STATE OF TAMIL NADU, ETC. ETC. versus L. ABU KAVUR BAI AND ORS. ETC.

STATE OF'tAMIL NAi>U, ETC. ETC. .. • v. ' L. ABU KAVUR BAI.AND ORS. ETC. O~tober 31, 1983 · lY:v._CHANDARcHuD, c.J., s •. MmtTAZA FAzAL Au,. V.D. TULZAPURKAR, 0. CHINNAPPA REDDY AND A. VARADARA1AN, JJ.] Constitution of India, 1950,.Articles 14, 19, 31, 39(b)and (c):

Tamllnadu Stage ·Carriages and Contract -Carriages (Acquisition) Act 1973-Nationalisation of stage car;iages Ond ·contract carriages- Vesting of vehicles, workshop etc. In the government on·nationalisatfon-Whether. confiscatory Jezis/atlon-Constitutionally Valid and permissible-Scope of Articles 39(b) an4 (c)-Whdt is, interpretarion of Statu_tes. ·

Words and Phrases : [11]distribution"-" Material resourCt$'~-Mel,ning of-Constitution of fndla 1950, Article ·39(b).·

The transport industry can be nationalised by two methods : (i) where the Government acts under Chapter IV-A, (section 68 (b) and (c) of the Motor -VehicICs Act 1939), after formulating the scheme fof taking o"ver a· route Or routes, 1and (ii) the more effective method, to taktp ·over the running of the entire transport· services by nat.iODalising them, along with their units, (Vehicles,. workshops .etc.) either by ·one stroke of by stages spread over · short time. ·

The Karnataka State adopled' the second method and the legislation vi_z., the Karnataka Contract Carriages (Acqui~ition) _Act, 1976 was upheld by this Court in .State of Karnataka and .Anr. v. Ranganatha Reddy. and Anr:, [1978] I S.C.R~ 641.

The Tamilnadu State passed, the Tamil Nadu Stage Carriages and Con~ tract Garriages (Acquisition) Ordinance, 1973 which later toOk the shape of the Tamil Nadu Stage Carriages and Con~ract Carriage (Acquisition) Act, 1973 • .. The intention of the Act was to start the nationalisation schen1e in one district of the State first and then extend it to other districts .. Secti.on 1 provided

[ 1984) 1 S.C.)l.

tha! the policy of nationalisation shall come into force off the 14th January, 1973. Clause (iii) of sub-section (4) (b) of section J laid down that wit~ respect to stage carriages in any other dist~ct -in the State,~ the Act will come into fore:e on_ such dates as the GOvernmCnt may by notification_ appoint. Section 2 codified one of the clauses of the preamble by enacting declaration· that the Act was meant for giving e!Iect to the policy of the State towards securing the principles specified in clauses (b) and (c)- of. Ariicle 39 of the Constifution and the acquisitiOn in respect of the_ stage carriages and contract carriages and other properties i:C_ferred to in seCtion 4.

SectiOn 4, the pivot~!· section provided that on and from the date as may be specified by the Government in respect of a·ny stage carriage Or contract cartiage operator, the perinit issued to the operator shall vest in the Govern-ment absolutely free from all encuinbrances and stage carriages or contract carriages whiCh vest in the Government, shall by fore~ of such ves.ting be freed and discharged fi'om any trust, obligation and encumbrances etc. ,It was further provided that any person interested shall have no clahn in relation to such carriageS or contract carriages taken over by. the State in pur~qance of the riationalisation Policy and the. clain1, if any, would be limited to the - amount payable under the Act. Sub-section (3) of section·· 4 contained decla-ration that the veSting of the stage carriage·s and other properiies ·shall be de~med to have _been acquired for public pu~pose and in pllblic interest.

SeCtiOn 6 provided for,a reasonable_ -amount or" cOmpensation to be paid 1 to the operators· on their properiies vesting in the Government. Where the amount can be fixed by agreement, the same shall be detern1i11ed in accordance · wi'th the agreement and in other cases .by an arbitrator appointed by the Government. · Se.ftion 1-2 ·provided for "an appeal to the High Court against the award of the.arbitrator .

., The schedule to the Act fixed the sc3.le of compensation enunciated the piil?-ciples ori , \Vhis;h it wks to be awarded and contained the guidelines for . its payment.

The· operat6rs whose stage carfiages were taken' over by the State Government.assailed the constitutional_ validitY"of the Act in their writ Petitions in the ~ligh Court. ...

