic project. occasionaUy result in incomprehens1bil ty and incongruity of the la\\ fo1 the lay and the legal. A radicalisation of the methodology and philosophy of legal drafting, and ability for the legislative manpo\ver to express themselves in strean1lined, si1nple, project-oriented fa·shion is, therefore, essentiaL [667 C-Fl 'Law.s arc not for layn1en'-Guardian Miscellany dated May 29. _1975,_ referred to. (4) Sheer legalisn1 cannot lightly upset legislative wisdom or efficiencv while passing on th~ constitutionality of economic legislation based on national plan·ning, public finance, private investments. cost accounting, policy decisions his·torical factors and a host of complex social variables. Ra\v realities like poverty and stark inequalities to abolish \Vhich. Article 31(2). 3IC-. 38 and 39 have been enacted, must inform legal interpretation. The Courts n1ust be circumspect not to rush in where serious reflection will make them fear to tread, not to resort to adroit circumvention because of economic allergy to a particular legi<lotive policy. [669 F. 670 A-BJ KAR~ATAKA _**V.**_ **RA .... '\'GANATHA** 645 ', _**B;;r:on**_ **v.** _I_ _-J?,(.<n_ -- ----.. -\ ._. **·a6** **CLR** **169, 179;· Preface to ihe English Legal** **Aid System** **by** ~eton **1:-l** **itck** **(Orient Longmans); referred to.** - **(5) 'Part** **JV- of --the** **Constitution,** especi~lly **Article** **39(b) '·and** **(c) - is** **a** **futuristic** **mandate to the State** **with** **the message -of** **transformation** **of** **the** **eco-** **nomic** **md** **social** **order.** **Such. change·** **cans_ for collaborative** **effort_ from all** **the** **1egal** **institutions** **of** **the system ;** **the** **legislature,. the** **judiciary** **and** **the** **administrative machinery. The** **Court** **and** **counsel** **ha·ve** **a** **justice constituency** **with economic oYertones, the** ~ **manifesto being the constitution** **designed** **to** **uphold the humanist values** **of** **life.** **liberty** **and** **the equal -pursuit** **of** **happiness,** material and spiritual.' [690 D-El A B 'iav.~·ers **for Social Change; Perspectives on Public Interest Law' by Robert** **L** Rab~ **Standord Law Review Vol. 28,** **No.** **2** **January** **1976;** **Law** **in America** **p .. 34** **·by** **ne-rnard** **Schwartz; The nature** **of** **judicial Process by Cardozo, 1932,** **p.** **170; The Indian Constitution by Granville Austin;** _**British Coal Corporation**_ **v.'** _**The Kind**_ **1935 AC 500;** _**Attorney Gett2ral**_ _**of**_ _**Ontario**_ **v.** _**Attorney General**_ _**·of**_ _**Canada**_ **1947 AC 503; I Constituent Assembly Debates,** **p.** **61.** **referred** **to.** _**Canada**_ **1947 AC 503; I Constituent Assembly Debates,** **p.** **61.** **referred** **to.** c 'Crv!L APPELLATE JURSDICTION: Civil Appeal No. 1085 and 1522-c 1894176. Fmn the Judgment and Order dt. 20th September 1976 of the Kar-, nataka High Court in _IV._ _P._ _Nos._ 817. and 818-826176 etc. etc. L. N. Sinha, R. N. Byra Reddy, Adv. Genl., Narayan Nettar, K. S. P:ittawany (For A. 2 in CA. No5. 1085 & 1522) and Mr. Am- **D·** neshw::r ~upta, Advs. for the appellants : ., A. :;{. Sen, K. N. Bhatt, and M. R. V. Achar, for the Res. pcn~ll!5 in Civil Appeals Nos. 1537, 1538-48, 1549, 1551-52, 1555, . 1557~69, 1562, 1564-66 1967-68, 1569-72, 1574, 1576-80, 1586-89 1593-94, 1597-1611, 1612-1613, 1618-24 1628-29, 1631-32, 1635-36 1638-42, 1644, 1646-48 1660, 1662-63, 1664-65, 1668, 1670-74, 1676, 1684-85, 1689 1695, 1697, 1700, 1701, 1703-4, 1710, 1712- . E 16, 1724-27 1729-30, 1732, 1734-37, 1738-39, 1741, 1746, 1748-50, 1753, 1759-60, 1761, 1763, 1765-66, 1768-69, 1771, 1774-76, 1786, 1785, 1803, 1805 (R-1) 1806-7, 1809, 1814-17, 1825, 1828, 1832, 1836-37 1840-41, 1844-46, 1850, 1858-59, 1863, 1865-66, 1868-71, 1873-77, 1879, 1882, 1884, 1887 & 1889/76: A. K. Sen, A. T. M. Sampath, and M. R, V. Achar, fer the F Respondents in Civil Appeals Nos. 1677, 1758 & 1778/76: G. · L. Sanghl, S. K. Mehta, K. R. Nagraja · & P. N. Puri and A. K. Sanghi, · for the Respondents in Civil Appeals Nos. 1523-24 1528, 1530, 1532-33 1575, 1581, 1583, 1595-96. 1626, 1678-83, 1686-88, · 1691-94, 1996 (R-I) 1717, 1720, I 723: I 742, . 1747, 1755-56, 1779-80, 1782-83, 1785, 1787-90 1792, 1798. 1810, 1823; 1830, 1861 & 1878176. Gs. S., Javali, A. K. Srivastava, and B. P. Singh, for the Respondents In Civil Appeals Nos, 1630, 1656, 1657 & 1854/76 CA. 1085/76. 1 Girish Chandra, (Not present) for Respondent No. 2 in CA . 1085/76. S. Narayana Bh~t (In person) for Respondent in CA. No. 180.+/76: ff R. N. Byra Reddy,. Adv Gnl. Narayan Nettar, for the' Adv. Genl/Kamataka . **A** **B** **D** **E** **G** 646 SUPREME COURT REPORTS [1978) 1 S.C.R· The following Judgment were delivered : .UNTWALIA, J .. This batch of 374 appeals by certificate is from the dec1s1on of the High Court of Karnataka given in 374 Writ Petition filed by different persons having various kinds of interest in the Contract Carriages which were taken over by the State of Karnataka Contract Carriages (Acquisition) Ordinance, 1976 (Kamataka Ordinance No. 7 of 1976) (for brevity, hereinafter. the Ordinance) followed by the Karnataka Contract Carriages (Acquisition) Act, 1976 IKarnataka Act No. 21 of 1976) (hereinafter to be referred to as the Act). The judgment of the High Court is reported in _K._ _Jayaraj_ _Balla/, and others_ v. _State_ _of Karnataka and others.(')_ For the sake of conv.enience hereinafter in this judgment, reference to the Higl1 Court judgment wherever necessary will be made from the said 1eport. FACTS The broad and the common facts of the various cases arc in a narrow compass and not in dispute. At the out,et, we shall state them mostly from the High Court judgment. We were not concerned to go into the special facts of some cases in these appeals. They may have to ~ looked into, if necessary, by the High Court in the light of this judgment. The Karnataka State Road Transport Corporation (hereinafter called the Corporation) was established by the State Government of Karnataka on August 1, 1961 under section 3 of the Road Transport Corporations Act, (Central Act 64 of 1950). TI1e Corporation was a party respondent to the writ petitions and is an appellant before us alongwith the State of Karnataka. We are stating the facts mostly from Civil Appeal No. 1985 of 1976 arising out of Writ Petition No'. 817 of 1976. The Corporation published in the Karnataka Gazette dated May _16,_ 1974 a draft scheme for nationalisation of Contract Carriages in the State under Chapter IV-A of the Moto1· Vehicles Act, _193'9_ (Central Act 4 of 1939). Objections were invited. Some of the writ-petitioners preferred their objections. It appears the State Government and the Corporation dropped _the_ idea of proceeding with the scheme and without concluding the hearing and the disposal of the objections and the finalization of their scheme the Government came out with the Ordinance which was promulgated on January 30, 1976. As per clause 1 (3) of the Ordinance. it applisd to "all contract carriage(s) operating in the State of Karnahka". By a number of notifications issued under the Ordinance almost all the contract carriages and the permits specified in the notifications vested in the State. They were transferred to the Corporation under clause 20( 1) of the Ordinance. The officers of the Corporation seized the vehicles ond the relative permits pursuant to the notifications aore<>aid except six vehicles which were operating under Inter-State permits celonoing to some of the writ petitioners. The seizure of the said six vehicles was stayed by the Order of the High Court made on 5th April, 1976 in some of the earlier writ petitions. The earlier writ petitions were decided on February 26. 1976 and March 3, 1976 by a learned _**(1)**_ **The** **Tndian** **Law Reports (Karnataka) 1976 (Vol. 26).** **J47R.** ' KARNATAKA _v._ RANGANATHA _(Untwalia,_ _!.)_ 647 single Judge of the High Court who held that the Ordinance did not A empower the acqu~$tion of the vehicles not covered by valid contract pennito and consequently quashed some of the notifications. The Ordina:1ce with some changes was replaced by the Act which received the ass~nt of the President on March 11, 1976 and was published in the Karnataka Gazette dated the 12th March, 1976. The operation of the Act was, however, made retrospective from the 30th January, 1976---:he day when the Ordinance had been promulgated and come B into force. The Ordinance was repealed by section 31 of the Act and _tbe_ saving clause in sub-section (2) says : "N<J-twithstanding such repeal (i) an}thing done or any action taken under the said Ordinance, shall be deemed. to have been done or taken C under the corresponding provisions of this Act;" ;Fresh notifications were also issued under the Act. The combined effect of all these actions was that whatever was done on and from the 30th January, 1976 either under the Ordinance or under the Act was _r,_ all deemed to have been done or done under the Act. Fresh writ petitions numbering 374 were filed in the High Court by the various D contract carriages operators, financiers and others including those who had filed or succeeded in the earlier writ petitions. The High Court has allowed all the writ petitions, struck down the Act as lillconstitutional and has declared it null and void. The notifications have been quashed. The respondents in the writ petitiollS, namely 1he appellants before us, were directed to restore the vehicles with the relative permits and all other assets to the operators from whon1 they were taken over. Some consequential directives for detennination of damages in some later proceedings were also given. We now proceed to state the findings of the High Court on the various points argued before it not in the order as finally recorded in para 98 of its judgment at page 1530 but in the order the points were urged before us by Mr. Lal Narayan Sinha, learned counsel for the appellants. They are as follows : ( 1) The acquisition is not for a public purpose. E F (2) The compensation or the amount provided for or the principles laid doW!l in the Act for payment in lieu of the various vehicles, permits and other assets is wholly illusory G and arbitrary. For the two reasons aforesaid, the Act is violative of Article 31 (2) of the Constitution and is a fraud on it. It is, therefore, null and void. 13) The acquisition of contract carriages with Inter-State per mits and other assets pertaining to such operators is _ultra_ _vires_ the legislative power and the competence of the State Legislature. H E F G **H** 648 **SUPREME** **COURT** **REPORTS** !1978j l ~.C.R. (-+) Article 31 C does not bar the challenge to the Act &s being violative of Article 31 (2) of the Constitution as there iS no rea·sonable and substantial nexus between the purpooe **of** **the acquisitions and securing the princip1es spei:ified** **in** clauses (b) and (c) of Article 39. We now proceed to deal with the points aforesaid seriatim in the above ordec. PUBLIC PURPOSE 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 Sripadagalavem_ v. _State_ _of_ _Kera/a(')_ popularly known as Fundamental Rigpts 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 justiciable 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 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. The acquisition of the vehicles namely the contract carriages, their permits and other assets for running them for the purposes of the Corporation could not be challenged as being not for a public purpose merely because it was for the purposes of transferring them. to the Corporation. Statement of Objects and Reasons for the impugned law runs as "~ follows : **"A large number' of contract carriages were being operated** in the State to the detriment of public interest and were ajso functioning stealthily as stage carriages. This had to be pre· vented. Article 39(b) and (c) enjoins upon the State to see that the ownership and control of the material resources of the community are so distributed as best to snbserve the comn:on good and that the operation of the economic system does not result in the concentration of wealth to the common detriment. In view of the aforesaid it was considered necessarv to acquire the contract carriages run by private operators."· Accordingly the Karnataka Contract Carriages (Acquisition) Ordinance, 1976 was promulgated. The Bill seeks to replace the Ordinance." The title of the Act indicates that it is "An Act to provide for the acquisition of contract carriagei; and for matters incidental, anc'l!ary or (I) [1973] Suppl. S.C.R.1. ###### .. KARNATAKA _v._ RANGANATHA _(Untwa/ia,_ _.!.)_ 649 ;ubservient thereto." In the Preamble it is stated : "Whereas contract carriages and certain other categories of public service vehicles are being operated in the State in a manner highly detrimental and prejudicial to public interest; And whereas with a view to prevent such misuse and also to provide better facilities for the transport of passengers by road and to give effect to the policy of the State towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the concentratiol) of wealth and means of production to the common detriment; And whereas for the aforesaid purposes it is considered necessary to. provide for the acquisition of contract carriages and certain other categories of public service vehicles in the State and for matters incidental, ancillary or subservient **thereto:"** A declaration was also made in section 2 that the Act is for giving effect to the p0licy of the State towards securing the principles specified in clauses (b) and (c) of Article 39. A deep probe into and investi~a­ tion of the facts stated in the Statement of Objects and Reasons and the Preamble of the Act was-neither permissible nor was it gone. into by the High Court. Mr. A. K. Sen advanced the leading argument on behalf of the respondents followed by some other Advocates and one of the respondents in person. The main plank of the argument advanced on behalf of the respondents was that acquisition of vehicles which are available for sale in the market cannot be said to be for a public purpose. Counsel submitted that the scheme of nationalisation in Chapter IV-A ol the Motor Vehicles Act was given up, whole Undertaking of the various operators was not acquired but what was acquired was certain assets most of which were available in the market. Acquisition of chattels or movables can never be for a public purpose. The High Court in support of its view, also refers to the wordings of sub-section (3) of section 4 of the Act wherein it has been provided that the contract carriage and other property ~sting in the State Government shall "be deemed to have been acquired for a public purpose". We are of the opinion that neither the argument nor the decision of the High Court that the acquisition is not for a public purpose is correct. On the fact of the Statement of Objects and Reasons of the Act as also from its Preamble it is clear, apart from further facts which were stated in the various affidavits filed on behalf of the State, that the operators were misusing their permits granted to them as contract carriages permits. In many cases the vehicles were used as stage carriages picking up and dropping passengers in the way. The Legislature thought that to prevent such misuse and to provide for better facilities to trans port passengers and to the general public it is necessary to acquire the vehicles, permits and all rights, title and interest of the contract carriage operators in or over lands, buildings, workshops and other places and A B c D E F G H A B c D E F G 650 SUPREME COURT REPORTS [1978] 1 S.C.R. all stores, instruments, machinery, tools, plants etc. as mentioned in sub-section (2) of Section 4 of the Act. It was not a case where some chattels or movables were merely acquirnd for augmenting the revenue of the State or for its commercial purposes. Mr. Sen heavily relied upon some passages in the judgment of this Court in _The State_ _of Bihar_ v. _Maharajadhiraja Sir Kameshwar.Singh_ _of_ _Darbhanga and others(_ _[1 ]_ _)_ to strengthen his submission. The said decision was concerned y,ith the vires of the Bihar Land Reforms Act, 1950 by which the Zamindaries or intermediaries' interest were acquired by the State. One of the provisions in the' Act was for acquisition of arrears of rent due to the intermediaries from their respective tenants. This provision was struck down as being un~onstitutional. And in that cormection, Mahajan, J, as he then. was, said at page 944 : "It has no connection with land reform or with any public purpose. It stands on the same footing as other debts due to zamindars or their other movable properties, which it was not the object of the Act to acquire. As already stated, the only purpose to support this acquisition is to raise revenue to pay compensation to some of the zamindars whose estates are being taken. This purpose does not fall within any definition, however wide, of the phrase "public purpose" and the law ther~ fore to this extent is unconstitutional." Mukherjee J., as he then was agreed with this view at page 957. Das J.,as he then was and Chandrasekhara Aiyar J., also concurred in the same. But the said decision given in respect of the debts due to the Zamindars from their tenants, which wern merely choses in action is of no help to the respondents. In these appeals we are not called upon to decide and express any final opinion as to whether an acquisition of chattels or movables can be for a public purpose or not. What may only add that the preposition so broadly but is not quite correct. There may be many circumstances and facts to justify the acquisition of even a movable property for a public purpose. It may not be universally so, but the converse is also not correct. In the instant cases what has been acquired under the Act is not only movables and chattels namely the vehicles but also the permits, the workshops, land and bulldings etc. Although the whole transport undertaking of any carriage operator was not acquired, the acquisition in no sense was of more movable properties available easily for purchase in the market. Several hundred vehicles were acquired by the various notifications. Tn substance it was a nationalisation of the contract transport service in the State of Kamataka. Undoubtedly it was for a public purpose. We may just quote a few lines from the judgment of Mahajan J., in the case of _The_ _SMe_ _of Bihar_ v. _Maharajadhiraja Sir_ _Kameshwar Singh_ _of Darb/zanga and others_ (supra) occurring at page 941 ' "Iu other words, shortly put, the purpose behind the Act is to H bring about a reform in the land distribution system of Bihar for the general benefit of the community as advised. The (!) [1952] 3 S.C.R. 889 ... KARNATAKA _v._ RANGANATHA _(Untwalia,_ _J.)