State of West Bengal Vs. Union of India [1962] INSC 382 (21 December 1962)
SINHA, BHUVNESHWAR P.(CJ) SINHA, BHUVNESHWAR P.(CJ) IMAM, SYED JAFFER SUBBARAO, K.
SHAH, J.C.
AYYANGAR, N. RAJAGOPALA MUDHOLKAR, J.R.
CITATION: 1963 AIR 1241 1964 SCR (1) 371
CITATOR INFO :
E 1963 SC1811 (104) RF 1964 SC 669 (14,18) RF 1964 SC1486 (12) MV 1967 SC 997 (34) RF 1967 SC1643 (264,271) RF 1969 SC 530 (2A) RF 1973 SC1461 (1619,1674,2180) RF 1976 SC1654 (5,20TO23,30,36) R 1978 SC 68 (221,223,254) E 1980 SC1955 (18,19,22) RF 1982 SC 149 (266) E&D 1985 SC1367 (33,35) R 1987 SC2310 (11A) RF 1988 SC 782 (40) R 1988 SC1353 (12) RF 1989 SC1530 (17) RF 1991 SC 101 (32) RF 1991 SC1676 (44,46) R 1992 SC 81 (12)
ACT:
Land Acquisition-State property-Coal bearing areas Acquisition by Union of India-Parliament, power to enact law-Indian Constitution, if not federal-Sovereignty, if lies in States also-Fundamental rights, whether can be claimed by States"Person" and "Property", Connotation of-Coal Bearing Areas (Acquisition and Development) Act, 1957 (XX of 1957)Constitution of India, Arts. 13, 31, 73, 162, 245, 246, 248, 249, 254, 294, 298, Seventh schedule, List I Entries 52, 54, 97, List II Entries 23, 24, List III Entry 42.
HEADNOTE:
Under the Coal Bearing Areas (Acquisition and Development) Act, 1957, enacted by Parliament, the Union of India proposed to acquire certain coal bearing areas in the State of West Bengal. The State filed a suit contending that the Act did not apply to lands vested in or owned by the State and that if it applied to such lands the Act was beyond the legislative competence of Parliament.
Held, (per Sinha C. J., Imam, Shah, Ayyangar and Mudholkar,JJ.), that upon a proper interpretation of the relevant 372 provisions of the Act it was clear that the Act applied also to coal bearing areas vested in or owned by the State. The preamble of the Act did not support the argument that the Act was intended to acquire only the rights of individuals and not those of the States in coal bearing areas. Though the statement of Objects and Reasons supported the contention of the State it could not be used to determine the true meaning and effect of the substantive provisions of the Act.
Held, further, (per Sinha C. J., Iman, Shah, Ayyangar and Mudholkar JJ. Subba Rao J., contral, that the Coal Bearing Areas (Acquisition and Development) Act, 1957, is not ultra vires the powers of Parliament and is valid. Under Entry 42 of List III of the Seventh Schedule to the Constitution, Parliament is competent to make a law for the acquisition for the property of a State.
The Constitution of India is not truly Federal in character.
The basis of distribution of powers between the Union and States is that only those powers which are concerned with the regulation of local problems are vested in the States and the residue specially those which tend to maintain the economic industrial and commercial unity of the country are left to the Union. It is not correct to say that fall sovereignty is vested in the States. Parliament which is competent to destroy a State cannot be held, on the theory of absolute sovereignty of the States, to be incompetent to acquire by legislation the property owned by the States.
Even if the Constitution were held to be a Federation and the States regarded qua the Union as sovereign, the power of the Union to legislate in respect of the property situate in the States would remain unrestricted. The power of Parliament conferred by Entry 42, List III, as accessory to the effectuation of the power under Entries 52 and 54, List I, is not restricted by any provision of the Constitution and is capable of being exercised in respect of the property of the States also.
From the fact that Art. 294 vests the property in the States and that Art. 298 empowers the States to transfer the property it does not follow that the property of the States cannot be acquired without a constitutional amendment, Article 294 does not contain any prohibition against the transfer of property of the States and if the property is capable of being transferred by the State it is capable of being acquired.
Under s. 127 of the Government of India Act, 1933, the Central Government could require the Province to acquire land 373 on behalf of the Federation if it was private land and to transfer it to the Federation if it was land belonging to the Province, and the Provincial Government had no option but to comply with the direction. It was not considered an infraction of Provincial autonomy to vest such a power in the Central Government. Absence of a similar provision in the present Constitution made no difference. Under the Government of India Act the power to compulsorily acquire property was exclusively vested in the Provinces but under the Constitution the Union also has that power.
If the other provisions of the Constitution in terms of sufficient amplitude confer power for making laws for acquiring State property, the power cannot be defeated because the express power to acquire property generally does not specifically and in terms refer to State property.
Power to acquire and requisition property can be exercised, concurrently by the Union and the States but on that account there can be no conflict in the exercise of the power as such a conflict is prevented by Arts. 31 (3) and 254.
Under the Constitution fundamental rights can be claimed not only by individuals and corporations but in some cases by the State also. Property vested in the States may not be acquired under a law made under Entry 42, List III, unless the law complies with the requirements of Art. 31.
The rule that the State is not bound, unless it is expressly named or by necessary implication in a statute is one of interpretation. In interpreting a constitutional document provisions conferring legislative power must normally be interpreted liberally and in their widest amplitude. There is no indication in the Constitution that the word "property" in Entry 42 of List III is to be understood in any restricted sense; it must accordingly be held to include property belonging to the States also.
Per Subba Rao, J.-The impugned Act in so far as it confers a power on the Union to acquire lands owned by the States, including coal mines and coal bearing lands is ultra vires.