·The High Court held that the·Act was ultra vires Articles 14 and 19 of the Constitution as it did not fciH within the scppe of Articles 31 C, and that by viftue of~ the Act _the financiers who were the owners of .the stage or contract carfiages would be compl.etely wiped out of their business and that therefore Article· 19 was clearly· violated. It further held ihat the objects of Article 39 (b) & (c) have not bee_n subserVed and, since the vehicles taken over by . the State under ·the Act were moveable properties A.rticle 39 was not applicable.

In appeals 'to this .COurt it was· .contended on beh~lf of thC State·that_ the Act squarelY ·rell within the protective umbrella of Article 31C inasmuch as

in pith and substance, the Act sou1Zht to subserve and· secure the objects contained i~'ciauses·(b) and (c) of Article 39 and was, therefore, fully prote-· ctcd from· the onsiaught of Articles 14, 19 and 31.o1- The provisions of the Act are almost in pori materia with the ·Karnataka ContraC~ Carriages (A_cquisition) Act. 19 ,6, which has been upheld by this -Court._ On the other hand, it was contended on behalf of the operators (ReSpondents · in the appeals arid peti-tioners in the writ petition) that the manner in_wh_ich _the transport services had been nationalised under the Act did not fall within the ambit of Article 39 (b) and (c) as, the buses or the vehicles were nOt an integral part of the policy of nationalisation. If the Act had nationalised the transport services ..:without taking over the units and the workshops, etc, then the operators could have had something to fall back upon to earn their livelihood. Complete deprivation of livel1hood by the Act amouhted to confisCatory piece of ' legislation and therefore void.

Allow'ing the appe.a1s and dismissing the writ petitions :

HELD : The Tamilnadu Stages Carriages and Contract· Carriages· (Acquisition) Act 1973 is constitutionally valid. [766 A]

1. ·By and large ~he p~~visioris of the t~o Acts viz. -.the Karnataka Contract carriage (Acquisition) Act, 1976 ·and the Tcimil ~adu Stages Carriages and Cont_ract Carriages (Acquisition) Act, 1973 appear to be identical in many res-pCcts and the general structure and the fu0dameiltal features of the two- Acts are almOst same. In view of the clear decision of this Court regarding the consti-tutional validity of the Karnataka Act, very little survives so far as the arguments. in this case, advanced on behalf of the resporidents are concerne~. Further the three important decision in Minerva Mills, U'aman Rao and Sanjeev Coke Manufacturing cases, "reinforce and rejterate the conclusions reached in the K.arnataka case .. [751 F, 752 D·EJ

2. · (i) There.appears to be complete unani~ity of judicial opinion on the point that although· .th.e directive principles are not eriforceable yet ·ti1e court shbuld make real attempt ~t harmonising and reconCiling the directive principles and the fundamental rights and any collision between the twCJ should be avoided as far as possible. [736 BJ

(ii) Whereas in the 2sth A:Uend111ent, the protective umbrella given by' Constitution w~s restiicted to la,ws passed only to promote objects in Cls. (b) & (c) or Art. 39, by virtue of the 42nd Amendment the limitations which were confin.ed to Cls. (b) and (c) of Art. 39 \\ere taken away and the Article was given· much wider conn.otaiion by legislating. that Acts or laWs giVing effect to all or any of the principles laid down in part IY of the· Constitution would be protected by the umbrella contained in Art. 3 l and would be immune from . challenge on. the groun~ that they were violative of Art. 14 or· i"9. [738 c:D]

(iii 1 From combined reading of Bharati's and Minerya Mills' cases as also of the subsequent decisions,_ the undisputed position is that Art._ 31C, as introduced by the 25th Amendment, is constitutiOnally valid in.all respects.