_ 65 J Legislature is the best judge of what is good for the community, by whose suffrage it comes into existence and it is not possible for this Conrt to say that there was no public purpose behind the acquisition contemplated by the impugned statute." The language of section 4 ( 3) of the Act is not for the purpose of introducing a legal fiction as observed by the High Court but with the object of putting the challenge to the factum of public purpose beyond the pale of any attack. The use of the word "deemed" does not invariably and necessarily implies an intorduction of a legal fiction but it has to be read and understood in the context of the whole statute. It may well be that the State is not authorised to compulsorily acquire any property merely to augment its revenue although in a larger sense one can say that augmentation of the coffers of the State is also for a public purpose. But it is not always correct to say that a property cannot be acquired merely for a commercial need of the Government. Under the Land Acquisition Act, 1894 land can be acquired for commercial purposes of the Government a Public Corporation or a Company. Why can't movables be acquired for commercial purposes if the exigencies of the situation so require ? A particular commercial activity of the State may itself be for a public purpose. Acquisition of property either movable or immovable may in such a situation be for a public purpose. Mr. Sen referred to section 19 of the Road Transport Corporations Act and specially to clause (c) of sub-section (2) to knd support to his argument that without acquiring the whole undertaking only a portion of its assets leaving out the liabilities could not be acquired. For this purpose, he relied upon the provisions of Chapter JV-A of the Motor Vehicles Act also. The nationalisation of routes under the said Chapter of the Motor Vehicles Act does not necessarily imply the acquisition of the transport undertakings of the various operators, their vehicles or properties. That is a separate and distinct method altogether. In section 19 of the Road Transport Corporations Act are enumerated the powers of the Corporation. Sub-section (2) ( c) gives a power to the Constitution "to prepare schemes for the acquisition of, and to acquire, either by agreement or compulsorily in accordance with the law of acquisition for the time being in force the state concerned and with such procedure as may be prescribed, whether absolutely or for any period, the whole or any part of any undertaking of any other person to the extent to which the activities thereof consist of the operation of road transport services in that State or in any area". It is plain that the scheme for the compulsory acquisition may be for a part of the undertaking also and: that would mean a part of the property of the undertaking or a branch of the undertaking. Of course, the Corporation can purchase vehicles as provided for in clauses (a) arid (g) of sub-section (2) of section 19. But it does not follow therefrom that in all cases it is obliged to do so. Compulsory acquisition is also provided for in clause (c). Under motion 3 of Act 64 of 1950 while establishing a Road Transport Corporation the State Government is obliged to keep in mind primarily the public interest as provided for in clauses (a) to (c) thereof. The acquisition in question **for** the purpose of the Corporation was, therefore, in public interest. 5-951SCI/77 **A** _**c**_ **D** **E** **F** **G** **H** 652 SUPREME COURT REPORTS (1978] 1 S.C.R. A In our judgment, therefore, the decision of the High Court on the ~ question of public purpose is erroneous. We hold that the impugned ~ Jaw of acquisition and the acquisitions are for public purpose. B c D E F G H AMOUNT TO BE PAID FOR THE PROPERTY ACQUIRED. The High Court in paragraph 92 at page 1527 has come to the conclusion " ...... the scheme for payment for the property acquired under the Act is wholly illusory and therefore the Act violates the fundamental rights of the petitioners secured under Article 31 (2) ." The history in relation to the provision of payment of compensation or the amount in Article 31 (2) of the Constitution is interesting and clearly points out the difference in the approach to the question by this Court and the Parliament resulting in the amendments in the provisions from time to time as and when some important and leading judgmc11t were handed down by this Court which according to the Constituent Body did not correctly Jay down the Jaw as it intended the Article to mean. The word used in the original Article 31 (2) was 'compensation'. In _The State of_ _West Bengal_ v. _Mrs. Bela Banerjee and others(_ _[1]_ _)_ compensation was held to mean a just equivalent of what the owner has been deprived of. Then came an amendment in the Article by the Constitution (4th Amendment), Act, 1955 stating in clause (2) of Article 31 " ...... no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate." In spite of the amendment, this Court in some decisions-to with _P._ _Vajravelu Mudaliar_ v. _The Special Deputy Collector, Madras_ (') and _Union_ _of India_ v. _The Metal Corporation_ _of India Ltd. and Another_ ( [3 ] ) largely, if not fully, stuck to its view in _Mrs. Bela Banerjee'.' case_ (supra). Then came the decision in _State_ _of Gujarat_ v. _S/11i_ _Shanti-_ _/al_ _Mangaldas_ N _Ors_ (') where Shah J., as he then was in his leading judgment to which was appended a short concurring note by Hidayatullah C. J., made a conspicuous departure from the views expressed in _Vajravalu's_ case and the case of _The Metal Corporation_ (supra) and the said decisions wer<) over-ruled. Thereafter came the decision of 11 Judges of this Court the leading judgment being of Shah J., on behalf of himself and 9 others in what is known as the Bank Nationalisation case in _Rustom_ _Cavasjee_ _Cooper_ v. _Union_ _of_ _India(')._ Although in terms the decision of this Court in the case of _Shanti/al Mangaldas_ (supra) was merely explained, in substance it was over-ruled. Thereafter, by the Constitutiori (25th Amendment) Act the word 'compensation' was substituted by the word 'amount' in Article 31 (2), which, as in the case of 'compensation', may be fixed by the law of acquisition or be determined in accordance with such principles and given in such manner as may be specified in such law. The law was sought to be kept beyond the pale of challenge in any Court by reiterating in a slightly different form that it cannot be assailed on the ground "that the amount (1) [19541 S.C.R. 558. (2) [196511S.C.R.614. (3) [196711 S.C.R. 255. (4) [1969] 3 S.C.R. 341. ' (5) [1970] 3 S.C.R. 530. ' .. r KARNATAKA _v._ RANGANATHA _(Untwalia,_ _!.)_ 653 so fixed or determined is not adequate or that the whole or any part -0f such amount is to be given otherwise than in cash". In the Fundamental Rights case (supra) the change in the phraseology of Article 31 (2) came up for consideration before the Bench of 13 Judges. The High Court is not right in saying that decision in the Bank Nationalisation case still holds the field on the question of amount or compensation 1o be paid for the acquired property. A departure has bfen made from the view expressed earlier in the light of the 25th Amendment. It is not necessary to pin-point the details of such departure. For t':te purpooe of deciding the point whlch falls for consideration in these appeals, it will suffice to say that still the over-whelming view of the majority of judges in _Kesavananda Bharati's_ case is that the amount payable for the acquired property either fixed by the legislature or determinecj on the basis of the principles engrafted in the law of acquisition cannot be wholly arbitrary and illuS-Ory. When we say so we are not taking into account the effect of Article 31 C inserted in the Constitution by the 25th Amendment (leaving out the invalid part as declared by the majority). Just to support the principle of law culled out above, we may refer to a few lines in some of the judgments in _Kesavananda Bharati's_ case. Sikri C. J., has said at page 197 : "Applying this to the fundamental right of property, P'a;'rliament cannot empower legislatures tn fix an arbitrary amount or illusory amount or an amount that virtually amnu1\ts to confiscation, taking all the relevant circumstances of the ocquisition into consideration."' Shelat and Grover JJ., in addition to what they lmve said earlier categorically say at page 285 : " .............. and further that the "amount" is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivaton of the rght under Article 31 (2). The question of adequacy or inadequncy. however, cannot be gone nto." Hedge and Mukherjee JJ., have observed at page 338 : "Therefore, stated briefly, what the 25th Amendment makes non-justiciable is an enquiry into the question whether the amount fixed or determined is an equivalent value of or 'compensation• for the property acquired or requisitioned ..................... . It is difficult to believe that Parliament intended to make a mockery of the fundamental right conferred under Article 31(2). It cannot be that the Constitution while purporting to preserve the fundamental right of the citizens to get an "amount" in lieu of the property taken for public purpose has in fact robbed him of all hls right." Rav J.. as he then was goes to point out at pages 446 and 44 7 : " .... ~ ..... the Article still binds the legislature to provide for the· gh1ng to the owner a sum of money either in cash or otherwise. The legisbture may either lay down principles for the determination of the amount or may itself fix the amount. The Constitution does not allow judicial rview of a law on the ground of adequacy of the amount and the manner as to how such amount is to be given otherwise than in cash." At page 555 is to be found the view of Jaganinohan Reddy J., in these words : A B c D E F G H A 654 SUPREME COURT REPORTS [1978] 1 S.C.R. "Once the Court is satisfied that the challenge on the ground that the amount or the manner of its payment is neither arbitrary or illusory ...... " Lastly we would refer to a passage occurring in the judgment of one 0£ us (Chandrachud J.) at pages 992 and 993. It runs thus: B "The specific obligation to pay an "amount" and in the alternative the use of the word "principles" for determination of that amount must mean that the amount fixed or determined to be paid cannot be illusory. If the right to property s.!)ll finds a place in the Constitution, you cannot mock at the man and ridicule his right. You cannot tell him : "I will take your fortune for a farthing." c As already stated the High Court took ·the view that the amount payable under _the Act for the property acquired would be such that it will be wholly arbitrary illusory and leave the many operators in huge debts. Many of them were playing their contract carriages having taken loans of considea.rble sun1s of money from the various financiers on hire-purchase system, for whom also Mr. A. K. Sen appeared and D argued before us. They would not only be paupers but huge liability will remain on their shoulders if the interpretation put by the High Court were to be correct. Mr. Lal Narayan Sinha, learned counsel for the appellants, took a very just and proper attitude in advancing ati argument before us which would take away the basis of the High Court Judgment in this regard. With respect to each and every relevant section on the question of payment of the amount in lieu of the property E acquired he suggested such a reasonable, harmonious and just construction by the rules of interpretation that we found no difficulty in accept ing his argument-rather, were glad to do so. The other side on the interpretation so put, which we are going to mention hereinafter, felt satisfied to a large extent. Mr. Sinha also advanced some argument with reference to the valid part of Article 31 C read with clauses (b) and ( c) of Article 39 but very wisely did not choose to heavily rely F upon it. On the interpretation of the statute as canvassed by him, there lmrdly remained any necessity of it. Section 3 of the Act defines in clause (a) 'acquired property' to mean the vehicles and other property vesting in the State Government under section 4. The definition of 'contract carriage' is an inclusive one with reference to certain provisions of Motor Vehicles Act. Clause G (h) runs thus : " 'contract carriage operator' means an operator holding one or more contract carriage permit and includes any person in whose name a public service vehicle is registered and is specified as a contract carriage in the certificate of registration of such vehicle." H 'Permit' in clause (m) means the permit granted under the Motor Vehicles Act, authorising the use of a vehicle as a contract carriage. Then comes the important clause (n) which runs as follows : r' ~ . ' , .. KARNATAKA _v._ RANGANATHA _(Untwalia,_ J.) 655 " 'Person interested' in relation to any acquired property 'includes the contract carriage operator and any secured credit 'Or or financier under a hire purchase agreement, who has a tharge, lien or any interest in the acquired property and any other person who is affected by the vesting of the acquired property and claiming or entitled to claim an interest in the **amount."** Section " provides for vesting of contract carriages etc. with the permit or the certificate of registration or both absolutely free from all encumbrances. Various other properties mentioned in clauses (i) and (ii) of sub-section (2) also vest on the issuance of the notification under sub-section ( 1) . While providing that the property shall vest absolutely free from all encumbrances, a safeguard has been provided for a person interested aud having a claim to the amount in respect of such property under the Act. Under section 5, the operators are to furnish the required particulars. Section 6 which deals with determination of .the amount must be read in full. "6. Determination of the amount.-( 1) For the vesting <>f the acquired property under section 4, every person interested shall be entitled to receive such amount as may be determined in the manner hereinafter set out and as specified in the Schedule, that is to say ( a) where the amount can be fixed by agreement it shall be determined in accordance with such agreement; ( e) the arbitrator shall, after hearing the dispute, make an award determining the amount which appears to him just and reasonable and also specifying the person or persons to whom the amount shall be paid; and in making the award he shall have regard to the circumstances of each case and the provisions of the Schedule so far as they are applicable; **A** B c D (b) where no such agreement can be reached, the State Government shall appoint as arbitrator a person who is an officer not below the rank of a Divisional Commissioner or a E District Judge; (c) the State Government may, in any particular case, nominate a person having expert knowledge as to the nature of the acquired property to assist the arbitrator and where such nomination is made, the person interested may also nominate an assessor for the same purpose; F (d) at the commencement of the proceedings before the .arbitrator, the State Government and the person interested shall state what in their respective opinion is the amount payable: G ( f) where there is any dispute as to the person or persons who arc entitled to the amount, the arbitrator shall decide **H** such dispute and if the arbitrator finds that more persons than one are entitled to the amount, he shall apportion the :amount, amongst such persons; ### 1 /. #### ' A B c D E 656 SUPREME COURT REPORTS [1978] 1 S.C.R. (g) nothing in the Arbitration Act, 1940 (Central Act X of 1940), shall apply to arbitrations under this section. (2) Every award made by the arbitrator under clause ( e) of sub-section ( 1) shall also state the amount of costs incurred in the proceedings before him and by whom and in what proportions such amount is to be paid." A notice under section 7 is to be given to all persons interested in respect of the amount determined under section 6. Any person interested and served with a notice under section 7 can file a claim before the authorised officer under sub-section (1) of section 8. fhe language of sulJ.-section (2) created some difficulty in harmonising it with the other provisions of the statute. It runs thus : "The authorised officer shall forward the claim made under sub-section (1) to the State Government for the payment of the amount to the person interested in the manner specified under section 11." Section 10 is important and provides for the various categories of the amount liable to deduction in certain cases. The nature of such amounts liable to be deducted are relatablc to the Employees' Provident Funds and Family Pension Fund Act, 1952, Employees' State Insurance Act, 1948, salary, wags etc. due to an employee, taxes etc. But ·the important item to be1 noticed is mentioned in clause (iii) of sub" section (3) which makes "the amount due towards the claims of secured creditors" deductible under section 10. Sub-section ( 4) au~ thorises the arbitrator to decide any dispute regarding the sum to be deducted under sub-section (3). Then section 11 (I) providing for the manner of payment of amount for the acquired property says : "The amount determined under section 6 shall, after deduction, if any, made under this Act, be given in cash by the State Government to the person interested, F (a) in one lumpsum where the amount does not exceec! ten thousand rupees; and (b) in ten equal annual instalments in other cases, the: amount of each instalment carrying interest at the rate of six per cent per annum from the notified date." G H An appeal lies to the High Court from the award of the arbitrator as provided for in the 12th section. Certain powers of the Civil Court have been conferred on the arbitrator and the authorised officer under section 13. Section 19 enjoins the State Government to transfer the whole of the acquired property in favour of the Corporation. The permit stands transferred to the Corporation under section 19(2). Sub section (6) says : "(a) All sums deducted hy the State Government under· sub-section (3) of section 10 shall stand transferred to the corporation referred to in sub-section (I). KARNATAI<A _v._ 11.ANGANATHA _(Untwalia,_ _!.)