Under the Constitution of India the political sovereignty is divided between the constitutional entities, that is, the Union and the States, who are juristic personalities possessing properties and functioning through the instrumentalities created by the Constitution. The Indian Constitution accepts the federal concept and distributes the sovereign powers between the coordinate constitutional entities, namely, the Union and the 374 states. This concept implies that one cannot encroach upon the governmental functions or instrumentalities of the other unless the Constitution provides for such interference. The legislative fields allotted to the units cover subjects for legislation and they do not deal with the relationship between the coordinate units functioning in their allotted fields. This is regulated by other provisions of the Constitution and there is no provision Which enables one unit to take away the property of another except by agreement.
The power to acquire the property of a citizen for a public Purpose is one of the implied powers of the sovereign.
Under the Indian Constitution that Sovereign power is divided between the Union and the States. It is -implicit in the power of acquisition by a sovercign that it must relate only to property of the governed. for a sovereign cannot acquire its own property.
It is also implicit in the concept of acquisition and requisition that they shall be for public purpose on payment of compensation. Tile word "person" in Art. 31 does not include "State"; if Entry 42 were to empower Parliament to acquire the property of a State, the State would not have the protection of Art. 3-1 which is available to all other persons. Therefore, Entry 42 List III does not authorise either Parliament or a State Legislature to make. a law for the acquisition of the property of the other.
Nor do the residuary Art. 248 and Entry 97 List I confer any power on Parliament to acquire the property of a State. The residuary legislative field cannot possibly cover interState relation, for that matter is not distributed between the Union and the States by way of legislative Lists. When a specific provision is made for acquisition of property, it would be incongruous to confine that Entry to properties other than those of the States and to resort to the residuary power for acquiring the property of the States.
Further the anomaly of the Union acquiring the property of the States without compensation would still remain.
Neither Entry 24 of List II nor Entry 52 of List I empowers a State Legislature before Parliament made a law declaring that the control of a particular industry by the Union is expedient in the public interest or the Parliament, after such declaration, to make such a law for acquisition of State lands, for they deal only with the regulation of an existing industry or an industry that may be started subsequently, but not with acquisition of lands.
375 Act 12 of 1952 and Act 67 of 1957 deal only with the regulation of mines an3 further the declarations contained in the said Acts are expressly confined to the extent of the regulation provided there under and, therefore, the declarations therein could not be relied upon to sustain the validity of the Act.
No inspiration can be drawn from foreign constitutions or decisions made there under in construing the express provisions of our Constitution in the context of its different set up. The property of the states can be acquired by the Union only by agreement.
ORIGINAL JURISDICTION: Suit No. 1 of 1961.
S. M. Bose,, Advocate-General for the State of West Bengal, B. Sen, S. C.Bose, Milon K. Bunerjee, P. K. Chatterjee, and P. K. Bose, for the plaintiff.
M. C. Setalvad, Attorney-General for India, H. N. Sanyal, Additional Solicitor General of India, Bishan Narain, N. S. Bindra and R. H. Dhebar, for the defendant.
B. N. Seib and I. N. Shroff, for the Intervener No. 1.
S. M. Sikri, Advocate-General for the State of Punjab, R. Ganapathy Iyer and P. D. Menon, for Intervener No. 2.
B. C. Barua, Advocate-General for the State of Assam and Naunit Lal, for the Intervener No. 3.
Dinabandhu Sahu, Advocate-General for the State of Orissa, B. K. P. Sinha and P. D. Ale on, for the Intervener No. 4.
A. Ranganadhan Chetty and A. V. Rangam, for Intervener No. 5.
Lal. Narayan Sinha, and D. Goburdhan, for Intervener No. 6.
376 K. S. Hajela and C. P. Lal, for Intervener No. 7.
P. D. Xenon, for Intervener No. 8.
S. M. Sikri, Advocate-General for State of Punjab, and P. D. Xenon, for Intervener No. 9.
G. S. Pathak, N. S. Bindra and R. H. Dhebar, for Intervener No. 10.
1962. December 21. The Judgment of Sinha, C. J., Imam, Shah, Ayyangar and Mudholkar, JJ., was delivered by Sinha, C. J., Subba Rao, J., delivered a separate judgment.
SINHA, C. J.-This is a suit by the State of West Bengal against the Union of India for a declaration that Parliament is not competent to make a law authorising the Union Government to acquire land and rights in or over land, which are vested in a State, and that the Coal Bearing Areas (Acquisition and Development) Act (XX of 1957)-which hereinafter will be referred to as the Act-enacted by the Parliament, and particularly ss. 4 and 7 thereof, were ultra vires the legislative competence of Parliament, as also for an injunction restraining the defendant from proceeding under the provisions of these sections of the Act in respect of the coal bearing lands vested in the plaintiff. As will presently appear, the suit raises questions of great public importance, bearing on the interpretation of quite a large number of the Articles of the Constitution. In view of the importance of the questions raised in this litigation, notices were issued by this Court to all the Advocates General of the States of India. In pursuance of that notice, the States of Assam, Bihar, Gujarat, Madras, Orissa, Punjab, Rajasthan and Uttar Pradesh have appeared, either through their respective Advocates General or through other Counsel. The National Coal Development Corporation Ltd., with its head 377 office at Ranchi in Bihar, has also intervened in view of a pending litigation between it as one of the defendants and the State of West Bengal as the plaintiff. We have heard counsel for the parties at great length.
The Plaint is founded on the following allegations. The plaintiff is a State, specified in the First Schedule of the Constitution,, as forming part of India' which is a Union of States. By virtue of Art. 294 of the Constitution, all property and assets in West Bengal, which were vested in His Majesty for the purposes of the Government of the Province of Bengal became vested in the State of West Bengal for the purpose of the State. The State of West Bengal, in exercise of its exclusive legislative powers, enacted the West Bengal Estates Acquisition Act, 1954 (W. B. 1 of 1954). By notification issued under the Act, as amended, all estates and rights of intermediaries and Ryots vested in the State for the purposes of Government, free from encumbrances, together with rights in the sub-soil, including mines and minerals. The Parliament enacted the impugned Act authorising the Union of India to acquire any land or any right in or over land, in any part of India. In exercise of its powers under the Act, the Union of India, by two notifications dated September 21, 1959 and January 8, 1960, has expressed its intention to prospect for coal lying within the lands which are vested in the plaintiff, as aforesaid. Disputes and differences have arisen between the plaintiff and the defendant as to the competence of Parliament to enact the Act and its power to acquire the property of the plaintiff, which is a sovereign authority.
