Rajiv Sarin & anr  vs. State of Uttarakhand & Ors.

The present appeal challenged the judgment passed by the High Court of Judicature at Allahabad  whereby the Division Bench of the High Court dismissed the writ petition filed by the appellants. Whether the High Court was justified in holding that the appellants were not entitled to any compensation even when their forest land was acquired by the government, merely because the appellants had not derived any  income from the said forest, was determined in the present case.

The appellant’s father had in the year 1945 acquired proprietary right in an Estate known as Beni Tal Fee Simple Estate situated in Pargana Chandpur, Tehsil Karan Prayag, District Chamoli, Uttarakhand (“the property in question”) which comprised of large tracts of forest spanning in and around 1600 acres. By a Gazette Notification dated 21st December, 1977 under Section 4-A of the Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960 ( “KUZALR Act”) as amended by the U.P. Act No. 15 of 1978, the rights, title and interest of every hissedar in respect of forest land situated in the specified areas ceased with effect from 01st January, 1978 and the same were vested in the State Government. A notice issued by the Assistant Collector, Karan Prayag, District Chamoli, under Rule 2 of the Kumaun and Uttrakhand Zamindari Abolition and Land Reform Rules, 1965 (“the KUZALR Rules”) framed under the KUZALR Act was served upon the appellants intimating them that effective from 1st January, 1978, the rights, title and interest of hissedar in respect of the property in question had vested in the State Government free from all encumbrances and it invited objections and statement, if any, relating to the compensation qua the property in question. Assailing the aforesaid notice issued by the Assistant Collector, the appellants preferred a writ petition under Article 32 of the Constitution before the Supreme Court. In 1978 while disposing the writ petition, the Supreme Court passed the following order “We are of the opinion that it will be better if the Petitioner files a petition under Article 226 of the Constitution in the High Court. This Petition is therefore allowed to be withdrawn.”

Subsequently, in 1979 the appellants filed objections to the notice issued by the Assistant Collector challenging the vires of the KUZALR Act and also stating that no profit was being made from the property in question. By an order dated 11th April 1988, the Assistant Collector dismissed the objections of the appellants by observing that that he had no jurisdiction to consider the legal validity of the KUZALR Act. With regard to the issue of compensation, the Assistant Collector held that since the KUZALR Act did not provide for a method to compute compensation in cases where no income has been derived from the forests, the appellants were not entitled to any compensation. Feeling aggrieved, the appellants preferred a writ petition in the High Court of Judicature at Allahabad questioning the legality and validity of the order of the Assistant Collector and also challenging the constitutional validity of Sections 4A, 18(1)(cc) and 19(1)(b) of the KUZALR Act. The High Court dismissed the writ petition.

Section 4A was added to the KUZALR Act and private forests were brought within its purview. Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960, which was a State legislation received the assent of the President of India on 10th September, 1960. The amendment brought in 1978 through UP Act 15 of 1978 to the said Act also received the assent of the President on 26th April, 1978.

The Supreme Court observed that the KUZALR Act is a law principally relatable to Entry 18 (land) of List II read with Entry 42 in List III of the Seventh Schedule of the Constitution and only incidentally trench upon “forest” i.e. Entry 17A/List-III of the Seventh Schedule of the Constitution. This is so because it is an enactment for agrarian reforms and so the basic subject matter is “land”. Since the land happens to be forest land, it spills over and incidentally encroaches on Entry 17A i.e. “forest” as well. On the other hand, the Central Act i.e. the Indian Forests Act 1927 is relatable to Entry 17A read with entry 42, both of List III of the Seventh Schedule of the Constitution. It is in pith and substance relatable to Entry 17A, as it deals with “forests” and not with “land” or any other subject. It only incidentally spills over in the field of Entry 42, as it deals with “control over forest land and not property of the Government” and in that context Section 37, as an alternative to management of forests under Section 36 of the Indian Forests Act 1927, deals with the grant of power to acquire land under the Land Acquisition Act 1894. The KUZALR Act relate to agrarian reforms and therefore it deal with the “land”; however, the Central Act i.e. the Indian Forests Act 1927 deal with “forests” and its management, preservation and levy of royalty/fees on forest produce. KUZALR Act further provide for statutory vesting, i.e., statutory taking over of property of hissedar, which happened to be 1st Januaryof  1978, i.e. the statutorily fixed date. Therefore, the forest land become the property of the State Government and is dealt with like land, which is acquired under Section 4A of KUZALR Act. This emerge from a reading of Rule 41 of the KUZALR Rules itself. Further, the acquisition under the KUZALR Act is a case of “taking” upon payment of an amount, which is not intended to be the market price of the rights acquired. On the other hand, the power of acquisition under Section 37 of the Indian Forests Act 1927 i.e. the Central Act is an acquisition based on the principles of public purpose and compensation. Thus, the aforesaid Acts relate to different subject matters, and the acquisitions mentioned therein are conceptually different. The Central Act i.e. the Indian Forests Act 1927 mainly deal with the management, preservation and levy of royalty on transmit of forest produce. The Indian Forests Act 1927 also incidentally provide for and empowers the State Government to acquire any land which might be required to give effect to any of the purposes of the Act, in which case such land could be acquired by issuing a notification under Section 4 of the Indian Forests Act 1927

It is the UP Private Forest Act, 1948, which is an enactment relatable to Entry 17A of List III, i.e., Forests, read with Entry 42 of List III of the Seventh Schedule of the Constitution, i.e., acquisition to the extent of “vested” forests. It is this Act which cover a field similar to that of the Central Act and therefore, sought and obtained the permission of the President under Section 76 of the Government of India Act.