_ 657 (b) The corporation shall credit the sums transferred to the appropriate funds or if any part of the sums is payable to the employee directly, such part shall be paid to him directly." A ·monopoly is created in favour of the Corporation by the 20th **section.** Then comes the Schedule spoken of in section 6 which provides for principles for determination of the amount in relation to the various properties acquired unde.r the Act. Para 1 deals with the principle and the manner of determination of the amount for the vehicles. The acquisition cost is to be determined firstl and then a certain percentage is to be deducted in accordance with the Table appended to sub-para ( 1). The explanation says : "For the purpose of this paragraph "acquisition cost"" shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by the body builder.'" In respect of almost all other properties acquired the amount to be paid is by and large the' market value .of the property; vide paras 2, 3 and 4. Provisions have been also made for payment of the amount in respect of the workshops in para 5 and in respect of stores in para 6. Some compensatiol\ has been provided in para 7 of the Schedule for every permit acquired under the Act, although the amount so fixed ·may not be adequate. **A** **B** c D Now by the harmonious and reasonable rules of construction as also to save the Act from being violative of Article 31(2) of the E Constitution, we proceed to discuss and accept in a large measure the interpretation put and canvassed by Mr. Sinha. If the amount is fixed _'1_ by agreement, well and good. In the absence of an agreement, the State Government shall appoint an arbitrator who will be an officer of a high rank. Two assessors having expert knowledge as to the nature of the acquired property-one by the Government and one by the person interested, can be appointed to assist the arbitrator. Both F sides will state before the arbitrator as to what should be the amount payable according to each. The arbitrator shall hear the dispute and make an award determining the amount which appears to him _just_ _and_ _reasonable._ He shall also specify the person or persons to whom the ~ ~ amount shall be paid. In niaking the award,, he _shall have regard to_ the circumstances of each case and the provisions of the schedule so ' far they are applicable. Some difficulty at the outset arose in recon- G ciling the expression "as specified in the schedule" occurring in subsection ( 1) of section 6 and the underlined expression occurring in clause (e) of that sub-section. The content and purport of the expressions "having regard to" and "shall have regard to" have been the subject matter of consideration in various decisions of the Courts in England as also in this country. H We may refer only to a few. In _Illingworth_ v. _Welmsley(_ _[1]_ _)_ it was held (I) (1900)2Queen'sBench, 142. **c** **D** E **F** G **H** 65 8 SUPREME COURT REPORTS [1978] 1 s.c.R. by the Court of Appeal, to quote a few words from the judgment of Romer C.J. at page 144 : "All that clause 2 means is that the tribunal assessing the compensation is to bear in mind and have regard to the average weekly wages earned before and after the accident respectively. Bearing that in mind, a limit is placed on the amount of compensation that may be awarded ..... " In another decision of the Court of Appeal in _Perry_ v. _Wright_ (etc. etc.) (1) Cozens-Hardy M.R. observed at page 451 : "No mandatory words are there used; the phrase is simply "regard may be had''. The sentence is not grammatical, but I think the meaning is this : Where you cannot compute you mmt estimate, as best as you can, the rate per week at which the workman was being remunerated, and to assist you in making an estimate you may have regard to analogous cases." _It is worthwhile to quote a few words from the judgment of Fletcher Moulton L.J. at page 458. Under the phrase" "Regard may be had to" the facts which the Court may **thus** **take cognizance** **of;** **are** **to be** **"a** **guide,** **and** **not a fetter."** **""fhis** Court speaking through one of us (Beg J., as he then was), has expressed the same opinion in the case of _Saraswati Industries Syndicate_ _Ltd. Etc._ v. _Union_ _of India(')._ Says the learned Judge at page 959 : "The expression "having regard to" only obliges the Government to consider as relevant date material to which it must have regard." The arbitrator, therefore, reading section 6(1) as a whole is not obliged to fix the amount as specified in the Schedule. But he has to fix the amount which appears to him _just and reasonable_ on the totality of the facts and circumstances keeping primarily in mind the amount mentioned in the Schedule. Another apparent conflict was writ large on the phraseology of subsection (2) of section 6 and the provisions contained in sections 10 and 11. Section 10 provides for the deductions of the various amounts at the outset from the amount determined by the arbitrator payable in respect of the acquired properties, including those due to the secured creditors, which undoubtedly, would include the financiers of the hire-purchase agreements. The amount payable under section 11 and the manner of its payment is, after deducting all the amounts, provided in section 10. To that extent, for the purpose of harmonious construction, sub-section (2) of section 8 must mean the payments of the amounts as mentioned in section 10 and the balance to the ~operator in the manner specified under section 11. The Act thus interpreted to a large extent will satisfy not only the claims on account of wages and tax etc. but also the amount due to the secured creditors. Surely the amount due, if any, to any unsecured creditor cannot be taken into account as there is no such provision made in section 10. Sufficient power has been conferred on the arbitrator to arrive at a just and reasonable figure of the amount payable for the property acquired. And further, a procedural safeguard bas been provided by making a provision for an appeal to the High Court from the aV{ard of the arbitrator. (1) [1908] 1 King's Bench, 441. (]) [197511 S.C.R. 956. - ~·- ' - _f_ KARNATAKA _v._ RANGANATHA _(Untwalia,_ _J.)_ 65 9 No attack with any reasonable justification could be made on paras 2 to 7 of the schedule. But a difficulty arose in interpretation of the term "acquisition cost" occurring in sub-para ( **1)** of para 1. The literal meaning of that expression in sub-para ( **1)** would have been the acquisition cost of the contract carriage operator or any other persoo int~rested therein. But the difficulty created was by the language of the explanation appended thereto when it said that "acquisition cost" shall be the aggregate cost of the chassis as well as the body of the contract carriage as charged by the manufacturer of chassis and by .the body builder." Mr. Sinha rightly pointed out that the true and the .correct meaning of the words used in the explanation in the light of sub-para ( **1)** of para 1 would mean the cost of the chassis fixed by the manufacturers for their dealers to charge from the purchasers. Really the acquisition cost qua the purchaser is the price which he pays to the manufacturers' dealer from whom he purchases and not the manufacturer's actual cost of manufacturing the !chassis. So far the acquisition cost of the body of the vehicle is concerned, no difficulty is created by the explanation. It would be the actual cost charged by the body builder. On the interpretations aforesaid which we have put to the relevant provisions of the Act, it was difficult-rather impossible-to argue that cthe amount so fixed will be arbitrary or illusory. In some respects it may be inadequate but that cannot be a ground for challenge of the constitutionality ;of the law under Article 31 (2). The respondents felt quite satisfied by the interpretations aforesaid and could not pursue their attack on the vires of the Act on that ground. The number of such carriages and such permits compared to the total number of vehicles acquired was very few. It was about 20 to 25 only. It is no doubt true that under the Ordinance contract carriages with Inter-State permits were not sought to be acquired. The Act, however, has done so and with a retrospective effect. Question is whether the State Legislature of Karnataka has gone beyond its powers and competency in making such a prnvision. In that regard it was also .canvassed before us whether it was possible to read down certain _provi-_ sions of the Act to save it from constitutional invalidity. If so, to what extent and in what respect? The first attack on the legislative competence was that acquisition of such a contract carriage squarely fell under Entry 42 of List **l** of the Seventh Schedule to the Constitution that is to say, ''Inter-State trade and commerce." In paragraph 97 of the judgment the High Court seems to have rejected the contention that the Act violated the freedom of trade and commerce guaranteed under Article 30 I and 304. But the High Court in the earlier portion of its judgment appears to have taken the view that an Inter-State permit is, in fact and in substance, two or more permits rolled into one. The vehicle ply in the different States. The permit originally granted by the Karnataka authority under the Motor Vehicle Ac.t has to be countersigned by the authorities of the other States. Some of the operators kept their **A** **B** **c** **D** _Legislative Competence_ Re : _Contract Carriages Plying on Inter-State_ **E** _Routes_ **F** **G** **H** A B c D E F G H 660 SUPREME COURT REPORTS [1978) 1 s.c.R. vehicles and have got their workshops in other States.,The law made by the Karnataka Legislature cannot have extra territorial operation. We do not think that the view expressed by the High Court is wholly correct. There are numerous decisions of the Privy Council, the Federal Court and the Supreme Court in support of the proposition that the pith and substance of the Act has to be looked into and an incidental trespass would not invalidate the law, vide for example _Prafulla Kumar Mukherjee and others_ and _Bank of Commerce Limited,._ _Khulna_ and _Advocate-Genera/ of Bengal('); Kera/a State Electricity_ _Board_ v. _Indian Aluminium Co.(_ _[2 ]_ _)_ The earlier case of this Court is reported in _A._ _S._ _Krishna_ v. _State_ _of_ _Madras(')._ Almost a direct decision on this point is to be found in an unreported decision of this Court in _S._ _K. Pasari_ v. _Abdul Ghafoor and Ors.(_ _[4 ]_ _)_ The question for consideration in th.at case was whether the State Government had power under section 64A of the Motor Vehicles Act as introduced by the Bihar Amendment to deal with a revision in relation to an Inter-State permit. The High Court had taken the view that it had no such power, as such, a provision falls within item 42 of List I of the· Seventh Schedule to the Constitution, namely, Inter-State trade and· cominercc and not Entry 35 of List III, namely, mechanically propelled vehicles. This Court following the principle laid down in the· case of _Narayanappa_ v. _State_ _of_ _Mysore(')_ reversed the view of the High Court and held that the. impugned section fell within the legislative power of the State under Entry 20 of Lis~ III of Schedule Seven· of the Government of India Act, 1935 corersponding to Entry 35 of List _III_ of the Seventh Schedule to the Constitution. The said decision has been followed by this Court in _Tansukh Rai Jain_ v. _Nilratan·_ _Prasad Shaw and others(_ _[6]_ _)._ Mr. Sen submitted that the portion of the Statute providing for acquisition of contract carriages running on Inter-State routes is in reality legislating on the subject of Inter-State trade and commerce. The State Legislature was not competent to do so. In support of his argument, learned counsel referred to some of the American decisions viz. _United States_ _of America, Plfj._ _in_ _Err.,_ v. _Dan_ _Hil/(_ _[1]_ _);_ _Claude_ _R._ _Wickard, Secretary of Agr'cu/ture of the United States eta/_ v. _Roscoe_ C. _Filburn('); The Steamer Daniel Ball, Byron D. Ball and Jessie Ganoe,_ _Claimants, Appit._ v. _Uni'ted_ _States(')._ In _Dan Hi/I's_ ease (supra) it was held that the transportation of intoxicating liquor from one State to another was in itself Inter-State commerce, and the Congress· in the· (I) [1947] Federal Court Reports, 28. (2) [19761 I S.C.R. _552._ (3) [1957] S.C.R. 399. _(4)_ Civil Appeal No. 306 of 19H decided on 4-5-1964. (5) [196013 S.C.R. 742. (6) [19651 2 S.C.R. 6 (7) 63 Law Ed. 337, (8) 87 Law Ed. 122, (9) 19 Law Ed. 999, KARNATAKA _v._ RANGANATHA _(Untwalia,_ _J.)_ 661 exercise of its plenary authority to regulate the Inter-State transportation of intoxicating liquors may prohibit such transportation even into a State which permits it. In the case of _Claude_ _R._ _Wickard_ (supra) the question arose entirely in a different context. A Federal regulation of the· production of wheat not intended in any part for commerce but wholly for consumption on the farm was held to be within the power conferred by the commerce clause where the purpose of such regulatior. was to control the market price of wheat in Inter-State commerce. In the case of _The Steamer Daniel Ball_ (supra) the question was whether the impugned Act applicable to a steamer engaged as a com**n1on.** **carrier** **to** **carry** **goods** **in** **a** **navigable** **river** **between places** **in** **the** s~mc State when a portion of the merchandise transported by her is destined to places in other States could control such a steamer under the authority of the Congress to regulate an agency employed in comme1ce between the States. It was held that it could be so done. In our judgment it is difficult to apply the principles of any of the cases aforesaid to the facts and the provisions of the Act. It is not an Act which deals with any Inter-State trade and commerce. Even assuming for the sake of 1 argument that carriage of passengers from one State to 'the other is in one sense a part of the Inter-State trade and commerce, the impugned Act is not one which seeks to legislate in regard to the i;aid topic. Primarily and almost wholly it is an act to provide for the acquisition of contract carriages, the Inter-State permits and the other properties situated in the State of Karnataka. In pith and substance it is an act of that kind. The incidental encroachment on the topic of Inter-State trade and commerce, even assuming there is some, cannot invalidate the Act. The Motor Vehicles Ac:, 1939 was enacted under Entry 20 of List Ill of Schedule Seven of the Government of India Act, 1935 corresponding to Entry 35 of List III of the Seventh Schedule to the Constitution. The subject being in the Cor,current List and the Act having received the assent of the President, even the repugnancy, if any, between the Act and the Motor Vehicles Act stands cured and cannot be a ground to invalidate the Act. Entry 42 of List III. deals with acquisition of property. The State has enacted the Act mainly under this entry. It does not in any way violate or militate against the provisions of the Road Transport Corporation A.ct either, as argued by Mr. Sen. Now. we proceed to refer to some of the provisions of the Motor Vehicles Act, to repel Mr. Sen's arguments even with reference ta that Act. But it cannot be rejected fully. A portion of it _for_ the reasons to be hereinafter stated has got to be accepted. **B·** c G Under Section 23, every owner of a Motor Vehicle has got to cause his vehicle to be registered by a registering authority in the State in which he has the residence or place of business where the vehicle is norrnally kept. Almost all the Inter-State vehicles (there may be a few exceptions) are registered in the State of Karnataka. They are H normally kept there. If a vehicle registered in one State has been kept in another State for a period exceeding 12 months, then the registration has to be changed in accordance with section 29. Under the B D E G H 662 SUPREME COURT REPORTS [1978] 1 s.c.R. second proviso to section 45 ( 1) if it is proposed to use a vehicle in . two or more regions lying in different States, an applica'.ion for a permit has to be made to the Regional Transport Authonty of th.e region in which the appellant resides or has his principal place of business. Almost all the Inter-State permits were initially granted by the Karnataka authority. Section 63(1) says: "Except as may be otherwise prescribed, a permit gr3nted by the Regional Transport Authority of any one region shall not be valid in any ohter region, nnless the permit has been countersigned by the Regional Transpmt Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless conntersigned by the State Transport Anthority of that other State or by the Regional Transport Authority concerned : " This Court has expressed the view in the case of _Mis. Bundelkhand_ _Motor Transport Company, Nowgaon_ v. _Behari Lal Chaurasia and_ _another(')_ followed in _Punjab Sikh Regular Motor Service, Modha-_ _para_ v. _The Regional Transport Authority, Raipur and another(')_ that permits granted by one Regional Authority and counter-signed by another Regional Authority either in the same State or in different States are really different permits rolled into one. If the initial granting authority does not renew the permit for plying the vehicle within the jurisdiction of another authority the latter by mere counter-signing the permit cannot empower the permit holder to ply the bus either in their region or another State. None of the Inter-State permits in these cases has been issued by any central authority in accordance wi•h section 63A of the Motor Vehicles Act. In the case of _The Bengal Immunity Company Limited_ v. _The State_ _of Bihar and others(_ _[3]_ _)_ Venkatarama Ayyar J., delivered his separate judgment. Although he dissenting from the majority view in regard to the main contraversy in the case, in his judgment from page 811 onwards he discussed very lucidly, if we may say so with respect, the concept of extra territorial operation of a law. It has two connotations as pointed out by the.learned Judge at page 814: It" ...... means a law of a State with reference to its: own citizens in respect of acts or events which take place outside the State.. In discussing questions relating to extra-territorial operation, it is desirable that the two connotations of the words should be kept distinct and separate". Two other connotation is the operation of the law itself to subjects or properties outside the territory of the State which has made the law. For the reasons stated above by and large the law is not invalid. But to maintain its constitutionality in full, on the well-known principles of law established and noticed in several decisions, such as, in _The_ _Hindu Wumen's Rights to Property Act_ 1937, _and the llindu Women's_ (I) [1966] 1 S.C.R. 485. (2) [1966]2 S.C.R. 221. (3) [19551 2 S.C.R. 603. _)_ I ##### l KARNATAKA _v._ RANGANATHA _(Untwalia,_ _J.)