In paragraph 9 of the Plaint, a controversy had been raised as to whether or not the proposed acquisition was for a public purpose, but at the actual hearing of the case, the learned Advocate General of Bengal withdrew that contention, and, therefore, that issue is no more a live one. Notice 378 under s. 80 of the Code of Civil Procedure is said to have been duly served.
The Written Statement of the defendant does not deny the allegations of fact made in the Plaint, but denies the correctness of each and all the submissions or legal contentions as to the legislative competence of Parliament to enact the Act and as to the power of the defendant to acquire any property of a State. It is also denied that the State of West Bengal is a sovereign authority. The following statement in paragraph 12 of the Written Statement brings out the policy underlying the enactment in question :
"The defendant states that it is in the public interest that there should be a planned and rapid industrialization of the country. For such rapid and planned industrialization, it is essential that the production of coal should be greatly increased as coal is the basic essential for industries. Regulation of mines and mineral development under the control of the Union has been declared by Parliament by law to be expedient in the public interest. It is submitted that in the circumstances, the acquisition of coal bearing areas by the Union is necessary for the regulation of mines and mineral development and for increased production of coal in the public interest. The defendant will rely on documents a list whereof is hereto annexed." On those pleadings, the following issues were raised :
1. Whether Parliament has legislative competence to enact a law for compulsory acquisition by the Union of land and other properties vested in or owned by the State as alleged in para 8 of the plaint ? 379
2. Whether the State of West Bengal is a sovereign authority as alleged in para 8 of the plaint ?
3. Whether assuming that the State of West Bengal is a sovereign authority, Parliament is entitled to enact a law for compulsory acquisition of its lands and properties ?
4. Whether the Act or any of its provisions are ultra vires the legislative competence of Parliament ?
5. Whether the plaintiff is entitled to any relief and if so, what relief ? After the arguments on behalf of the plaintiff, and of the States in support of the plaintiff, had been finished, application was made for amendment of the plaint praying that the following paragraph may be added as paragraph 9A, which is as follows :"Alternatively the plaintiff submits that the Coal Bearing Areas (Acquisition and Development) Act (Act XX of -1957) on its true construction does not apply to the lands vested in or owned by the Plaintiff the State of West Bengal. Further the notifications purported to have been issued under the said Act are void and of no effect." At the request of the learned Attorney-General a short adjournment was granted to consider the position as to whether or not the amendment sought should be opposed on behalf of the defendant. As the amendment sought was not opposed, it was granted and an additional issue was raised in these terms :
"Whether Act XX of 1957 on its true construction applies to lands vested in or owned by the Plaintiff State? 380 It will thus appear that the parties are not at issue on any question of fact, and the determination of the controversy depends entirely upon the interpretation of the relevant provisions of the Constitution, and the scope and effect of the Act.
The issues joined between the parties are mainly two, (1) whether on a true construction of the provisions of the Act, they apply to lands vested in or owned by the plaintiff; and (2) If this is answered in the affirmative whether there was legislative competence in Parliament to enact the impunged statute. The scope and effect of the Act is the most important question for determination, in the first instance, because the determination of that question will affect the ambit of the discussion on the second question. As already indicated, when the case was opened for the first time by the learned Advocate-General of Bengal, he proceeded on the basis that the Act purported to acquire the interests of the State, and made his further submission to the effect that Parliament had no competence to pass an Act which had the effect of affecting or acquiring the interest of the State.
But later he also took up the alternative position that the Act, on its true construction, did not affect the interests or property of the State. The other States which have entered appearance, through their respective counsel, have supported this stand of the plaintiff and have laid particular emphasis on those provisions of the Act which, they contend, support their contention that the Act did not intend to acquire or in any way affect the interests of the States. In this connection, the arguments began by making pointed reference to the following paragraphs in the Statement of Objects and Reasons, set out at pages 16-17 of the Paper Book :
"According to the Industrial Policy Resolution of 1956 the future development of coal is the responsibility of the State. All new units in 381 the coal industry will be set up only by the State save in exceptional circumstances as laid down in the Resolution.
The production of coal in India in 1953 was 38 million tons and the target for production for the Second Five-Year Plan has been fixed at 60 million tons per annum. It has been decided that out of the additional production of 22 million tons per annum envisaged. the public sector should produce an additional 12 million tons per annum, the balance being allocated to the private industry for production from existing collieries and immediately contiguous areas.
Out of the additional 12 million tons in the public sector, the bulk (10 million tons per annum) will have to be raised by the development of new coal fields, such as Korba, Karanpura, Kathara and Jhilimili and Bisrampur. Very nearly all the coal bearing areas however are covered by mining leases held by private persons or prospecting licencees which carry a right to mining lease. Hence it is proposed to take power to acquire un worked coal bearing areas covered by private leases or prospecting licencees which are found surplus to the production required in the private sector and to work these areas as lessees of the State Government.
With the acquisition of zamindari rights by the State Governments, the rights in minerals are now vested in all areas in the State Governments, and it is not appropriate to use the Land Acquisition Act, 1891, for the acquisition of mineral rights', particularly because the Central Government does not intend to acquire the proprietary rights vested in the States. There is no other existing Central or State Legislation under which the Government has powers to acquire immediately the lessee's rights over the coal bearing areas acquired by Government for the 382 additional coal production. It is accordingly considered necessary to take powers by fresh legislation to acquire the lessees" rights over un worked coal-bearing areas on payment of reasonable compensation to the lessees, and without affecting the State Government rights as owner of the minerals or the royalty payable to the State Government on minerals.