The Supreme Court observed that in the State, there are two Acts, which are applicable viz. the UP Private Forests Act, 1948, which is in the same field as the Central Act i.e. the Indian Forest Act 1927 and the KUZALR Act, which is in respect of a different subject matter. For repugnancy under Article 254 of the Constitution,  there is a twin requirement, which is to be fulfilled: firstly, there has to be a “repugnancy” between a Central and State Act; and secondly, the Presidential assent has to be held as being non-existent. The test for determining such repugnancy is indeed to find out the dominant intention of the both legislations and whether such dominant intentions of both the legislations are alike or different. After discussing the law, as applicable in the aforesaid manner and upon scrutiny of subject matters of both the concurrent Acts, the Supreme Court came to the conclusion that no case of repugnancy is made out in the present case as both the Indian Forest Act, 1927 and the KUZALR Act operate in two different and distinct fields. Accordingly, both the Acts were held to be legally valid and constitutional. That being so, there was no  requirement of obtaining any Presidential assent. Consequently, Article 254(2) of the Constitution had also no application in the instant case.

Article 300A of the Constitution and Compensation

After passing of the Constitution (Forty Forth) Amendment Act 1978 which deleted Article 19(1)(f) and Article 31 from the Constitution and introduced Article 300A in the Constitution, the Constitution (44th Amendment) Act inserted in Part XII, a new chapter: “Chapter IV – Right to Property” and inserted a new Article 300A, which reads as follows:- “No person shall be deprived of property save by authority of law”

The Supreme Court observed that the Government is empowered to acquire land by exercising its various statutory powers. Acquisition of land and thereby deprivation of property is possible and permissible in accordance with the statutory framework enacted. Acquisition is also permissible upon exercise of police power of the State. It is also possible and permissible to acquire such land by exercising the power vested under the Land Acquisition Act. But the Act envisage payment of compensation for such acquisition of land and deprivation of property, which is reasonable and just. As provided under Article 300A of the Constitution the State can proceed to acquire land for specified use but by enacting a law through State legislature or by Parliament and in the manner having force of law. When the State exercise the power of acquisition of a private property thereby depriving the private person of the property, provision is generally made in the statute to pay compensation to be fixed or determined according to the criteria laid down in the statute itself. It does not require payment of market value or indemnification to the owner of the property expropriated. Payment of market value in lieu of acquired property is not a condition precedent or sine qua non for acquisition. It must be clearly understood that the acquisition and payment of amount are part of the same scheme and they cannot be separated. It is true that the adequacy of compensation cannot be questioned in a court of law, but at the same time the compensation cannot be illusory.

The Supreme Court observed that the stand taken by the State that the right, title or interests of a hissedar could be acquired without payment of any compensation was contrary to the express provisions of KUZALR Act itself. Section 12 of the KUZALR Act, 1960 state that every hissedar whose rights, title or interest are acquired under Section 4, shall be entitled to receive and be paid compensation. Further, Section 4A of the KUZALR Act make it clear that the provisions of Chapter II (Acquisition and Modifications of existing rights in Land), including Section 12, shall apply mutatis mutandis to a forest land as they apply to a khaikhari land. Further, the intention of the legislature to pay compensation is abundantly clear from the fact that Section 19 itself prescribe that the compensation payable to a hissedar under Section 12 shall, in the case of private forest, be eight times the amount of average annual income from such forest. In the instant case, income also include possible income in case of persons who have not exploited the forest and have rather preserved it. Otherwise, it would amount to giving a licence to owners/persons to exploit forests and get huge return of income and not to maintain and preserve it. The same could not be said to be the intention of the legislature in enacting the aforesaid KUZALR Act. In fact, the persons who are maintaining the forest and preserving it for future and posterity could not be penalised by giving nil compensation only because of the reason that they were in fact chose to maintain the forest instead of exploiting it.

The Supreme Court further observed that a distinction and difference had been drawn between the concept of `no compensation’ and the concept of `nil compensation’. As mandated by Article 300A, a person can be deprived of his property but in a just, fair and reasonable manner. In an appropriate case the Court might find `nil compensation’ also justified and fair if it is found that the State had undertaken to take over the liability and also had assured to compensate in a just and fair manner. But the situation would be totally different if it is a case of `no compensation’ at all. A law seeking to acquire private property for public purpose couldnot say that `no compensation’ would be paid. The Supreme Court termed the present case as a case of payment of `no compensation’ at all. In the case at hand, the forest land which was vested on the State by operation of law could not be said to be non-productive or unproductive by any stretch of imagination. The property in question was definitely a productive asset. That being so, the criteria to determine possible income on the date of vesting would be to ascertain such compensation paid to similarly situated owners of neighboring forests on the date of vesting. Even otherwise, revenue authority could always make an estimation of possible income on the date of vesting if the property in question had been exploited by the appellants and then calculate compensation on the basis thereof in terms of Sections 18(1) (cc) and 19(1) (b) of KUZALR Act. The Court thus held that awarding no compensation attracted the vice of illegal deprivation of property even in the light of the provisions of the Act and therefore amenable to writ jurisdiction. That being so, the omission of the Section 39(1) (e) (ii) of the UPZALR Act 1950 as amended in 1978 was held to be of no consequence since the UPZALR Act left no choice to the State other than to pay compensation for the private forests acquired by it in accordance with the mandate of the law.

The appeal was thus partly allowed while upholding the validity of the Act and particularly Sections 4A, 18(1) (cc) and 19 (1) (b) of the KUZALR Act, the Supreme Court directed the second respondent, i.e. Assistant Collector to determine and award compensation to the appellants by following a reasonable and intelligible criterion evolved on the guidelines provided and in light of the law enunciated by the Court in the judgment.