_ 663. _Rights_ _to_ _Property (Amendment) Act,_ 1938, and _A Special Reference_ A _under section_ 213 _of the Government of India_ _Act,_ 193~:(1) _R.M.D._ _Chamarbaugwalla_ v. _The Union_ _of_ _India(')_ and _Gulabhai Vallabh-_ _bhai Desai etc._ v. _Union_ _of India_ & _Ors(_ _[3 ]_ _)_ a reading down of some of the provisions is permissible. And that reading down will be only to this effect . Vehicles kept and registered in the State of Karnataka in respect of which initially the I1<ter State permit has been granted by this State have validly been acquired. The permit acquired in respect of B: those vehicles will be the pern1it operative within the territory of the State of Karnaiaka. The counter-signed portion of the permit, which as pointed out above on the authorities of this Court is in substance and in effect a separate permit authorising the permit holder to ply the bus in another State, cannot be acquired. Such an acquisition will fall within the second connotation of the extra-territorial operation of the law, as referred to above from the _Bangal Immunity_ case. The State C Government on acquisition and the vesting of the acquired property cannot transfer the countersigned portion of the permit !o the Corporattion. The Corporation in view of the transfer under section 19 will be able to utilize the unexpired portion of the permit for plying the vehicle only in the Sate of Karnataka until and unless it gets it signed by the Transport authority of the other State or States in accordance with the Motor Vehicles Act or take steps in accordance with section D 20 of the Road Transport Corporations Act. This portion of the law, although it is a very minor one, has got extra-territorial operation in the connotation and sense which did not pennit the Karnataka Legislature to enact such a law. If on the facts of a particular case it be found that any particular vehicle is kept and registered or is plying on an initial permit granted by anolher State, such a vehicle also would not stand acquired under the Act and the notifications issued thereunder. E Since the High Court has not gone into the details of the facts, we were not concerned to go ino them. The Constitution Bench was formed merely to decide the constitutional issues. At the end we may also indicate that under sub-section (6) of section 19 all sums deducted by the State Government nnder sub-section ( 3) of section 10 which include the sums payable to the secured creditors stand transferred to the Corporation which is obliged to credit the sums transferred to the appropriate funds. The said provision would take within its ambit the liability of 1;he Corporation to pay forthwith the sum found due to the secured creditors. Since we have upheld the COfl,'ititutional validity of the Act on merits by repelJing the attack on it by a reasonable and harmonious construction of the Act, we do not consider it necessary to express any opinion with reference to Article 31 C read with clauses (b) and _(_ c) of Article 39 of the Constitution. Our learned brother Krishna Iyer J., has prepared a separate judgment specially dealing with this point. We must not be understood to agree with all that he has said in his judgment in this regard. (I) [1941] Federal Court Reports, 12. (2) [1957] S.C.R. 931. (3) [1967] I S.C.R. 602. F G H A .D E .F H 664 SUPREME COURT REPORTS [ 1978] ] S.C.R. For the reasons stated above, we allow the appeals and set aside the . judgment of the High Court. It will be open to any of the writ petitioners to file a petition in the High Court either in the same writ petition or a fresh one for adjudication and decision of the special facts of a particular case, if necessary, in the light of this judgment. It is hoped that since the matter has been considerably delayed by now, very early and expeditious steps would be taken for ~etermination and payment of the amounts in respect of the acquired property to the persons interested in accordance with the Act in the light of this judgment. We shall make no order as to costs in any of the appeals. KRISHNA IYER, J.-We go wholly with our learned brother l'niwalia J. Then _why a separate afterword_ ? Because, to put it simplistically, a legislation for the nationalisation of contract carriages by the Karnataka State, where provision has been made for fair compensation under present circumstances, has still been struck down by the High Court on the surprising grounds of absence of public purpose, illusoriness of compensation State take-over being beyond the orbit of Article 39 (b) and the like, and to express ourselves emphatically in reversal on the obvious, yet basic, issue we itemise below which is necessary to obviate constitutional deraliment again. The public sector, in our constitutional system, is so strategic a tool in the national plan for transformation from stark poverty to social justice, transcending administrative and judicial allergies,. that the questions raised and rulings thereon are of larger import for the country than one particular legislation and its vires and one particular government and its policies. What are those disturbing interrogatories ? If the State, to subserve the objects of governmental or other like agencies, compulsorily takes movable property or realty of private citizens, the like of which are readily available in the open market. does the law authorising such taking violate the limitation of 'public purpose' imposed by Article 31(2) of the Constitution, in the absence of _urgency_ which brooks no delay whatever ? Further, does the prospect of easy purchase elsewhere, negate the presence of 'public purpose', implying thereby the resort to compulsory acquisition within the framework of Article 31 ('2) is interdicted save where there is _'State necessity'_ coupled with _scarcity_ of supplies in the market? Secondly, does a legislation qualify for immunity under Article 31C read with Article 39(b), _onlv_ where the scheme is to divide and deal out to a plurality of persons, to disperse, diffuse or scatter ownership and control of material resources of the community compulsorily taken by the State? Or does it embrace 'distribution' with a wider connotation of 'removal' from the private sector and allocation in the public sector, dividing and arranging, · separating and allocating, acquiring from individuals and ma.king over to collective institutions or State organs, acting for and in the interest of the community, according to the State Plan or policy decision on the scheme of distribution and allocation of resources among the different sectors of economic activity so as best to subserve the public good ? How. in short, do we decode 'distribute' in Article 39(b) illumined by Article 3 8 ? All permitting or proscribing holding of 'resources' by KARNATAKA _v._ RANGANATHA _(Krishna_ _Iyer,!.)_ 665 the State or its designated organ monopolistically, for the better producfion and/ or distribution of goods and services to the community, for participative control by and distribution of profits among workers' and for all those other benefits claimed to flow out of public ownership, social <:ontrol, commitment to community, parliamentary accountability and vaster capability? Does _R._ C. _Cooper(')_ remain a legal tender even after demonetisation on the question of acquisition vis a vis compensation, by the 25th (Constitution) Amendment ? Can the theory of 'illusory compensation' be apocryphal or be exaggerated to apply to ,diminished compensation as a revised reincarnation of 'adequate compensation' still menacing projects of nationalisation ? How do we conceptulise 'material resources' and 'public purpose' in our current constitutional setting ? When cryptic phrases expressive of constitutional culture and aspirational future, fundamental to the governance of the nation, call for interpretative insight, do we merely rest content to con ~ult the O.E.D. and alien precedents, or _feel_ the philosophy and _share_ the foresight of the founding fathers and their telescopic faculty ? Is the meaning of meanings an artless art ? Holmes ( [2] ) J. in lovely language,, stated 'what oft was thought but never so well expressed' : **A** **B** c "A word is not crystal, transparent and unchanged; it is the skin of living thought and may vary greatly in colour and D content according to the circumstances and the time in which it **is** **used."** Jerome Frank adopted a quotation from Holmes which drives home the same point : "We must think things not words, or at least, we must constantly translate our words into the facts for which they stand if we are to keep to the real and the true.( [3] )" Be the High Court's judgment right or wrong, its socio-economic and jurisprudential repercussions for a social Welfare State or a 'Socialist Republic' are sufficiently profound to explain why, from us too, an _afterword._ Is it otiose _to_ ponder over these matters ariculately even though we generally concur in the reasoning and conclusion of our learned colleagues ? Some economic issues of moment, quiet in their legal look but critical in their later portent, come before the Court as has happened now, when, regardless of assent or dissent, the spelt-out opinion of the judges sitting on the same bench, separately or conjointly, becomes the right of the citizen, read in the context of the pregnant provision in Article 14 l. When major juristic problems of futuristic import involve constitutional probes, a plurality of opinions may bring out if we may mix metaphorS-more facets, shifts in emphasis, finer notes, fresh vistas and seeds of development. not necessarily verbal re-hash or medley of re-' petitive prolixity. A hundred noetic flowers and some cerebral briars are not a confusing crowd of colours. _Judicial perspective_ vis a vis _consti!utio,nality of economic legislation._ (1) [1970] 3 S,C.R. 530. (2) TowneV.Eigner,245U.S .. 418~62L.ed. 372,376 (3) Dias Jurisprudence, 4th Edn. p. 625 F G **H** A B c D E F G H 666 SUPREME COURT REPORTS [1978] 1 S.C.R. When confronted by serions constitntional problems, judicial statesmanship drops the craft of a legal tinker or lexicographic borrower bnt transforms itself into that of social engineer who 'beholds the fntnre in the present and his thoughts are the germs of the flower and frni! of latest time'. He gives conscions expression, in jnristic tongne, to the Constitntion's implicit pnrpose gronnded on the permanent interests of man as a progres_sive being-here, the little yet large man of India breaking ont of an iniqnitons system, yet reaching out to a human society, shot with distributive justice. The presence of this people-oriented perspec- · tive in the conrt, as the interpreter of the Constitution and its imperatives and the laws designed to inaugnrate a Human Tomorrow, compels us in all hnmility and aware of inadeqnacy, lo lend our pen to the reversal of the decision under appeal which _de facto_ proceeds on fastidions societal valnes of vanishing validity in the changed setting, and is partly founded on exotic jnridical doctrines (eminent domain) incongrous with the legitimate realities of the emerging Indian Order as are writ into Article 31 (2) and more nnmistakably in Article 31C read Oin the man· ner of _Keshavananda Bharati)_ (') along side of Article 39(b) and (c). The social philosophy of the Constitution shapes creative judicial vision and orientation. Our nation has, as its dynamic doctrine,, economic democracy _sans_ which political democracy is chimerical. We say so because our Constitntion, in Parts III and IV and elsewhere, ensonls snch a valne system and the debate in this case pnts precisely this son! in peril. Friedman has said in his 'Legal Theory and Social Evolntion'. 'The lawyer cannot afford to isolate himself from the social process. His independence can never be more than relative, and it is only a clear awareness of the political. social and constitntional fonndations of his fnnction in general as well as of particular legal problems that enables him to find the proper balance between stability and progrcss."( [2] ) Our thesis is that the dialectics of social jnstice should not be missed if the synthesis of Part III and Part IV is to influence State action and conrt prononncements: Constitutional problems cannot be studied in a socio-economic vacnum, since socio-cultnral changes are the source of the new valnes,, and slonghing off old legal thought is part of the process of the new eqnity-loaded legality. A judge is a social scientist in his role as constitntional invigilator and fails fnnctionally if he for· gets this dimension in his complex dnties. The credal essence of the Constitution consists in its Preamble, Arti. cles 38, 39(b) and (c), 31 and the bunch of Articles 31A, 3!B and 31C (We do not deem it necessary to refer in this case to the 42nd Constitntion Amendment Act). (l) [1973! Supp S.C.R. I (2) Legal Theory and_Social Evolution, p. 81, 5th Edn. ., , # KARNATAKA _v._ RANGANATHA _(Krishna_ _Iyer,/.)_ 667 Our emphasis is on abandoning formal lega!istics or sterile logomachy in assessing the vires of statutes regulating vital economic areas, and adopting instead a dynamic,, goal-based approach to problems of constitutionality. It is right that the rule of law enshrined in our Constitution must and does reckon with the roaring current of change which shifts our social values and shrivels our feudal roots, invades our lives and fashions our destiny. The key issues argued at learned length in these appeals cannot suffer 'judicial separatidn' from the paramount principles in the Preamble and in Article 39(b) and (c). So we have to view the impugned provisions from the vantage point of . socio-legal perception. _Fhe semantic sin_ _of dubious legislating drafting_ Before entering the thorny thicket of debate on the questions arising in this batch of appeals a cautionary word may be uttered, without disrespect, about the unwitting punishment of the community by our legislative draftsmen whose borrowed skills of Westminster vintage and hurried bills without sufficient study of their economic project, occasionally result in incomprehensibility and incogruity of the law for the lay and the legal. Francis Bennion, ( [1] ) commenting on the Renton Committee Report, writes : "The Renton Committee points out that the problem of obscure statute law is important to every citizen. "There is hardly any part of our national life or of our p~r­ sonal lives that is not affected by one statute or another. The affairs of local authorities, nationalised industries, public corporations and private commerce are regulated by legislation. The life of the ordinary citizen is affected by various provisions of the statute book from credle to grave." The c0mmittee might have added that the rule of law and parliamentary democracy itself are imperilled if laws are incomprehensible. They did say that it is of fundamental importtance in a free society that the law should be readily ascertain able and reasonably clear, and that otherwise it is opressive and deprives the citizens of one of his basic rights. It is also needlessly expensive and wasteful. Reed Dicerson, the famous American draftsman, said it cost the government and the public "many millions of dollars annually." It must be said in fairness to both sides that Shri Lal Narain Sinha whole-heartedly agreed with Shri Asoke Sen (they appeared on opposite sides) that the legislation was i!ldrafted and made a big drift on the creative imagination and linguistic tolerance of the judges, to reconcile tte verbal deficiencies and semantic difficulties besetting the text. Shri Sinha told the Court that a clarificatory bill was going before the House shortly as an amending exercise in this behalf. Our draftsmen (I) Laws are not for laymen-Guardian Miscellany May 29, 1975. 6-951SCI/77 A B c D E F G H 668 SUPREME COURT REPORTS [1978] 1 S.C.R. A handle foreign know-bow meant for different circumstances, and without full grasp of the economic regulation or the leisure and facilities --< for such study. In a country where the people are, by and large, illiterate, where a social revolution is being pushed through by enormous volume and variety of legislation and where new economic adventures requirB ing unordhoodoz jural techniques are necessitous, if legal drafting is to be equal lo th~ challenge of change, a radica!isation of its methodology and philosphy and an ability for the legislative manpower to ex- < press themselves in streamlined, simple, project-oriented fashion is ' essential. Jn the hope that a rolrrconscious court communicates to a responsive Cabinet, we make this cbservation. c _What_ is _the battle about_ ? _, Back to the challenging problems thrown up by the High Court's decision. The facts are there in the leading judgment and the formulation of the controverted propositions also needs no reiteration. Broadly speaking, we strike no note of dissensus but seek to bring out some social nuances even in consensus. Let us project the pegs on which,~ ~ D our discussion may bang. Incidentally, conceptual differences about the dimensions of the change visualised by Article 31 C read with Artic!e 39 (b) and ( c) arc bound to exist among judges who, after all, professionally objectify the social philosophy of the Constitution through the subjective prism of their own mentalism. 1. What is a 'puhlic purpose', set as a constitutional limitation in E Article 31(2), compliance with which conditions the immunity from attack based on Article 19 (!) (f) or inadequacy of recompense when any person is deprived of his property ? _y_ 1. (a) What is the degree of nexus between 'the public purpose and the acquisition desiderated by Article 31 (2) ? 