The Bill provides for payment of reasonable compensation for the acquisition of the rights of prospecting licencees and mining lessees." Besides setting out the policy of the State in the matter of coal mining industry and the actual state of affairs in relation thereto, the Statement of objects and Reasons contains the crucial words on which particular reliance was placed on behalf of the States, "because the Central Government does not intend to acquire the proprietary rights vested in the States........ and, "without affecting the State Government rights as owners." It is however well settled that the Statement of Objects and Reasons accompanying a bill, when introduced in Parliament, cannot be used to determine the true meaning and effect of the substantive provisions of the statute. They cannot be used except for the limited purpose of understanding the background and the antecedent state of affairs leading up to the legislation. But we cannot use this statement as an aid to the construction of the enactment or to. show that the legislature did not intend to acquire the proprietary rights vested in the State or in any way to affect the State Governments' rights as owners of minerals. A statute, as passed by Parliament, is the expression of the collective intention of the legislature as a whole, and any statement made by an individual, albeit a Minister, of the intention and objects of the Act cannot be used to cut down the generality of the words used in the statute.
It was then contended that the preamble of the 883 Act was the key to the understanding of the scope and provisions of the statute. The preamble is in these words :
"An act to establish in the economic interest of India greater public control over the coal mining industry and its development by providing for the acquisition by the state of un-worked land containing or likely to contain coal deposits or of rights in or over such land, for the extinguishment or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters connected therewith." Particular stress was laid on the last two lines of the preamble, showing that only rights "accruing by virtue of any agreement, lease, licence or otherwise" were being sought to be extinguished or modified by the provisions of the Act. But this argument omits to take note of the words of the previous clause in the preamble which has reference to the fact that the Act also was meant for "acquisition by the state of unworked lands containing or likely to contain coal deposits." Before proceeding to deal with the main arguments it is necessary to advert to a submission of the learned Advocate-General of Bengal that the reference to the "State" in the words "acquisition by the State" occurring in the preamble was a reference to the "States" as distinguished from the union. This contention has only to -be mentioned to be rejected as the entire object and purpose of the impugned Act was to vest powers in the Union Government to work coal mines and in that context the word "State" could obviously refer only to the Union Government.
The preamble, therefore, does not support the argument that the Act was intended to acquire only the rights of individuals, derived from prospecting licences or based on leases, and to exclude from the 384 purview of the Act the rights of States in coal-bearing lands. Section 4, relating to the issue of a preliminary notification of the intention to prospect for coal in any given area, makes reference to "lands", without any qualifications, and s. 6, which is consequential' upon s. 4 lays down the effect of such notification on prospecting licences and mining leases. Section 7 also speaks of giving notice of the Government's intention to acquire the whole or any part of the land, notified as aforesaid. or any rights in or over such land. Section 9, which provides for a declaration of acquisition has also used the same expression, "any land or any rights in or over such land." The proviso to s. 9, which is in these terms "Provided that, where the declaration relates to any land or to any rights in or over land belonging to a State Government which has or have not been leased out, no such declaration shall be made except after previous consultation with the State Government" is very important in this connection. This proviso for the first time makes specific reference to any land or to any rights in or over land "belonging to a State Government." Section 9A authorises the Central Government to dispense with the necessity of complying. with the provisions of s. 8, which provides for hearing any objections raised to the proposal to acquire any land which is notified under s. 7 as the subject-matter of acquisition. Ordinarily, if a notification is made by the Central Government of its intention to acquire of the whole or any part of the land or of any right in or over land, notified under s. 4, it is open to any person interested in the land to object to the acquisition of the whole or any, part of the land or of any rights in or over such land. If any such objection is raised, an opportunity has to be given for hearing such an objection or 385 objections, by the "competent authority." But under s. 9-A, the Central Government, if it is satisfied that it is necessary to acquire immediately the whole or any part of the land, or any rights in or over such land, may direct that s. 8 shall not come into operation, and, therefore, no proceedings there under would be entertainable. Section 10 lays down the consequences of the notification of declaration of acquisition under s. 9. On such a declaration the land, or the rights in or over the land, shall vest in the Central Government, free from all encumbrances, and under sub-section (2) where the rights acquired happen to have been granted under a mining lease by a State Government, the Central Government shall be deemed to have become the lessee of the State Government. A good deal of argument was addressed to us as to the significance of the provision, contained in s. 10 (2) of the Act. They will be dealt with later in the course of this judgment. But it is open to Government to direct by an order in writing that the land or the rights in or over the land, instead of vesting in the Central Government under s. 10 shall vest in a Government Company, which has expressed its willingness to comply with the terms and conditions imposed by the Central Government. A 'Government Company means a company as defined in s. 617 of the Companies Act, 1956. In the case where the land or the rights in or over the land become vested in a Government Company, under s. 11 (1), that company shall be deemed to have become a lessee of the State Government, as if the Company had been granted the mining lease by the State Government. under the Mineral Concession Rules. Compensation under the Act on account of prospecting licences ceasing to have effect, or the rights under a mining lease having been. acquired, or for any land acquired under s. 9, has been provided for and the rules lay down the procedure for determining such compensation, in s. 13. It is clear on a reading of the provisions for 386 compensation in that section that no compensation has been provided for in respect of minerals lying un-worked underground. Section 14 to 17 lay down the method of determining compensation and other cognate matters relating to payment of compensation. The rest of the provisions of the Act do not bear on the present controversy and, therefore, need not be adverted to.
On a bare reading of the provisions of the Act, the expression "any land" or "any rights in or over such land" would appear to cover every interest regardless of the person or authority who owns them, including those of a State Government. But it has been argued that on a close examination of the provisions aforesaid of the Act and keeping certain general principles of interpretation of Statutes in view, the conclusion follows that the Act does not cover any property or interest in or over land belonging to a State Government. We have already indicated that neither the statement of objects and reasons nor the preamble are of any help to the plaintiff or to States which have intervened and have claimed that any property belonging to a State Government is outside the scope and effect of the Act.
