Case Note & Summary
The dispute arose from compensation payable for property known as 'the Grove' situate on Station Road at Patna, which was requisitioned by the Government of India on 17 July 1942 under Rule 75(A) of the Defence of India Rules, 1939. The property was purchased by the appellants' mother on 18 September 1944, and she later executed a trust deed in 1946 in favour of the appellants. The Government remained in possession of the property and decided to acquire it in 1953, giving notice under Section 7 of the Requisitioning and Acquisition of Immovable Property Act, 1952; the property was acquired on 11 September 1953. The Government offered Rs. 2,47,990 as valuation, while the appellants claimed Rs. 18,00,000. The dispute was referred to the District Judge, Patna as sole arbitrator under Section 8(1) of the 1952 Act. The arbitrator by award dated 25 May 1956 held that compensation was payable under Section 8(3)(b) of the 1952 Act, which provided for twice the price the property would have fetched on the date of acquisition, whichever is less compared to clause (a). The appellants appealed under Section 11 of the 1952 Act, and the High Court of Patna on 13 January 1961 dismissed the appeal, upholding the arbitrator's award. The legal issues before the Supreme Court were whether compensation should be determined under clause (a) or (b) of Section 8(3) of the 1952 Act, and whether the requisition originally made under the Defence of India Act continued after that Act lapsed, thereby affecting the year of requisition. The appellants contended that the Defence of India Act lapsed on 14 February 1946 and there was no order of requisition under the 1952 Act, so for purposes of compensation the property should be treated as requisitioned in 1952 when the 1952 Act came into effect, making clause (a) applicable. The Government argued that although the arbitrator mentioned Section 8(3)(b), in substance the award gave effect to clause (a) and should be upheld. The Supreme Court held that the requisitioning of the property under the 1939 Act was continued by the Requisitioned Land (Continuance of Powers) Ordinance 1946, then by the Requisitioned Land (Continuance of Powers) Act 1947, the Requisitioning and Acquisition of Immovable Property Ordinance 1952, and finally by the 1952 Act. Section 24(2) of the 1952 Act made the property deemed to be requisitioned under Section 3 of that Act. Therefore the year of requisition remained 1942, not 1952. On the compensation clause, the Court relied on Union of India v. Kamlabhai Harjiwandas Parekh, (1968) 1 SCR 463, where Section 8(3)(b) was held arbitrary and bad. Consequently the award made under that clause could not be sustained. The Court further rejected the Government's contention that the arbitrator in substance applied clause (a) because the award expressly stated it was made under Section 8(3)(b). The Court noted that in 1968 clause (b) was deleted by amendment, preserving clause (a) as the sole sub-section (3) of Section 8. Accordingly, the Supreme Court allowed the appeal, set aside the High Court judgment and the arbitrator's award, and directed that compensation under Section 8 of the 1952 Act be determined in accordance with law; if the parties did not reach agreement, the Central Government was to appoint an arbitrator as contemplated in Section 8. The appellants were awarded costs of the appeal.
Headnote
A) Property Law - Requisitioning and Acquisition of Immovable Property - Continuance of Requisition - Requisitioning and Acquisition of Immovable Property Act, 1952, Sections 3, 7, 24(2); Defence of India Act, 1939, Rule 75(A); Requisitioned Land (Continuance of Powers) Ordinance, 1946, Section 3 - The property was requisitioned on 17 July 1942 under Rule 75(A) of the Defence of India Rules and remained in government possession; successive enactments continued the requisition after lapse of the Defence of India Act. Held that the property became deemed requisitioned under Section 3 of the 1952 Act and the year of requisition remained 1942, not 1952. (p. 961F-962B) B) Constitutional Law - Compensation for Acquisition - Arbitrariness of Section 8(3)(b) - Requisitioning and Acquisition of Immovable Property Act, 1952, Section 8(3)(a) and 8(3)(b) - The Supreme Court in Union of India v. Kamlabhai Harjiwandas Parekh held Section 8(3)(b) arbitrary and bad; therefore the arbitrator's award made under that clause could not be sustained. Held that appellants are entitled to compensation under Section 8(3)(a). (p. 962E-F) C) Arbitration - Award - Express Application of Invalid Provision - Requisitioning and Acquisition of Immovable Property Act, 1952, Sections 8(3)(b), 11 - The Government contended that although Section 8(3)(b) was mentioned, the arbitrator in substance applied clause (a); however the award expressly stated it was made under Section 8(3)(b). Held that this contention failed and the High Court judgment upholding the award was set aside. (p. 962G-H) D) Remedy - Compensation Determination - Directions for Fresh Determination - Requisitioning and Acquisition of Immovable Property Act, 1952, Section 8 - The Supreme Court directed that compensation be determined in accordance with Section 8; if parties cannot agree, the Central Government shall appoint an arbitrator. Held that appellants entitled to costs of the appeal. (p. 962H)
Issue of Consideration
Whether compensation for acquisition of property requisitioned under Defence of India Act, 1939 should be determined under Section 8(3)(a) or 8(3)(b) of Requisitioning and Acquisition of Immovable Property Act, 1952; whether requisition continued after lapse of Defence of India Act and the year of requisition.
Final Decision
Supreme Court allowed the appeal, set aside the judgment of the High Court and the award of the arbitrator, and directed that compensation be determined in accordance with Section 8 of the Requisitioning and Acquisition of Immovable Property Act, 1952; if parties could not reach agreement, the Central Government shall appoint an arbitrator under Section 8; appellants awarded costs.
Law Points
- compensation under Section 8(3)(a) not 8(3)(b)
- Section 8(3)(b) arbitrary per Parekh
- requisition continuance
- deemed requisition under Section 3
- arbitrator award under invalid section set aside
- Central Government to appoint arbitrator under Section 8