1 (b) Can _Cooper_ (supra) be judicially resurrected, draped diffeF rently but with the same 'compensation' soul, even after the amendment of Article 31 (2) _'?_ 2. What are the pervasive ambience and progressive amplitude of the 'directive principle' in Article 39 (b) and ( c) in the context of nationalisation of public utilities ? h. G 2 (a) Can State monopoly by taking over private property be a modus operandi of _distribution_ of ownership and _control_ of the _mate-_ _rial resources_ _of_ _the community_ to subserve the common good, within the framework of Article 39 (b) ? 2(b) Are distribution and nationalisation antithetical of overlapping? H 2 ( c) What is the connotation of the expression 'material resour- >- -. ccs'? Can private buses be regarded as material resources of the community ? .. KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 669 These and cousin issues are the legal-economic points canvassed be- A :>- fore us and are sure to occupy the centre of the stage when management and control of growth in effective measure for common weal expand the frontiers of public law with a view to implement the 'distributive justice' embodied in Articles 38 and 39 and, by Article 37, made fundamental in the governance of the country. Dr. Ambedkar, in words significant, said B "In enacting this part (Part IV) of the Constitution, the Assembly is giving certain directions to the future legislature and the future executive to show in what manner they are to exercise the legislative and executive power they will have. Surely it is not the intention to introduce in this part these principles as mere pious declarations. It is the intention of ., cutive should not merely pay lip-Service this Assembly that in future both the legislature and the to thos,c principles exe- c but that they should be made the basis of all legislative and executive action that they may be making hereafter in the matter of the governance of the country." c \ The Directive Principles, being the spiritual essence of the consti~ ' tution, must receive sweeping signification, being our socio-economic Magna Carta, quiddities apart. D _They key etc. thought o the Constitution and the interpretative response._ The role of nationalisation of essential services for the better life of the people, an item on tl1e country's urgent developmental agenda, must be gathered before the wide range of the companion set of constitutional articles can be spanned by the court "in interpretative terms. Codified E law is legislatively crystallised politico-economics and so the search of the jurist has to be wider and deeper and interlaced. Take care of -, the basics, the specifics will take care of themselves. So we have to go behind the legal facade to respond to the rhythm of the pulsating text of the Constitution which casts heavy developmental responsibilities on the Welfare State. Roscoe Pound's remark reflects this thought : F - cally all must "All he social sciences must be co-workers, and emphati-be co-workers with jurisprudence." Moreover. sheer legalism cannot lightly upset legislative wisdom or k, ___..;, efficiency while passing on the constitutionality of economic legislation based on national planning, public finance, private investments, cost accounting, policy decisions, historical factors and a host of complex G social variables, Dixon C.J.(') in a different context observed : "These matters of incidental powers are largely questions of degree, but in considering them we must not lose sight of the fact that once the subject matter is fairly within the provinee of the Federal legislatuure the justice and wisdom of the provisions which it makes in the exercise of its powers over the subject matter are matters entirely for the legislature H -< and not for the Judiciary." (1) Burton v. Honan : 1952, 86 C.L.R. 169, 179. A B c **D** E F **670** SUPREME COURT REPORTS ( 1978] 1 S.CR This is no argument for abdication of judicial power; for where legislation is colourable, measures make-believe or orders _mala fide,_ the judges are the masters of the situation, and this Court, under Article 141, declares the law in that supreme spirit. But courts must be circumspect not to rush iu where serious reflection will make them fear to tread nor to resort to adroit circumvention because of econ0mic al lergy to a particular legislative policy. At this stage, a glance at the raw realities, to abolish which Article 31(2), Article 31C and Articles 38 and 39 have been enacted, is necessary. Poverty has, for ages, been the omnipresent reality of Indian life. Stark inequal,ties have been chrome and the 'hidden hunger' (to use Myrdal's phrase) of the people have pushed the Freedom Movement forward in the socialistic direction toward a better lik. The fasciculus of clauses in the Constitution we have referred to is calculated to prevent the revolution of rising expectations from becoming a revolution of rising frustrations. These compulsions mnst inform legal interpretation. For. in the words of Seton Pollock, "The law itself, though of crucial social importance, is oruy one element in the total human task. That task is to meet and master those frustrations that diminish man in this humanity and obstruct the realisation of his freedom and fulfilment within !he human society. Those frustrations stem from ignorance, poverty, pain, disease and conflicts of interest both within the person (the field of psychological medicine) and between persons (the territory of the law). These manifold and interacting frustrations cannot be met by any one discipline but only by a coordinated attack upon the problem through enlightened political and administrative initiatives and by educational. medical, psychological and legal remedies. Our concern is with the human condition and the imperative need to improve it through such resources as we can develop. We are beginning to see more clearly the need for a unitary view which is, in essence, spiritual in its character. reaching down to the realities that underlie our fragmented disciplines. ' ' ' "" The burning issue ol our times is how our _resources_ can be developed and combined to achieve the fulfilment of the human task and the improvement of the human condition." (Preface to 'The English Legal Aid System' by Seton PollockOrient Longmans) The Father of Nation long ago argued for 'the art and science of mobilising the entire physical, economic and spiritual _resources_ of all the various sections of the people in the service of the common good of all'. Sir Leslie Scarman developed this new dimension of law in !he H English climate when he said : "I shall endeavour to show that there are in the contemporary world challenges, socia,J. political and economic, KARNATAKA _v._ RANGANAHL\ _(Krishna Iyer,_ _J.)_ li7 l which, if the system cannot meet them, will destroy it. These challenges are not created by lawyers; they certaintly cannot be suppressed by lawyers; they have to be met either by discarding or by adjusting the legal system. Which is to be?" A A panoramic sociological view-not a narrow legal peep-alone can invest judicial power with capability to help solve the myriad problems of Mankind and Mother Earth. B _j_ We have divagatcd to drive home the pertinence and power or poverty to change our social order through law, and the necessity of the constitutional court to appreciate this fundamental logos before voiding any 'law'. Ideas of the Old Order on 'public purpose', illusory compensation, nexus doctrine and 'distributed to subservc the common good' should not reduce lofty constitutional considerations into 'hollow concepts, tea-cup debates and impotent ideas (which) debase modern jurisprudence' and are 'intellectually subversive', to use the indignant expressions of John Batt. Nietzsche once said : 'The great problems are in the streets'. Abraham Lincoln warned that 'the dogmas of the quiet past are no longer adequate to the stormy present.' Our legal doctrines, canons of interpretation and constitutional attitudes must therefore t.1ke not of this adaptational potential and response tn realities. _**The**_ _**schen1e**_ _**of the**_ _**in:p11g11ed**_ _**statute**_ c **D** **Co1ning** **no\v** **to** **the** **concrete** provi~ions **of the** _**r\cti**_ **tested on** th~ anvil of Article 31(2) and 39(b) and (c), we have to get a hang ot E the legislative project. Its purpose is to acquire contract carriages from all private sources. The reason for this measure of nationalisation is set out in the 'whereas' paragraphs. In broad terms, _it_ is. that private contract carriages are being operated in the State in a manner highly detrimental and prcjudical to the public interest. It is further claimed that with a view to prevent such misuse and also to provide better facilities for the transport of passengers and 'to give effect **F** to the policy of the State towards securing that the ownership and control of the material resources of the conununity are so distributed as best to subserve the common good and that the operation of the ecnomic system does not result in the concentration of wealth and means of production to the common detriment,' acquisition of contract. carriages is being resorted to. The requisite declaration contemplated in Article 31 C is thus made in the preamble as well as in Section 2 of the G Act. Of course, in the light of the _Keshavananda_ _Bharat1_ _Case_ (supra) there is in this Court a power-and if demanded, a duty-to examine whether there is real nexus between the legislation and Article J9(b) and _(c)_ or whether the ritualistic declaration is cutely but colourably designed to ward off attack from Article 14, 19 and 31. Make-believes cannot make-do. But if there is a reasonable relation between the two, the Court cannot constitute itself as a super- **H** administrator and suggest that there arc better ways of achieving the object than what the legislature has chosen to adopt. 'Quo modo' ;, not for the court. A **B** c **D** E **F** G **H** _**"The**_ _**ter111**_ _**is**_ _**synonyrnous with**_ _**gover11111al**_ _**purpose,**_ **(State-** v. Dizon). As employed to denote the objects for wl1ich taxes may be levied, it _.has no relation_ _to_ _the urgency_ _of_ _the_ public _need_ or to the extent of the public benefit which is to follow; _the essential reqwsrte beim;_ that a _public service or_ _use_ _shall effect the inhabitants as a_ _community,_ and not merelv as individuals. (Stevenson v. Port of Portland). A public purpose or public business has for its objective the promotion of the public health. safety. mora:ls, general welfare. security, prosperity. and contentment of all the inhabitants of residents within a given political division, as, for example, state. the sovereign powers of which **are exercised to promote such public ouroosc** **or** **pu** **b1ic** **busi-** ness. (Green v. Frazier)." (underscoring ours) There may be many processes of satisfying a public purpose. _A_ wide range of choices may exist. The State mov walk ;ntn the ooen market and buy the items, movable and immovable, to fulfil the public 672 SUPREME COURT REPORTS (1978] 1 S.C.R. The anatomy of the Act has been set out in the leading judgment and we adopt it. Let us now examine the fatal constitutional vices, embedded in the Act and discovered at the High Court level. One such lethal feature which appealed to the High Court, and has been repeated before us by Shri Asoke Sen with insistence, is that there is no public purpose involved in the acquisition of contract carriages and so the enactment is not invulnerable under Article 31 (2). The statutory purpose was to acquire contract carriages in private ownership, and transfer them to the State Road Transport Corporation which was to enjoy the exclusive privilege of running contract carriages. The expected shower of benefits was elimination of misuse of contract carriages in private hands and augmentation of public good by plying these vehicles under prolic ownership and direction. The first question is whether such taking from a private person and vesting in a public body is not a public purpose. There are two sub-issues which are distinct and mu>t be kepi distinct if ideational confusion is not to vitiate our conclusion : (a) Is there a public purpose ?; and (b) If there is, what are the ways to fulfil that purpose '/ The ends cannot be telescoped into the means. Once this perspicacity in thinking is present, it is unarguably obvious that the State Government's or the State Corporation's purpofo is a public purpose. Putting aside the possible distortions, historically proved, of class domination of the State apparatus and assuming the values of our constitutional order, the State symbolizes, represents and acts for the good of society. Its concerns are the ways of meeting the wants of the community, directly or otherwise. The pnrpose of a pnblic body to run a public transport service for the benefit of the people. operating it in a responsible manner through exercise of public powe1 which is controlled and controllable by society through its organs like the legislature and, at times, even the court, is mainfestly a public purpose. Does the purpose subserve some public use or interest or produce some public good or utility? If it does. the purpose becomef, public. 'Public' qualifies the object. Black's Legal Dictionary elucidates the expression : ~ ' KARNATAKA _v._ RANOANATHA _(Krishna_ _Iyer,_ _!.)_ 673 , ' p11IpOSe; or it may compulsorily acquire from some private person's A possession and ownership the artioles needed to meet the public purpose; it may requisition, instead of resorting to acquisition; it may take on loan or on hire or itself manufacture or produce. Ali these steps are various alternative means to meet the public purpose. The State may need chalk or cheese, pins, pens or planes, boats, buses or buildings, carts, cars, or eating houses or any other of the innumerable items to run a welfare-oriented administration or a public corporation or B answer a community requirement. If the purpose is for servicing the public, as governmental purposes ordinarily are, then everything desiderated for subserving such public purpose falls under the broad and expanding rubric. The nexus between the taking of property and the public purpose springs necessarily into existence if the former is capable of answering the latter. On the other hand, if the purpose is a private or non-public one, the mere fact that the hand that acquires C or requires is Government or a public corporation, does not make the purpose automatically a public purpose. Let us illustrate. If a fleet of cars is desired for conveyance of public officers, the purpose is a public one. If the same fleet of cars is sought for fulfilling the tourist appetite of friends and relations of the same public officers, it is a private purpose. If bread is 'seized' for feeding a. starving section of the community, it is a public purpose that is met but, if the same bread is D desired for the private dinner of a political maharajah who may _pro_ _rem_ fill a public office, it is a private purpose. Of course, the thing taken must be capable of 'serving the object of the taking. If you want to run bus transport you cannot take buffaloes. I A public _purpose_ is vastly wider than public _necessity,_ even as a mere purpose is more pervasive than an urgency. That which one sets before him to accomplish; and end, intention or aim, object, plan, project-is purpose (Black's Legal Dictionary). A need or necessity is compulsive, urgent, unavoidable. In purpose, there is dires; in necessity, there is imperative demand. 'The presumption is that a use is public, if the legislature has declared it to be such, and the decision of the legislature must be treated with the consideration due 10 a co-ordinate department of the government of the state'. Its effect is not conclusive but considerable. 