Bearing in mind that the words used in s. 4 are comprehensive and unrestricted and apt to include in their sweep lands "belonging to a State" and that the reference in s. 7 is to lands which are notified under s. 4 (1), we shall now turn to the arguments bearing upon the interpretation of certain specific provisions which are however claimed to suggest an opposite conclusion. Firstly, it is urged that "any person" used in s. 8 could not be interpreted as including a State. This argument is bound up with the other argument relating to the competence of Parliament to legislate in respect of property belonging to a State. It will, therefore, be convenient to deal 387 with this argument along with that topic, It is enough to point out here that the explanation to s. 8 (1), and particularly the words "undertaken by the Central Government or by any other person' Would lend support to the argument of the learned Attorney General that the word "Person" has been used in the generic sense of including both a natural person and a juristic person. Secondly, it "as argued with reference to the words of the proviso to s. 9 (1) that where the Act intended to make any mention of a State Government, it had done so specifically as in ss. 9, 10, 11 and 18 of the Act, and that, therefore, the substantive provisions of the Act were. not intended to apply to any rights or interest vested in a State Government. The argument is plausible but not sound. Section 9 is the effective section of the Act, which provides that after the Central Government has investigated the prospect of obtaining coal, after the issue of a notification under s. 4, and after notifying its intention to acquire the land covered by the notification under, s. 7, and after disposing of objections, if any, under s. 8, the Central Government has to make the necessary declaration that that land should be acquired. The proviso to s. 9 (1) only requires consultation with the concerned State Government where it is the owner of the land, or has any interest in or over such land. It has rightly been pointed out on behalf of the Central Government that if the right or interest of a State Government were not involved in the acquisition, it would be wholly unnecessary to make any reference to the State Government concerned. It was urged that unless "lands belonging to a State Government" or in which a State Government has an interest in or over such land, were within the operative words of the main provisions in s. 9 (1), it would be meaningless to Make a provision for the consultation referred to in the proviso. We see force in this submission. The consultation with the State Government is made a condition precedent to the declaration 388 to be made by the Central Government in respect of the proposed acquisition. But consultation does not necessarily mean consent, though ordinarily consultation between two governments or two public authorities would signify the cooperation and willingness to accede to the proposals situation which is not contemplated with reference to the interests of private persons.
On the question of the proper interpretation of the proviso to s. 9 (1), a Dumber of readings were suggested, which went to the length of not only rewriting the section but of adding words which were not there so as to make the proviso mean what on its plain reading it cannot. We are not, therefore, inclined seriously to examine those several alternative readings of this part of the section. Similarly the provisions of s. 10 (2) were pressed in aid of the construction suggested on behalf of the plaintiff and the other intervening States, that the interests of a State Government were not within the purview of the Act. This argument is based on the consideration that if rights or interests of a State Government were also within the purview of the Act, it would be meaningless to provide that the Central Government or a Government Company, as contemplated by s. II, should be deemed to be the lessee of the State Government in respect of the rights acquired. We are unable to accedes to this construction. Sections 10 (2) and 11 have particular reference to those cases where the property acquired consists of rights under any mining leases granted by a State Government. Apart from the kind of property contemplated by ss. 10 (2) and 11 (2), as aforesaid, there may be other kinds of property acquired, e. g. coal-bearing land, in which the entirety of the interest is vested in a State Government. In such cases, there would be no question of the Central Government or a Government Company becoming or being deemed to become a lessee of a State Government.
Reference was made 389 to s. IS but the mention of a "State Government" in the section is consequential upon the provisions of ss. 10 and 11, that is to say, where the Central Government or a Government Company has, by operation of those provisions of the Act, become the lessee of a State Government. In the case of any differences between the Central Government and a State Government on the question of how prospecting is to be done or of how far the mineral Concession Rules shall be observed, is, by virtue of this section, to be resolved by arbitration or in such other manner as the Governments concerned may decide.
It will thus appear that on a proper interpretation of the relevant provisions of the Act, it cannot be said that either in express terms or by necessary implication the provisions of the Act are implacable to rights or interests of a State Government or that such lands are excluded. It is plain that the Act is intended to cover land or rights in or over land belonging either to an individual or to a juristic person. Such land may comprise not only surface rights but also mineral rights. The land to be acquired by the Central Govt. might be virgin soil unencumbered by any prospecting licences or mining leases granted bv the State or by an intermediary, using the expression to mean all interests below the State. Such an interest as aforesaid may be vested in a State or different interests may be vested in different persons by virtue of leases or licences granted by proprietors in permanently settled States or by tenure-holders who have expressly obtained mining rights.
The Act, therefore, had to use the compendious language "'land or any interest in or over land" to cover all those diverse rights and interests which the Central Govt. would be interested to acquire in order to have a free hand in developing the I and for coal mining in the public sector, as it is called. The Act may have been more artistically drafted but construing it as it is, we have no doubt that 390 Parliament intended to acquire all rights and interests in coal bearing land with a view to prospecting for coal and for exploiting coal-bearing mines. It must, therefore, be held that the supplementary issue as regards the interpretation of the Act joined between the parties as a result of the amendment of the plaint must be decided against the plaintiff.
Starting with the position that on a true construction of the relevant provisions of the Act, the rights and interests of a State Government in coal bearing land had not been excluded from the operation of the Act, either in express terms or by necessary implication, the next question that arises for consideration is the first issue which covers issues 3 and 4 also. The competence of Parliament to enact the Act has to be determined with reference to specific provisions of the Constitution, with particular reference to the entries in the Seventh Schedule List I and List III.
By Entry 42 in List III of the Seventh Schedule to the Constitution read with Art. 246 (3) power to legislate in respect of acquisition and requisition of property is conferred upon the Parliament as well as the State Legislatures, Prima facie, this power may be exercised by the Parliament in respect of all property, privately owned or State owned. But on behalf of the State of West Bengal and some of the intervening States it was submitted that the very nature of the right in property vested in the State for governmental purposes imposed a limitation upon the exercise of the Power of the Union Parliament, affecting State owned property. On behalf of the State of Punjab-one of the intervening States-it was urged that if acquisition of property was necessarily incidental to the effective exercise of power by Parliament in respect of any of the entries in Lists I and 111, the Parliament may legislate so as to affect title of the State to property vested in it 391 provided it does not interfere with the legislative power of the State.
Diverse reasons were suggested at the Bar in support of the plea that the State property was not subject to the exercise of legislative powers of the Parliament. They may be grouped under the following heads (1) The Constitution having adopted the federal principle of government the States share the sovereignty of the nation with the Union, and therefore power of the Parliament does not extend to enacting legislation for depriving the States of property vested in them as sovereign authorities.
Entrustment of power to legislate must therefore be so read as to imply a restriction upon the parliamentary under Entry 42 of List III when it is sought to be exercised in respect of the property owned by a State.
(2) Property vested in the States by virtue of Art. 294 (I) cannot be diverted to Union purposes by Compulsion of Parliamentary legislation.
(3) The Government of India Act, 1935 provided special machinery for acquisition of property of the State by negotiations, and not by compulsion in exercise of legislative power that provision recognised that the Central Legislature of the Government of India had no power to acquire property of the State by exercise of legislative power, and even though no provision similar to s. 127 of the Government of India Act, 1935 has been enacted in the Constitution, the recognition implicit in that provision of the immunity of the property of the units must also be deemed to be superimposed upon the exercise 392 of legislative power vested in the Parliament under the Constitution.
(4) Absence of power expressly conferred such as is to be found in the Australian Constitution, to legislate for acquisition of the property of the State indicates that it was not the intention of the Constitution makers to confer that power upon the Union Parliament, under the general legislative heads.
(5) If power be exercised by the Union to acquire State property under Entry 42 of the Concurrent List, similar power may also be exercised by the States in respect of Union property and even to re-acquire the property from the Union by exercise of the State's legislative power. The power under Entry 42 can therefore never be effectively exercised by the Parliament.
(6) It could not have been the intention of the Constitution makers to confer authority upon the Parliament to legislate for acquiring property of the States and thereby to make the right of the State to property owned by it even more precarious than the right which individuals or Corporations have under Constitution to their property.
Individuals and Corporations have the guarantee under Art.
31 (2) of the Constitution that acquisition of their property will be for public purposes and compensation will be awarded for acquiring property. Entry 42 must be read subject to Art. 31, and inasmuch as Fundamental rights are conferred upon individuals and Corporations against executive or legislative actions, and States are not invested with any fundamental rights exerciseable against the Union or other States, the right to legislate for -compulsory acquisition of State property cannot be exercised, 393 (7) Unless a law expressly or by necessary implication so provides, a State is not bound thereby. This well recognised rule applies to the interpretation of the Constitution. Therefore in the absence of any provision express or necessarly implying that the property of the State could be acquired by the Union, the rights claimed by the Union to legislate for acquisition of State property must be negatived.
All these arguments, except the purely interpretational, are ultimately founded upon the plea that the States have within their allotted field full attributes of sovereignty and exercise of authority by the Union agencies, legislative or executive, which trenches upon that sovereignty is void.
Rc: (1) Ever since the assumption of authority by the British Crown under Statute 21& 22, Vict .(1656) Ch. 106, the administration of British India was unitary and highly centralized. The Governor-general was invested with autocratic powers to administer the entire territory. Even though the territory was divided into administrative units, the authority of the respective Governors of the Provinces was derived from the Governor-General and the Governor-general was responsible to the British Parliament. There was, therefore, a chain of responsibility-the Provincial Governments were subject to the control of the Central Government and the Central Government to the Secretary of State. Some process of Revolution took place under the Government of India Act, 1919, but that was only for the purpose of decentralization of the Governmental power but on that account the Government did not cease to be unitary.
The aim of the Government of India Act, 1935 was to unite the Provinces and Indian States -into a federation, but that could be 394 achieved only if a substantial number of the Indian States agreed to join the Provinces in the federation. For diverse reasons the Indian States never joined the proposed federation and the part dealing with federation never became effective. The Central Government as it was originally constituted under the Government of India Act, 1919, with some modification continued to function. But in the Provinces certain alterations were made. Certain departments were administered with the aid of Ministers, who were popularly elected, and who were in a sense responsible to the electorate. The Governor was still authorised to act in his discretion without consulting his Ministers in respect of certain matters. He derived his authority from the British Crown, and was subject to the directions which the Central Government gave to carry into execution Acts of' the Central Legislature in the Concurrent List and for the maintenance of means of communication, and in respect of all matters for preventing grave menace to the peace or tranquility of India or part thereof. The administration continued to function as an agent of the British Parliament.
By the Indian Independence Act, 1947 a separate Dominion of India was carved out and by s. 6 thereof the Legislature was for the first time authorised to make laws for the Dominion. Such laws were not to be void or inoperative on the ground that they were repugnant to the law of England or to the provisions of any existing or future Act of Parliament of the United Kingdom, or to any order, rule or regulation made under any such Act, and the powers of the Legislature of the Dominion included the power to repeal or amend any such Act, order, rule or regulation. The British Parliament ceased to have responsibility as respects governance of the territories which were immediately before that date included in British India, and suzerainty of the Crown over the Indian States lapsed 395 and 'With it all treaties and agreements in force on the (late of the passing of the Act between the Crown and the rulers of Indian States. The bond of agency which bound the administration in India to function as agent of the Birtish Parliament was dissolved and the Indian Dominion to that extent became sovereign. Then came the Constitution. The territory was evidently too large for a democratic set-up with wholly centralized form of Government. Imposition of a centralized form might also have meant a reversal of political trends which had led to decentralization of the administration and some distribution of power. The Constitution had, therefore, to be in a form in which authority was decentralized. In the era immediately prior to the enactment of the Indian Independence Act, there were partially autonomous units such as the Provinces. There were Indian States which were in a sense sovereign but their sovereignty was extinguished by the various merger agreements which the rulers of those States entered into with the Government of India before the Constitution. By virtue of the process of integration of the various States there emerged a Centralised form of administration in which the Governor General was the fountain head of executive authority. The Constitution of India was erected on the foundations of the Government of India Act, 1935 ; the basic structure was not altered in many important matters, and a large number of provisions were incorporated verbatim from the earlier Constitution.