'Public purpose' should be liberally construed, not whittled down by logomachy. The concept of 'public purpose' has been considered in some academic writings and judicial rulings and a glance at them may give theoretical nourishment to juridical ideas. We have to remember that neither socia.tist jurisprudence nor capitalist legal culture can govern the concept of public purpose in India's mixed economy and expanding public sector, in the context of progressive developmental programmes. Even the Privy Council, way back in 1914, in _Fram;ee_ _Patit_ 42 I.A. 44 approved of the wide definition of 'public purpose.' This court has also taken a liberal view of 'public purpose'. In a host of cases beginning with _Kameshwar_ AIR (1952 SC 889). Agrarian refom1, slum clearance to house the homeless, procuring a house for a dinlomat _(Bombay_ v. _Ali_ _Gulshan:_ AIR 1955 SC 810) or an office for the State Trading Corporation, acquisition of land to construct a dharmashala, houses for members of a cooperative society housing scheme, E F G H A. **B** c () E F G **H** .G74 SUPREME COURT REPORTS (J 978] l S.C.R. houses for workmen or for a Mahatma Gandhi Memorial, as poiote<l out by an Indian Jurist (Rajeev Dhavan, in his study of 'The Supreme Court of India' (Tripathi) have been regarded in decided cases as public purposes.' Conceptually, it has a home-spun texture al tho' that public transport is a public purpose is self-evidence anywhere. The dynamics of development must inform interpretation in this area. There is a touch oi swadeshi about a country's jurisprudence anti so our legal notions must bear the stamp of Indian Developmental amplitude linked to constitutional goals. Counsel for the appellant, from his angle, produced before us the Industrial Policy Resolution o! the Government of India of April 6, 1948 and April 30, 1956 wherein considerable importance was attached to the national economy securin~ a continuous increase in production and equitable distribution. The 1948 Resolution itself pointed out that the State must play an increa>ingly active role in the development of industries. Many other item' were included for a progressive participation by the State by 1he time the 1956 Resolution was made. This fresh statement of Industrial policy took note of the constitutional preamble which, _inter alia_ aimed at securing justice-social, economic and political. Articles 3~ and 39 were also adverted to so that a precise direction might be given to the socialist pattern of society as the objective of social and economic policy. In particular, it was explicitly stated that 'the Stnte will progressively assume the predominant and direct responsibl!ty from settin~ up new industrial undertakings and for developing _'transpor• facilities'._ Indeed, the State was to become the agency for planned national development and the socialistic pattern of sociey as the national objective required that all industries, of basic and strategic importance, or in the nature of _public_ _utility services_ should be in the public sector'. Titer,· **was** **a division** **and** **distribution,** **in** **a broad** **manner,** **of** **industries** **and** utilities between the private and the publlc sector. Stress was laid on the need to improve the Jiving and working conditions of workers a' well as their efficiency and a schedule in which _road transport_ figure' (Schedule B) was appended setting out those categories which would be progressively State-owned and in which the State ·would therefore genera,lly take the intiative in establishing new undertakings. When we ascertain the content of 'public purpose', we have to bear the above factors in mind which mean that acquisition of road trans port 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 (p. 228, Words & Phrases Legally defined, II Edn.). Theoretically. or even otherwise, there is no warrant for linking un public ourposL· 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 i• indeed sigoificant that in Section 40(h) 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 sucl1 work as likely to prove useful to the public. Even the American Constitution, in the Vth Amendment, uses the expression 'public use' and it has been held in India in _Kameshwar_ that 'public purpose' i' l [ KARNATAKA _v._ RANGANATllA _(Krishna Iyer,_ J.) 675 wider than 'public use'. Mahajan J. (as he then was) observed in that case : "The phrase 'public purpose' has to be construed according to the times in which particular legislation is enacted and so construed, the acquisition of the estates has to be held to have been made for a public purpose." (p. 942) In the same judgment. the learned j11dgc went on to state 'The legislatiure is the best judge of what is good for the community, by whose suffrage it comes into existence and it is not possible for this court to say that there was no public purpose behind he acquisition contempated by the impugned statute." _(_ p. 941) We have no doubt that this wider approach necessar11y means that a comprehensive signification has to be given to the expression 'public purpose'. It is true that Cooley and Willoughby and Willis and other American writings and rulings and theories like 'eminent domain' and 'police powers' have been eruditely referred to in the early days of this Court. However useful they may be in helping to understand the scope of 'public purpose', we have to be guided by the Directive Principles of State Policy while decoding the cryptic expression "public purpose'. Even in _Kameshwar_ the Court referred to Article 39 and the preamble to the Constitution and the obligation to secure its citizens justiceSocial, economic and political. The reference, here and there, in the separate judgments delivered in that case to the 'necessities of the State' cannot cut back npon the ambit of the concept. It is signiJicant that Das J. (as he then was) has in _Kw>ieshwur,_ observed : "We have been referred to some American authorities for ascertaining the meaning and implication of 'public me' an expression which obviously _is_ _of a more limited import than_ _the expression_ 'public purpose used in our Constitution." A ll c ll E F The learned Judge explains that the notion of 'public nse' is-rapidly changing in America, for in the modern view, 'public use' means 'use- G ful to the public.' It is right to remember, what has been mentioned in Shri Justice Das' judgment, that modern conditions and the increasing inter-dependence of the different human factors in the progressive complexity of the community make it necessary for the government to touch upon and limit individual activities at more points than formerly. In _Car-_ H _pus Juris_ the meaning of the term is stated to be flexible and varying with time and circumstances. All that can be said is that it embraces public utility, public advantage, public interest or object. . . A B c 676 SUPREME COURT REPORTS [1978] 1 S.C.R. "It is thus quite clear that a fresh outlook which piaces the general mterest of the community above the interest of the individual pervades our Constitution .... The words 'public purpose' used in Article 23(2) indicate that the Constitution used those words in a very large sense. In the never end-· ing race, the law must keep pace with the realities of the social and politica·l evolution of the country as reflected in the Constitution. If, therefore, the Sate has to give effect to this avowed purpose of our Constitution, we must regard as 'public purpose' all that will be calculated to promote the we!· fare of the people as envisaged in these Directive Principles of State policy whatever else that expression may mean." This new outlook, in the words of Das J. brings in economic justice regarded yesterday as a fantastic formula, but is today a directive principle of State policy. To conclude this branch of the discussion, there is no validity in Shri Sen's contention that because the Road Transport Corporation; Act, 1950, speaks of business principles as guiding State Transport Services, therefore taking over of private buses is not a public purpose. **D** Nor is there any force in reading compulsive need or State necessity of some imperative urgency as a component of the concept of public pur pose. Speaking for ourselves, nothing that has been stated in the judgment of the High Court discussing the doctrine of 'eminent domain' and allied matters, or/in the submissions of Shri Sen conjuring up a grim picture of government acquiring even paper, pencil, ink. furniture, spares and tyres and cars and buses merely because they do not want **E** to pay market price even when these items are abundantly available, does not deffect us from the conclusion that a Government **which** seeks to serve the community is entitled even for its commercial purposes to invoke its power of compulsory purchase, even when not driven by necessitous circumstances. We cannot confuse between abuse of public power and limitation of public purpose. F The nexus between 'public purpo'se' and Part IV is also relevant. Sir Alladi Krishnaswami Ayyar in his speech in the Constituent Assembly said : 'No Government responsible to the people can afforti light-heartedly to ignore the provisions in Part IV of the Constitution. f As early as _A._ _K._ _Copa/an_ (1950 SC 27), Chief Justice Kania state, with reference to Directive Principles, that 'it repre·sents not the temporary will of a majority in the Legislature but the deliberate wisdom of G the nation'. Shri Justice Mathew explained this idea at the Second Kerala State Lawyers' Conference thus : ' **H** " ... State is not an end in itself, but only an instrumentality, to be evaluated in terms of its contribution to the welfare of the political community. The concept of the laissez faire of the nineteenth century arose from a philosophy that general welfare is best promoted when the intervention of the State in economic and social matters is kept to the lowest possible minimum. The rise of the welfare State prOceeds from the political philosophy that the greater economic KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 677 and social good of the greater number requires greater intervention of the Government and the adoption of public measures aimed at general economic betterment. Today, people cry for intervention of Government when anything goes wrong in any front. They demand interjection of Government in every aspect and sphere of life." _IVill_ _'public purpose'_ _run_ _riot?_ A B _1_ The. consternation that if _anything_ can be acquired compulsorily for a public purpose _everything_ will be so acquired is understandable only if we readily grant that the Legislature and the Cabinet are the veils and vestments worn by a callous body irresponsible to the people and irresponsive to justice. There is a general presumption .. "What is abnormal it our Constitution has trusted the legislature, as the people o[ Great Britain have trusted their Parliament ? Right to life and personal liberty and the right to private property still exist in Great Britain in spite of the supremacy of Parliament. Why should we assume or apprehend that our Parliament or State legislatures should act like mad men and deprive us of our property without any rhyme or reason ? After all our executive government is responsible to the legislature and the legislature is answerable to the people. Even if the legislature indulges in occasional vagaries, we have to put up with it for the time being. That is the price we must pay for democracy. But the apprehension of such vagaries can be no justification for stretching the language of the Constitution to bring it into line with our notion of what an ideal Constitution should be. To do so is not to interpret the Constitution but to make a new Constitution by unmaking the one which the people of India have given to themselves. That I apprehend, is not the function of the Court. If the Constitution, properly construed according to the cardinal rules of interpretation. appears to some to disclose any defect or lacuna the appeal must be to the authority competent to amend the Constitution and not to the **court."** (1954 SCR 587; 654; _Subodh Gopal Bose)_ E F G in favour of honest and reasonable exercise of power _(State_ _of_ _West_ c _Bengal_ v. _Anwar Ali Sarcar,_ 1952 SCR, 284, 301, per Patanjali Sastry J.). Of course not that gross abuse of power and demoniac departure from legal norms are unknown; even so we should have faith in Parliament which, ultimately, is responsible to the people who cannot be ignored by it for all time without imperilling it own existence. Repelling the argument of likely abuse of power, Das J. observed _<_ 1954, SCR 587) _:_ D To take Sri Sen's illustration, if a law authorises-or government does-resort to compulsory acquisition of all its requirements of 11 stationary or routine needs of public sector undertakings, with a view to pay nominal snm and ~et away with it, that Legislature or Government will, without the Court's services. go the way world histor3 A B _c_ [) E F G II SUPREME COURT REPORTS [l978J I S.CR has blown away gross mis-rule. The court is not the onh sanctuary 111 a democracy against caprise dressed in 'little brief Juthority. If the act becomes so shockingly 1mqmt1ous to violate the law of life, the Court will have enough reserve power _under_ the Constitution to speak _for_ law aud to save the government from itself ! These extreme lurid, recondite picturisations cannot be transformed into probabilities and realities. especially in a case where we find little to complain in fairues·s of procedure or delivery of the end product. Of course, in a 'radical change' situation, certain classes, invoking vari1ishing values, may cry 'wolf'· and in any welfare legislation stray injustice is unavoidable. Perfection is God's property, to aim at its is human progres·s. We find no legal. flaw in the measure under attack. We think it is a fallacy to deny the presence of public purpo>c· merely because its satisfaction by readily available private purchase is possible in the circumstances. It is for the State to decide whether it should pay market price and buy or resort to Article 31 (2) and pay an amount which may be administratively feasible but less than the market price. It may take on hire and not buy at all, it may requisition without paying full compensation. These arc the means which cannot be confounded with the ends and it is egregious error to roll up the two together. The entire object of Article 31 (2) is defeated if such a constricted construction or cramped meaning were to be given to the provision. ft is a social welfare handicap, a jurisprudential error and a truncation of the State's constitutional power to ruk that it shall not 'seize' private property within Article 31 (2) unless II proves beyond reasonable doubt a scarcity situation, a public necessit0 and unavailability in the open market and the like. Yet this is the 'reasoning' which has had a fascination for the High Court. The spec• nus submission is tersely put by the High Court thus : "It was argued that for compulsory taking over of the vehicles w'th permits and o•her effects of the contract carriage operators, there was _no necessity or need_ or, in other words, there was no nexus between the public purpose and the taking over of the particular property." (ILR 1976 Karuataka 1 1478, 1512) fhc accent was on need or necessity. The Court felt the pell of till' ratiocination and erroneously argued itself into convincing conclu**siveness:** °'State necessity or need for taking the particular property of a citizen is the very foundation for the exertion of the power **of E1nincnt Domain.** **If there is** **no Stale necessity or need** for the particular property, then, in my opinion, the power **of** **Ern!nc11t** **Don1ain cannot** **be exerted.** **Let** **n1e** **assun1c** that the law provides for payin~ just compensation for taking the property of a citizen but there is no si:<Jtc nccc'5ity for taking over that property. In such an event. the property cannot be taken in an exercise of the power oE Eminent Domain. The ambit of legislative power conferre<l by I . \ , ........ ' "There is material in the Act itself to show that the Legislature was conscious of the fact that the acquisition under section 4 is not for a public purpose . . . . . . . . . . . . . . . . . . C When the purpose of the acquisition is 'deemed' to be a public purpose, the only meaning possible is that whereas tl1e purpose of the acquisition is not in reality a public purpose, the State Legislature requires the purpose to be treated as if it were a public purpose. It is rather an admission on the part of the Legislature that the purpose of the acquisition is not a public purpose." (pp. 1515-16) **D** If this were good law and logic, the States' operations might shrink into midget size with large spaces for _laissez_ _faire_ economics. The **fiaw** and fallacy of the law and the fetter on the State in this collStitutional interpretation goes far beyond this Act and to mortality. We have no hesitation in visualising a wider horizon of public purpose as outlined by us earlier and consequentially to overrule the view. of the **E** High Court. The people iu our welfare State await State undertakings in a we-alth of ways most of which involve compulsory taking of pri vate property and this futurism argues for a wider connotation of public purpose. The _aware_ court must remember the hint of Francis Bacon that 'it is a hard thing to torture the laws so that they torture menpoor men hopefully looking forward for benignant State action. After all, ordinarily, the legislature will acquire compulsorily only if it consi- **F** ders it a proper measure to promote public good. _Compensatfrm vis a vis the 25th Amendment_ The constitutional salvoes of Shri Sen were fired on the target of illusory compensation granted according to him, by the impugned Act. The amendment and recasting of Article 31 (2) would stand stiutified G if the High Court were right that payment which is less than the dealer's price inclusive of sales-tax or does not make good the loans of the operators or spreads payments over long years awarding only 6% interest, is illusory aud unconstitutional. We are not dealing with the details of the arithmetic arranged by the statute for payment of the amounts to persons interested iu **the** **H** acquired properties since it is fairly clear, as explained by Shri Lal Narain Sinha, that the Act awards, through the arbitrator, an amount which is just and reasonable for those who· suffer deprivation of their KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 67 _9_ Entry 42 of List II of the Seventh Schedule, 'Acquisition or requisitioning of property', in my opinion, carUlot comprehend the taking of private property by the state even on payment of just compensation if there is no state necessity. If there is no nexus between the taking over or private property and State necessity such a power cannot be exerted. I am of opinion that even if Article 31 is deleted from Part III of the Congitution, the State cannot acquire property of a citizen or make a law for acquisition of priyate property if the taking over has no relation to State necessity. Such a legislation will be _ultra vires_ of the powers of the State Legislature." A B A B c D E F G **H** 680 SUPREME COURT REPORTS [1978] 1 S.C.R. property. Even so, the law bearing on Article 31 (2), particularly in view of the exceptionable construction adopted by the High Court, needs to be clarified unambiguously and declared decisively. Indeed, if the High Court were right in its holding on this branch, 27 years of decisions and amendments and decisions and amendments have taken us back to square one ! FuU compensation with a formal difference ! The Court will not question the 'adequacy' directly, but 'interpret' the amended articles into the same desideratum. In this condition of the Jaw, we deem it proper to dive to the beginnings briefly. Right from the start the framers of the Constitution have been clear in their minds, as the debates, drafts, reports and resolutions show, that the amount payable when private property is taken by the State is a matter of legislative policy and not of judicial fixation. Speaking with a sense of history, the Father of the Nation used prophetic words, as far back as the time of the Round Table Conference, while dealing with the issue of compensation : "If the national government comes to the conclusion that the step is necessary no matter what interests are concerned, they will be dispossessed and they will be dispossessed. I might te11 you, without any compensation because if you want this Government to pay compensation, it will have to rob Peter to pay Paul, and that would be impossi ble.