In some respects a greater degree of economic unity was sought to be secured by transferring subjects having impact on matters of common interest into the Union list. A comparison of the Lists in Schedule 7 to the Constitution with the Schedule 7 to the Government of India Act, 1935 discloses that the powers of the Union have been enlarged particularly in the field of economic unity and this was done as it was felt that there should be, 396 centralized control and administration in certain fields if rapid economic and industrial progress had to be achieved by the nation. To illustrate this it is sufficient to refer to National Highways (Entry 24), inter-State Trade and Commerce (Entry 42)-to mention only a few being transferred from List II of the Government of India Act to List I in the Constitution, to the new entry regarding inter-State rivers (Entry 56), to the new Entry 33 in the Concurrent List to which it is transferred from List 11, and to the comprehensive provisions of Part XIII-which seek to make India a single economic unit for Purposes of trade and commerce under the overall control of the Union Parliament and the Union Executive. The result was a Constitution which was not true to, any traditional pattern of federation. There is no warrant for the assumption that the Provinces were sovereign, autunomous units which had parted with such power as they considered reasonable or proper for enabling the Central Government to function for the common good. The legal theory on which the Constitution was based was the withdrawal or restimption of all the powers of sovereignty into the people of this country and the distribution of these powers save those withheld from both the Union and the States by reason of the provisions of Part III between the Union and the States.
(a) A truly federal form of Government envisages a compact or agreement between independent and sovereign units to surrender partially their authority in their common interest and vesting it in a Union and retaining the residue of the authority in the constituent units. Ordinarily each constituent unit has its separate Constitution by which it is governed in all matters except those surrendered to the Union, and the Constitution of the Union primarily operates upon the administration of the units. Our Constitution was not the result of any such 397 compact or agreement : Units constituting a unitary State which were non-sovereign were transformed by abdication of power into a Union.
(b) Supremacy of the Constitution which cannot be altered except by the component units. Our Constitution is undoubtedly supreme but it is liable to be altered by the Union Parliament alone and the units have no power to alter it.
(c) Distribution of powers between the Union and the regional units each in its sphere coordinate and independent of the other. The basis of such distribution of power is that in matters of national importance in which a uniform policy is desirable in the interest of the units, authority is entrusted to the Union, and matters of local concern remain with the State.
(d) Supreme authority of the Courts to interpret the Constitution and to invalidate action violative of the Constitution. A federal Constitution, by its very nature, consists of checks and balances and must contain provisions for resolving conflicts between the executive and legislative authority of the Union and the regional units.
In our Constitution characteristic (d) is to be found in full force, (a) and (b) are absent. There is undoubtedly distribution of powers between the Union and the States in matters legislative and executive; but distribution of powers is not always an index of political sovereignty. The exercise of powers legislative and executive in the allotted fields is hedged in by numerous restrictions, so that the powers of the States are not coordinate with the Union and are not in many respects independent.
398 Legal sovereignty of the Indian nation is vested the people of India who as stated by the -preamble have solemnly resolved to constitute India into a Sovereign Democratic Republic for the objects specified therein. The Political sovereignty is distributed between, as we will presently demonstrate, the Union of India and the States with greater weightage in favour of the Union. Article 300 invests the Government of India and the States with the character of quasi-corporations entitled to sue and liable to be sued in relation to their respective affairs. By Art. 299 contracts may be entered into by the Union and the States in exercise of their respective executive powers' and Art. 298 authorises in exercise of their respective executive powers the Union and the States to carry on trade or business and to acquire, hold and dispose of property and to make contracts. These provisions and the entrustment of powers to legislate on certain matters exclusive, and concurrently in certain other matters, and entrustment of executive authority coextensive with the legislative power form the foundation of the division of authority.
In India judicial power is exercised by a single set of courts, Civil, Criminal and Revenue whether they deal with disputes in respect of legislation which is either State legislation or Union legislation. The exercise of executive authority by the Union or by the State and rights and obligations arising out of the executive authority are subject to the jurisdiction of the Courts which have territorial jurisdiction in respect of the cause of action.
The High Courts have been invested with certain powers under Art. 226 to issue writs addressed to any person or authority, including in appropriate cases any Government, for the enforcement of any of the rights conferred by Part III and for any other purpose and under Art. 227 the High Court has superintendence over all courts in relation to which it exercises jurisdiction. The Supreme Court is at the apex of the 399 hierarchy of courts, civil, criminal revenue and of quasi-judicial tribunals. There are in India not two sets of courts, Federal and State as are found functioning under the Constitution of the United States of America. By Art. 247 Dower is reserved to the Parliament by law to provide for establishment of courts for better administration of laws made by the Parliament or of any existing laws with regard to the matters enumerated in the Union List, but no such courts have been constituted.