~' He reminded the British masters again : "I have in mind many things I would have to do in order to equalise conditions. I am afraid that for years together India would be engaged in passing legislation in order to raise the down-trodden. the fallen, from the mire into which they have been sunk by the capitalists, by the land-lords, by the so-ca11ed higher classes and then, subsequently and scientificaUy by the British rulers." "If we are to lift these people from the mire then it would be the bounden duty of the National Government of India in order to set its house in order. continuaUy to give preferences to these people and even free them from the burden under which they are being crushed. And if the landlords, zamindars, monied-men and those who are today enjoying privileges---1 do not care whether they are European or Indian-if they find that they are discrlminated against; I shall sympathise with them, but I will not be able to help them. It will therefore be a battle between the haves and the have-nots." Speaking as one of the foremost jurists of the country and with a sense of far-sightedness, Alladi Krishnaswami Iyer, in the Constituent Assembly, argued for legislative autonomy, without forensic intervention in the m~r of fixation of compe11Bation and the principles in . ' ' KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 68 I tllat behalf. He rightly stressed that by their very nature the princi- A pies of compensation could not be the same in every species of acquisition : "there is no reference in this to any judiciary coming into the picture. Much thought has been given to it and there has been much debate as to where the judiciary comes in. Eminent lawyers have told us that on a proper construction m this clause, normally speaking, the judiciary should not and does not come in. Parliament fixes either the compensation itself or the principles governing that compensation and they should not be challenged except for one reason where it is thought that there bas ben a gross abuse of the law, where in fact there has been a fraud on the Constitution. Naturally the judiciary comes in to see if there has been a fraud on the Constitution or not. But normally speaking, one presumes that any parliament representing the entire 'community of the nation will certainly not commit a fraud on its own Constitution and will be very much concerned with doing justice to the individual as well as the community. (p. 123, Krishna Shetty, supra) When complications arose on account of judicial interpretation of Article :11 not being in accord with what the framers of the Constitution fancied, amendments to the Constitution came in. Shri Jawaharlal Nehru, speaking on the 4th Amendment, which has sinoe been upheld by this Court, said in Parliament : "If we are aiming, as I hope we are aiming and we repeatedly say we are aiming, at changes in the social structure, then inevitably we cannot think in terms of giving what is called full compensation. Why? Well, firstly because "Law, according to me, if it is to fulfil its larger purpose, must serve as an instrument of social progress. It must refielct the progressive social tendencies of the age- Our ancients never regarded the institution of property as an end in itself. Property exists for dharma, dharrna and the duty which the individual owes to the society ~om the whole basis of social framework. Dharrna is the law of social well-being and varies from yuga to yuga. Capitalism as it i! practised in the West came in the wake of the Industrial Revolution and is alien to the root idea of our civilisation. The sole end of the property is yagna and to serve a social purpose." (Quoted from Fuudamental Rights & Socio-Economic Justice-by K. P. Krishna Shetty-pp. 127-128) B c E F G H ' , Shri Jawaharlal Nehru, speaking in the Constituent Assembly with refemnce to determination and payment of compensation emphasized D that it was left to Parliament to determine the various aspects thereof and ' A ll c 682 **SUPREME** **COlJR** **!** **REPORTS** (1978] I S.C.R. you cannot do it, secondly because it would be improper to do it, unjust to do it, and it should not be done even if you can do it for the simple reason that in all these social matters, Jaws etc., they are aiming to bring about a certain structure of society different from what it is at present. In that different structure, among other things that will change is this, the big difference between the have's and the have-not's. Now, if we are giving full compensation, the havc's remain the have's and the have-not's, have-not's. It does not change in shape or form if compensation take:; place. Therefore, in any scheme of social engineering, if I may say so, you cannot give full compensation, apart from the patient fact that you are not in a position-nobody has the resources--to give it." The divergence of thinking between those who framed U1e Constitution and amended it and the summit judiciary showed up glaringly in _Cooper's_ case and then came the Constituiton 25th Amendment Bill devoted primarily to overcome the effect of _Cooper._ While moving the Constitution 25th Amendment Bill which brought in ArtiD cle 31 C, the then Law Minister emphasized : E F G **H** "Critics of the present measure seek to invest propert; rights with an aura of sacrosanctity by regarding it as a pn• mordial institntion of the Jaw of natnre. It is this approach which led the Snpreme Court in the Bank Nationalisation case to seek help from the now archaic and long-past dead theories of Blackstone who regarded property as a natnral right. Such a view is not only out of tnne with the juristic approach to the institution of private property in modern jmisprudence, but it is not in tune even with the native genius of ancient and traditional juristic thought in India. TI1e individual's right to private property must yield second place to the supervening right of society to acquire the property for a public purpose. That is the eminent and dominant basis of the amendment which the House fa called upon to consider today." The Law Commission also had, in its 46th Report, supported Article 31-C in the sense that _Cooper's_ case was not in keeping with what they regarded as the intendment of the Constitution : "Nehru described this position in his characteristically lucid words by observing : "The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest man of our generation has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and suffering. so long our work will not be **over."** , ). KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ J.) 683 The view of the Commission has a bearing on our understanding **A·** ,of the provision and were referred to in the parliamentary debates :and so we excerpts portions thereof. Wrote the Commission : "Reverting then, to clause 2 of the Bill, it would be not'ccd that sub-clause (a) of this clause deletes the word 'compensation' and introduces in its place the word 'amount' in order to avoid any {;ontroversy about the adequacy of **B** the amount which Parliament may direct to be paid in tho manner specified by the clause, where property belonging to a citizen is compusorily acquired or requisitioned. It also provides, as did Article 31 (2) in the unamended form, that a law passed by virtue of the powers conferred by Article 31 (2) shall not be called in ·question in any Court on the ground that the amount so **C** fixed or determined is not adequate; and it adds that the said law cannot also be challenged on the ground that the whole or any part of such amount is to be given otherwise than in cash. ' Sub-clause (b) of clause. 2 of the Bill inserts clause **D** (2B) after clause (2A) in the existing Article, and it lays down that nothing in sub-clause (f) of clause (I) of Article J 9 shall effect any such law as is referred to in clause (2). In other words, an additional safeguard has been provided by clause (2B) which is sought to be introduced by the Bill to prevent any attack against the law passed under Article 31 (2) on the ground that any of its provisions **E** contravene the fundamental rights guaranteed by Article 19( l) (F) ." ·specific mention is made of the _Bank Nationalisation_ Case and its poignant pertinence consists in the High Court still dinging to _'.Cooper_ : "On a careful reading of the several opinions of the learned Judges in Keshavananda Bharati's case, I am of the clear opinion that the law hiid down in Cooper's case holds good." **(ILR** 1976 Kar. 1478, 1522) ·The Commission remarks : "Every student of Constitutional Law knows that Parliament thought that it was n=ssary to make these provisions because of the recent decision of the Supreme Court in _Rustom Covasjee Cooptr_ & _Another_ \'. _Union_ _of_ _India._ Parliament presumably thought, and we think rightly, that the effect of this majority decision of the Supreme Court was in substance, to make compensation provided for by the impugned legislation justi~iable and sub_ject it to . the test of reasonableness under arucle 19 ( 5) ; and, to that extent the said decision is inconsistent with the view taken by the 7-951SCI/77 **F** **G** **H** _I_ 684 SUPREME COURT REPORTS [1978] I S.C.R. A1 Supreme Court in _State_ _of_ _Gujarat_ v. _Shanti/al Mangaldass_ _&_ _others._ Indeed, ever since the Supreme Court had generally interpreted clause (2) of ArtiCJe 31 to mean that _the_ adequacy of compensation directed to be paid by laws passed under the said clause was not justiciable as we have explained earlier, except in cases where it reasonably appeared to the Court that the compensation was illusory or that **B** the whole legislative exercise was a fraud on the. Constitution. But, in _Cooper's_ case, the majority view appeared to strike **a somewhat different note;** **and that,** **according to Parlia-** ment, made it necessary to introduce the amended clause (2) in Article 31. We think that, in the circumstances to which we have just referred, Parliament is justified in intro **B** c ducing the amendment in question." A seminal aspect of the changes wrought by the 25th Constitution ,. Amendment Act is the immunization of 'Article 39 enactments' from the viral attack of rertain fundamental rights (the attackers were almost never the poor ! ) . The Commission commented : ' **D** E F G "By introducing this clause (31-C), Parliament is taking the first major and significant step to!"ards implementing two of the Directive Principles enshrined in clause (b) and (c) of Article 39 in Part IV of the Constitution, and, in that sense, the clause under consideration can be appropriately described as historic. After it is adopNxl, Parliament will have heralded a new era in the pursuit of the goal placed before the nation by the Constitution to establish social and economic justice in this country. The Commission is in full agreement with this object of the clause. In the two decades after the Constitution was passed, the inter-relation between the Directive Principles and Fundamental Rights have been often considered by the Supreme Court. The Directive Principles enshrined in Part IV are, in terms, declared to be non-justiciable and yet, Article 37, which makes this declaration, emphatically adds that the said principles are nevertheless fundamental in the governance of the country and it ordains that it shall be the duty of the State to apply these principles in making **Jaws."** "In the Directive Principles, however, one finds an even clearer statement of the social revolution. They aim at making the Indian masses free in the positivre sense, free from the passivity engendered by centuries of coercion by society and by nature, free from the abject physical conditions that had prevented them from fulfilling their best selves." The High Court has referred to _Cooper's_ case the ratio of whichlo put it terselv-goes to the extent of saving that if any of the relevant consideration in ascertaining the market value were not included. It ceased to be 'compensation' within the meaning of Article KARNATAKA v. RANGANATHA _(Krishna_ _Iyer,_ J.) 685 31. Then came the scenari~e 25th Amendment deleting th~ expression 'compensation' and substituting the neutral word 'amount' and restructuring the Article effectively to exclude judicial examination even of the principles of evaluation, the challenge to the constitutionality of that constitutional amendment and the elaborate _Bharati_ ruling upholding, by a majority, the vires of the Amending Act. And yet, the High Court has, after selectively culling out passages from the bunch of opinions in _Bharati_ come full circle to _Cooper_ again. This about-turn is untenable in our \<iew and it is necessary to run rapidly bnt in a short compass through the multiple views expressed by the many judges who heard and pronounced. _Bharati-the_ majority opinion-blinds us. What, on the question of payment for taking was the preponderant view ? Sikri C.J. permitted a narrow area for judicial inspection and readily accepted that full compensation was not a fundamental right. The Court could satisfy itself only about the amount not being a monstrous or unprincipled under-value. _Cooper_ was dead by this test. The learned Chief Justice said : A B c D E F ": . ; What meaning is to be given to the expression 'the amount so fixed'. The amount has to be fixed by law but the amount so fixed by law must also be fixed in accordance with some principles because it could not have been- intended that if the amount is fixed by law, the legislatnre would fix the amount arbitrarily. _It_ _could not, for_ _example,_ _fix_ _the amount_ _by_ _a letter ._ - - - - - If I were to interpret Article 31 (2) as meaning that e:ven an arbitrary or illusory or a grossly low amount could be given, which would shock not ouly the judicial conscience but the conscience of every reasonable human being, a serious question would arise whether Parliament has not exceeded its amending power under Article 368 of the Constitution. The substance of the fundamental right to 'property, under Article 31, consists of three things : one, the property shall be acquired by or under a valid Jaw; second, it shall be acquired only for a public purpose; and, thirdly, the person whose property has been acquired shall be given an amount in lieu thereof, which, as I have already said,· is not arbitrary, illusory or shocking to the judicial conscience or the conscience of mankind." (196-197 pp) G The payment may be substantially less than the market value, the principles may not be all-inclusive, but the court would not, because it could not, upset the taking save where the principles of computation were too arbitrary and illusory to be unconscionably shocking. Shri Justice Shelat, with the concurrence of Shri Justice Grover, put his viewpoint thus : H . "It is significant that the amount can be determined in accordance with specified principles, if it is not fixed by the **A** **B** **c** **D** **E** **F** **G** **H** 686 SUPREME COURT REPORTS [1978] 1 S.C.R. law itsclt. Moreover, its adequacy cannot b.: questioned in a court. The use of the word 'principles' anu the question of inadequacy can only arise if the amount has some norm. If it has hO,1orm no question of specifying any principles arises nor can there be any occasion for the determination of its adequacy. _The very fact that the court_ _is_ _debC'tred_ _Jrom_ _going into the question_ _of adequacy shows that the 'amount'_ _**can he adequate or ilwdequate. Even**_ _**if**_ _**it**_ _**is**_ ~uodequate, _**the**_ _**fixation**_ _**er**_ _**determinaiion**_ _**of**_ _**the**_ _**a111ount**_ _**is**_ _**h-nn·,;;111e**_ _**fron1**_ _**any**_ _challenge._ It postulates the existence of some standard or norm without which any enquiry into adequacy becomes wholly unnecessary and irrelevant." (p. 283) (emphasis, added). - - - - - ''It is true that the 'amount' to be paid to an owner may not be the market value. The price of the prape1ty might have increased owning to various factors to which no contribution has been made by the owner. The element of social justice may have to be taken into consideration ......... . The Court will certainly give due weight to legislative judgment. Bul the norm or the principles of fixing or determining Lhe 'amount' will have to be disclosed to the Conrt. It will haw to be satisfied that the 'amount' has reasonable relationship with the value of the property acquired or re**qui:-:it ioned and one or more** **of** **the relevant principles have** been applied and further that the 'amount' is neither illusery nor it has been fixed arbitrarily, nor _at such a_ _figul'e_ _that_ _it_ _means virtual deprivation_ _of_ _tM_ _right under Article_ 31(2). _Tk_ _question of adequacy or inadequacy, however,_ _cannot_ _be_ _gone into"_ (pp. 284-85) (emphasis; added). Hegde J. discussed the question from lexicographic, political and social ani:les and held : "The market value of a property is the result of an interaction of various forces. It may not have, any reason21ble relationship with the investment made by its successive owners. The price of the property acquired might have shot up because of various contributions made by the society snch as improvements effected by the State in the lo~ality in ques**tion or the conversion of a rural area into** **an** **urban area. It** is undoubtedly open to the State to appropriate to itself that part of the market value of a property which is not the result of any contribution made by its owners. There may be several other relevant grounds for fixing a particular 'amount' in a given case or for adopting one or more of the relevant p>;nch>les for the <letermination of the price to be paid. In **all** these matters **the** legislative judgment is entitled to great wci~ht. It will be for the aggrieved party to clearly satisfy the Court that the basis adopted by the legislature has no ' **c** KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 68 7 reasonable relationship to the valne of the property acquired or that the 'amount' to be paid has been arbitrarily fixed or that the same is an illusory return for the property taken. So long as the basis adopted for computing the '"Jue of lhc property is relevant to the acquisition in question or the amount fixed can be justified on any such basis, it is no more open to the court to consider whether the amount fixe1 or to be determined is adequate. But it is still open to the court **to consider whether 'amount'** **in** **question has been arbltrarily** determined or whether the same is an illusory return for the property taken. It is also open to the court to consider whether the principles laid down for the determination of the **amount** **are** **irrelevant** **for** **the** **acquisition** **or** **requisition** **in** qucstio11. To put it differently, the judicial review under the amended Article 31 (2) lies within narrow limits. The court cannot go into the question whether what is paid or is po.yable is compensation. It can only go into the question whether the 'amount' in question was arbitrarily fixed as illusory or whether the principles laid down for the purpose of determining the 'amount' payable have reasonable relationship with the value of the property acquired or requisitioned." (pp. 341342). Even here we may excerpt Hegde J's highlight of Part IV : "Part IV of the Constitution is designed to bring about the social and economic revolution that remained to be fulfilled after independence. The aim of the Constitution is not to guarantee certain liberties to only a few of the citizens but for all. The Constitution visualizes our society as a whole and contemplates that every member of the society should participate in the freedoms guaranteed. To ignore Part IV is to ignore the substance provided for in the Constitution, the hopes held out to the Nation and the very ideals on which our Constitution is built. Without faithfully implementing the Directive Principles, it is not possible to achieve !he Welfare State contemplated by the Constitution. A society like ours stepped in poverty and ignorance satisfying the minimum economic needs of every citizen of this country. An;- Government which fails to fulfil the pledge taken under the Constitution cannot be said to have been faithful to the Constitution . and to its commitments." (343-344). Reddy J. in short paragraph disposed of the question : "Once the Court is satisfied that the challenge on the ground that the amount or the manner of its payment is neither arbitrary or illusory or where the principles upon which it is fixed are found to bear reasonabie relationship to the value of the property acquired, the Court cannot go into the question of the adequacy of the amount so fixed or determined on the basis of such principles." (p. 555). **A** B c **D** E **F** **G** **H** **A** **B** **c** **D** **E** **F** **G** **H** 688 SUPREME COURT REPORTS [1978] 1 S.C.R. Our learned brother Chandrachud J. explained his stand effectively thus : "The specific obligation to pay an 'amount' and in the alternative the nse of the word 'principles' for determination of that amount must mean that the amount fixed or determined to be paid cannot be illusory. If the right to property still finds a place in the Constitution, you cannot mock at the man and ridicule his right. You cannot tell him : 'I will take your fortune for a farthing:." (p. 992-993). It is regrettable that two significant points made by brother Chandrachud J. have slipped out of the scrutiny o( the High Court and we have emphasized them for identification. Are the principles _wholly_ irrelevant? Do the principles bear on _social good?_ In the present case, few will agree that the principles are wholly irrelevant or not geared to social good. The majority view in _Bharati_ was set out by the Court and there it was sLqted: Section 2(a) and (b) of the Constitution (25th Amendment) Act, 1971 is valid. Glosses apart, the provision excludiug the court's power to investigate either the adequacy of the amount or the propriety of the principles to determine the amount was upheld. ft follows that individual annotations notwithstanding the Court has set its seal of validity on Article 31 (2). Nothing covered by it can now be available for examination using passages in separate opinions. Tile result is the quantum of the amount or the reasonableness of the principles are out of bounds for the Court. Article 31 C has also been upheld subject to the rider that there should be nexus between Article J9 (b) and (c) and the object of the acquisition. Our learned brother, Chandrachud J., has struck a middle note and pointed out that where the inputs of valuation prescribed by the statute are _wholly irrelevant_ or unconnected with Social good, then Article 31 (2) may not retrieve the statute. It is a far cry from this observation to the position that the 25th Constitution Amendment leaves untouched the ratio in _Cooper._ We have pointed out how the said constitutional amendment was ex "As at present advised, I am inclined to the view which as I have said is unnecessary to discuss fully, that though it is not open to the court to question a law under Article 31 (2) on the ground that the amount fixed or determined is not adequate, Courts would have the po\Ver to question such a law if the amount fixed thereunder is illusory; _if the principles, if any_ _are stated,_ _for_ _determining the amount are wholy irrelevant_ for fixation of the amount, if the-power of compulsory acqui sition or requisition is exercised for a collateral purpose; if the law offends constitutional safeguards other than the one contained in Article 19(1)(f); or, if the law is in the nature ,,f a fraud on the Constitution. I would only like to add, by way of explanation, that _if the fixation_ _of_ _an amount is_ _shown_ _to_ _depend upon principles bearing on social good it_ _**;nay not be possible to say that the principles are irrelevant."**_ (p. 993) (emphasis added) KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 689 pressly undertaken, _inter_ _aha,_ to undo the effect of _Cooper_ and to for- A bid forensic diagnostics into the question of compensation. In this light it is difficult to uphold the view of the High Court that _Cooper_ survives after death and keeps virtually alive the obligation for payment ·Of market value inclusive of the usurious rates of interest at which the owner borrowed to buy the property seized by the state . This takes us to the non-negotiable minimum of nexus between the B purpose of the acquisition and Article 39(b). Article 39(c) was feebly mentioned but Article 39 (b) was forcefully pressed by the appellant. Better read Article 39 (b) before discussing its lull import : "39(b) Certain principles of policy to be followed by the State.--The State shall, in particular, direct its policy towards securing that the ownership and control of the material resources of the commiiiilly are so ·distributed as best to subserve the common good." The key word is 'distribute' and the genius of the article, if we may say so, cannot but be given fully play as it fulfils the basic purpose of restructuring the economic order. Each word in the article has a strategic role and the whole article is a social mission. It embraces the entire material resources of the community. Its task is to distribute such resources. Its goal is so lo undertake distribution as best to subserve the common good. It re-organizes by such distribution the ow11ership .and control. c D 'Resources' is a sweeping expression and covers not only cash re- I/ sources but even ability to borrow (credit resources). Its meaning given I E in Black's Legal Dictionary is : ' "Money or any property that can be converted into suplied; means of raising money or supplies; capabilities of raising wealth or to supply necessary wants; available means or capability of any kind." And material resources of the community in the context of re-ordering F the national economy embraces all the national wealth, not merefy natural resources, all the private and public sources of meeting material needs, not merely public possessions. Every thing of value or use in the material world is material resource and the individual being a member of the community his resources are part of those of the community. To exclude ownership of private resources from the coils of · Article 39(b) is to cipherise its very purpose of redistribution the G socialist way. A directive to the State with a deliberate design to dismantle feudal and capitalist citadels of property must be interpreted in that spirit and hostility to such a purpose alone can be hospitable to the meaning which excludes private means of production or goods produced from the instruments of production. Sri A. K. Sen agrees that private _means_ of production are included in 'material resources of the community' but by some baffling logic excludes _things produced._ If a H car factory is a material resouree, why not cars manufactured ? 'Material' may cover everything worldly and 'resources', according to Random House Dictionary, takes in 'the _collective wealth_ of a country 690 SUPREME COURT REPORTS [1978] 1 S.C.R. A or its _llh!ans_ _of producing wealth_ : money or any property that can be converted into money; _assets.'_ No further argument is needed to con- '\ elude that Article 39(b) is ample enough to ropo in buses. The motor vehicles are part of the material resources of the operators. The next question is whether nationalisation can have nexus with. distribution. Should we assign a narrow or spaciorn sense to this conB cept? Doubtless, the latter, for reasons so apparent and eloquent. 'I<> 'distribute', even in its simple dictionary meaning, is to 'allot, to divide into classes or into groups' and 'distribution' embraces 'arrangement, classilication, placement, disposition, apportionment, the way in which items, a quantity, or the like, is divided or apportioned; the system of dispersing goods throughout a community' (See Random House Dictionary). To classify and allocate certain industries or services or C utilities or articles between the private and the public sectors of the national economy is to _distribute_ those resources. Socially conscious economists will find little difficulty in treating nationalisation of transport as a distribuiive process for the good of the community. You cannot condemn the concept of nationalisatfon in our Plan on the score that Article 39(b) does riot envelope it. It is a matter of public policy left to legislative wisdom whether a particular scheme of take·over should D be undertaken. E F G H Two conclusions strike us as quintessential. Part lV, especially Article 39(b) and (c), is a futuristic mandate to the state with a message of transformation of th~ economic and social order. Firstly, such change calls for collaborative effort from all the legal institutions. ol the system : the legislature, the judiciary and the administrative machinery. Secondly and consequentially, loyalty to the high purpose or the Constitution, viz., social and economic justice in the context of material want and utter inequalities o;n. a massive scale, compels the court to ascribe expansive meaning to the pregnant words nsed with hopeful foresight, not to circumscribe their connotation into contradiction of the objectives inspiring the provision. To be Pharisaic towards the Constitution through ritualistic construction is to weaken the social-spiritual thrust of the founding fathers' dynamic faith. An American political scientist, Benjamin Twiss, commented with jarring exaggeration upon the conservative perspective of the lawyer in the United States of the slump years in the 'thirties :' "It is not surprising that lawyers' fame is evanescent .... Allied with those who are pre-occupied with production and profits to the exclusion of standards of consumption and general well-being, lawyers have taken a negative rather than a creative and constructive attitude toward social development. · In defending rights of untramrneHed enterprise against rules of fair play and in presuming the unconstitutionality of legislative enactments, they have missed their cue to the role of con structive leaders and have been instead dogs in the manger." (Lawyers for Social Change : Perspectives on Public Interest Law : by Robert L. Rabin Stanford Law Review Col. 28, No. 2, January 1976). ;. -, KARNATAKA _v._ RANGANATHA _(Krishna Iyer,_ _J.)_ 691 This does not apply to the Indian Bar on Bench at all and is referred to _ex abundant; cautela._ Law and Development in India should repel, as far as possible. such an unlovely judgment 011 Indian jural perspectives and performances. The Court and counsel have a justice constituency with economic overtones, the manifesto being the Co11stitution designed to uphold the humanist values of life, liberty and the equal pursuit of happine·ss, material and spiritual. _An_ _Explanatory Post·script_ _to_ _our juristic Attitude_ We have been guided by the thought that an all-too-large gap between the law and public needs, arising out of narrow notions, must oe bridged by broadening the constitutional concepts to suit the changing social consciousness of the emerging Welfare State. Institutional crises and confrontations can be and should be avoided by evolvi11g a progressive interpretation, discarding over-sensitivity to under-valuation when private property is taken for public good. 'A legal system that works to serve the community' says Bernard Schwartz, 'is better than the academic conceptions of a bevy of Platonic guardians unrespmisivc to public needs'. The law, in the words of Justice Holmes, is a magic mirror in which we see reflected not only our own lives but also the lives of those who went before us-and may we add, of those who come after us. But basically we have brought fo bear upon the impugned legislation a value judgment in tune with the 'welfare' wav~ length of our Constitution and the still, and music of Indian humanity. 'The law moves with the main currents of the society it regulates. Each **society has** **its** **o\\·n values which** **nre** **necessarily reflected** **in** **the** **ends** that the legal order seeks to further. The ends of law are attained oy recognizing certain interest, defining the limits within which they shall be recognized legally, and endeavouring to secure those interests **that** are within the limits defined.' (Quoted from the Law in AmericaBernard Schwartz-p. 34) We have recognised that rights and obligations of long ago do not acquire a static validity in our galloping age and a decent oblivision must put· them back into forgotten antiquity if we, as a nation, are to run on the rails of the rule of law and so we have nullified the attempt to drift back from _Bharati_ to _Cooper_ on 'compensation'. A blend of law as a set of responses to the new needs of expanding society and of Daniel Chapman's advice that 'the known oertainty of the law is the safety of aU', has played upon our approach. We are aware that in constitutional construction, a limited judicial lawmaking is inevitable 'juristic chemistry', to borrow Roscoe Pound's exprei;sive phrase. "The chemist does not make the materials which go into his test tube : He selects them and combines them for some purpose and his purpose gives form to the resuli.' Our constitutionmakers have had due regard to the felt necessities of the time and the philosophical and political theories about what would best serve the country's progress; and so we have grounded ourselves on these solid prescriptions undeflected by speculative niceties lent by literal study and possible injuries inevitable in reshaping society. 'The object and end of all Government is to promote the happiness and prosperity of the community by which it is established', wrote U.S. Chief Justice Taney, **140** years ago in _Charles_ _River_ _Bridge_ v. _Warren_ _Bridge_ and we, in a republic with an irrevocable tryst to give social justice in the **A** **;c** **F** **G** A !B D ·G 692 SUPREME COURT REPORTS [1978] 1 S.C.R. midst of poverty, cannot diminish the power to accomplish those ends. To be stable is not to stand still; to move forward and reconcile is the road to the goal-juridical engineering geared to desiderated policy objectives, being the key to most constitutional problems. Not unoften, the subjective philosophy of the judge underpowers the philosophy of the Constitution while it should be overpowered by it. Cardozo, with apt elegance, struck this note : "The great tides and currents which engulf the rest of man do not turn aside in their course and pass the Judges by." Cardozo, The Nature of Judicial Process, 1932, P. 170. Taking this warning to head, we have also to take the Constituent Assembly's hope to heart : "The Judiciary was to be the arm of the social revolution, upholding the quality that Indians had longed for in colonial days ...... The courts were also idealised because, as guardians of the Constitution, they would be the expression of a new law created by India_ns for Indians." -Granville Austin, The Indian Constitution. The Discovery of Law India by interpreting liberalli to embrace the higher values of collective good and to curb, where necessary, individual property rights, is all that we have endeavoured to do. We have been cautioned by appellant's counsel that governments may usurp and destroy if judges do not cry halt. Where arbitrary, oppressive and _ma/a_ _fide_ misuse of power is a real peril. the court shall not fail. But to intervene and strike down, because a measure, within the constitutional bounds, may work hardship for some but is conceived for the good of the many in keeping with the planned process of Development, has a 'Tory' touch. Canonisation of _laissez faire_ cannons by the Court is to move counter-clockwise. Lord Sankey held the view that in the field of constitutional Law, progressive and dynamic interpretation in the light of political developments must dominate (see : _British Coal_ _Corporation_ v. _The King_ : 1935 AC 500). Lord Jowitt L.C. in _Attor-_ _ney General_ _of_ _Ontario_ v. _Attorney Gen._ _of_ _Canada_ (1947 AC 503) affirmed the same approach : "To such an organic statute the flexible interpretation must be given that changing circumstances require, aiid it would be alien to the spirit with which the preamble to the Statute of Westminster is instinct, to concede anything less than the widest amplitude of power to the Dominion legislature under section 101 of the British North America Act." - Legalism has to yield when spacious issues arise. "Whatever the legal aspect of the thing, tKere are moments when it is a feeble need to rely on," said Nehru, in the Constituent Assembly (I Constituent Assembly Debates, p. 61) . There is another stark possibility the Administration sliding back from the progressive constitutional values to protect private interests; and then the Court may be activate the 'welfare jurisprudence' of the Constitution by appropriate commands. M.R. '