Sovereignty in executive matters of the Union is declared by Art. 73 which enacts that subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which Parliament may make laws, and to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreement. But this executive power may not save as expressly provided in the Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws. By Art. 77 all executive actions of the Government of India have to be expressed to be taken in the name of the President. Executive power of the State is vested by Art. 154 in the Governor and is exercisable by him directly or through officers subordinate to him in accordance with the Constitution. The appointment of the Governor is made by the President and it is open to (lie Pregideat to make such provision as lie thinks fit for the discharge of the function of a Governor of the State in any contingency not provided for in Ch. II of Part VI. By Art. 162 subject to the provisions of the Constitution, executive power of the State extends to matters with respect to which the Legislature of the State has power to make laws, subject to the restriction that in matters in the Concurrent List of the Seventh Schedule, exercise of executive power of the State is also subject to and 400 limited by the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union or authorities thereof. Exercise of executive authority of the States is largely restricted by diverse Constitutional provisions. The executive power of every State has to be so exercised as to ensure compliance with the laws made by Parliament and any existing laws which apply in that State, and not to impede or prejudice the executive power of the Union. The executive power of the Union extends to the giving of such directions to a State as may appear to the Government of India to be necessary for those purposes and as to the construction and maintenance of means of communication declared to be of national 'or military importance and for protection of railways. The Parliament has power to declare highways or waterways to be of national importance, and the Union may execute those powers, and also construct and maintain means of communication as part of its function with respect to naval, military and air force works. The President may also, with the consent of the Government of a State, entrust to that Government or to its officers functions in relation to any matter to which the executive power of the Union extends : Art. 258 (1). Again the Union Parliament may by law made in exercise of authority in respect of matters exclusively within its competence confer powers and duties or authorise the conferment of powers and imposition of duties upon the State, or officers or authorities thereof : Art 258 (2).
Art. 365 authorises the President to hold that a situation has arisen in which the Government of a State cannot be carried on in accordance with the provisions of the Constitution, if the State fails to comply with or give effect to any directions given in exercise of the executive power of the Union.
These are the restrictions on the exercise of the executive power by the States, in normal times; in 401 times of emergency power to override the exercise of executive power of the State is entrusted to the Union.
Again the field of exercise of' legislative power being coextensive with the exercise of the legislative power of the States, the restrictions imposed upon the legislative power also apply to the exercise of executive power.
Distribution of legislative powers is effected by Art. 246.
In respect of matters set out in List I of the Seventh Schedule Parliament has exclusive power to make laws: in respect of matters set out in List 11 the State has exclusive power to Legislate and in respect of matters set out in List III Parliament and the State Legislature have concurrent power to legislate. The residuary power, including the power to tax, by Art. 248 and item 97 of List I is vested in the Parliament. The basis of distribution of powers between the Union and States is that only those powers and authorities which are concerted with the regulation of local problems are vested in the States, and the residue specially those, which tend to maintain the economic, industrial and commercial unity of the nation are left with the Union. By Art. 123 the President is invested with the power to promulgate Ordinances on matters on which the Parliament is competent to legislate, during recess of Parliament. Similarly under Art. 213 power is conferred upon the, Governor of a State to promulgate Ordinances on matters on which the State Legislature is competent to legislate during recess of the Legislature. But upon the distribution of legislative powers thus made and entrustment of power to the State Legislature, restrictions are imposed even in normal times. Article 249 authorises the Parliament to legislate with respect to any matter in the State List if the Council of States has declared by resolution supported by not less than two-third of the members present and voting that it is necessary or expedient in the national interest that it Parliament 402 should make laws with respect to any matter enumerated in the State List specified in the resolution. By Art. 252 power is conferred upon Parliament to legislate for two or more States by consent even though the Parliament may have no power under Art. 246 to make laws for the State except as provided in Art. 249 and 250. Such a law may be adopted by a Legislature of any other State. By Art. 253 Parliament has the power notwithstanding anything contained in Art. 246 to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body. In case of inconsistency. between the laws made by Parliament and laws made by the Legislatures of the States, the laws made by the Parliament whether passed before or after the State law in matters enumerated in the Concurrent List to the extent of repugnancy prevail over the State laws. It is only a law made by the Legislature of a State which had been reserved for the consideration of the President and has received his assent, on a matter relating to a Concurrent List containing any provision repugnant to the provisions-of an earlier law made by Parliament or an existing law with respect to that matter, prevails in the State.
Power of taxation (which is exercisable by the States in comparatively minor fields, the more important such as Income-tax, wealth-tax, excise duties other than those on certain specified articles, and customs, being reserved to the Union) conferred by various entries under List II on the States is also severely restricted. Property of the Union, save in so far as the Parliament may by law otherwise provide, is exempt from all taxes imposed by the State or by any authority within the State. By Art. 286 imposition of a tax on sale or purchase of 403 goods' where such sale or purchase takes place outside the State or in the course of import of the goods into, or export of the goods out of, the territory of India can only be imposed by Parliamentary legislation. A State is also prohibited unless the Parliament by law otherwise provides, from imposing a tax on the consumption or sale of electricity which is consumed by the Government of India or in the construction, maintenance and operation of any railway. Nor can levy of a tax be authorised in respect of water consumed or distributed or sold by any authority established by any existing law or any law made by Parliament for regulating or developing any inter-State river or river valley, except in so far as the Parliament may by law so provide.
The States depend largely upon financial assistance from the Union. A share in certain taxes levied and collected by the Union such as tax on non-agricultural income, duties in respect of succession to property other than agricultural land, estate duty in respect of property other than agricultural land, terminal taxes on goods or passengers carried by railway, sea or air, taxes on railway fares and freights, taxes on the sale or purchase of newspapers and on advertisements published therein, taxes on the sale or purchase of goods other than newspapers where such sale or purchase takes place in the course of inter-State trade or commerce, is given to the States. Certain grants-in-aid of the revenues of the States of Assam, Bihar, Orissa and West Bengal in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products to those States may also be made. Union duties of excise except duties on medicinal and toilet preparations are collected by the Union but may be distributed in whole or in part among the States in accordance with such principles of distribution as may be formulated. By Art.
275 grants-in-aid of the revenue of such States as 404 Parliament may determine to be in need of assistance may also be made.
It is manifest that the States depend for financial assistance upon the Union, their own resources, because of their restricted fields of taxation, being inadequate. The power of borrowing is exercisable by the States under Art.
293, but the same cannot be exercised without the consent of the Government of India, if there is still outstanding any part of a loa