'!'AMIL NAbU JI. L. ABU

5. From.a perusal of Bharati's a,s· alsO Karnalaka cases the following 'principles for assessing compensation after the amendment of Art'. 31 (2)' by substitution of the wo!d 'amount', .emer~e :

(Ir that compensation~should Dot be arbitrary or illusory,

(2) that the amount. fixe4 · as compensation ·sboul? not be uilprincipled,

In the .instant case, on: the question of compensation the relevant sections of the Act are completely io accordance with the prinCiples enunciated abo'e: and hence the argument of the counsel for .the respondents that the compen-sation is wholly inadequate or illusory must be overruled. [756 A]

6. (i) .The compensAti'on awarded QJ'. the· pri~Ciples ·.coDtained in the various sections of the Act are not illusory but amount to 'a Just and sufficierit compensation to the operators whose properties are taken away. In fact, it was .to ineet s.ucb situations that Art. 31C was introduced so that any obstacie restil-ting iD evil consequence to the operators.or- persons Whose prOperti~s are taken over is completely .removed• [757 BJ

Jn the inst3.nt Case,.the State ·has nationalised the stage and contract carriages for the purpose of providing general. and expeditious transport at, reasonable rateS to the members of the public and such policy is undoubtediy i.n public.interest and involves a_n important public purPose .. [758 F]

(ii)' Art. 39 (b) does not mention either move'al;lle or ·immovable property. The actual expression used is •material resources Of the commu-nity'. ''Material resources" ·are wide eilough to cover' not only natural physical resources but also moVeable or immoviible prope!ties. :[759 E}

7. (i) If the State chooses to monopo1ise trades in, certain f:Ssential commodities or properties, th~ purposes mentioned in Art. ~9. (b) ·& \c), Art. 3l (2)" wou,Id -be completely ex-eluded;- otherwise no State monpoly is_ ever· possible. It was for this reason that Parliament thought it advisable to prbtect the ·objec\s cont~ined in. Article 39 (b) & ( c) from tfie purview of Art. 31 (2).

[761 D'.F].

(ii) Article 31 (2) by virtue· of the 25th Ame~dment omitted the word 'cotilpensation' and had -substituted the word 'ainount' which gives ample . discretiori to. the State to fix reasonable amount if the prOpei:f:y of an individ-ual is taken over for public purpose. The court in such matters cannot

interfere.with the amount so fixed unless it. is .shown to the court's satisfaction· that the amount fixed is so monstrous as to shock~ its conscience. £761 G[4] 762 A]

·8. The persons whose properties are taken over cannot be heard to ·complain that the compensation awarded to the1n should be according to the market value which, if conceeded, would defeat the very purpose and objective of.Article 39 (b) . & (c). The principles that emerge are. . -. . . (I) that in view of the express provisions of Art. 31C which· excludes Art. 31 _(2) also, where property is acquired ,in_public interest for the avow"ed purpose of giving effect to the principles enshfined in Art. 39 (b) & (c), ·no cofnpensation is necessary and Art. 31 (2) is out of the harins way, and (2) That even if the law provides fOr cOmpensation, the' courts cannot go into the details or adequacy of the compensalion and it is sufficient for the State to 'prove that the compensation was reasonable and not monstrous or illusory so as· tO shock. the conscience of the court. [762 E;·_C-DJ

In the instant casi:, both the conditions mentioned above are- fully satisfied having regard to tlie proyision ~i the· Act.• f.'",'62 FJ

9. It Will not be correct to construe the word 'distribution• in purely literal sense so as io mean only division of particular kind ·or , to particula_r persons. The words, apportionment, allotment, ~llocation, classification, · clearly fall within the broad sweep of the word 'distribution'. 'so construed, the word 'distribution' as used in the Art. 39 (b) will include various facets, aspects, inethods and terminology of broad-based concept of distribution .. The word 'distribUtion' does not merely mean·that Property of one _should be taken oVer and distributed to others like land reforms where the lands from the · bi"g landlords are taken away and given to landless -labourers or for that matter the_ various urban and rural ceiling Acts. That is only ·one of the modes of .distribution but not the only mo<\e. [763 G-764 A]

In the instarit case, distriQution is undoubtedly there though in . different shape. So far as ·the opefators were concerned they were n1otivated by mal\ing huge profits and were most reluctant to go to villages or places where the passenger traffic is low or the track is diffic.ult. This naturally ca"used serious incO-nve:qience to the poorr-111em,bers of the Community who weie denied ·the facility of visiting the towns or other areiis in transport. By nationalising the transport as also the units the vehicles would be able to go to the fafthest cor-ner of the State and penetrate as deep as possible and provide better 3.n!i quic-ker and more efficacious facilities. This would undoubtedly be distribution for the common good of the pepple and would.be clearly covered by cl. (b) of Art. 39. [764 B-C] . '

JO. Once poliCy of nationalisation is in public interest 3.nd for public good, some losses, some dtlmages, SQme .prejudices and some harsh conse~ quences ·are bound to follow. but this does not mean that· the aforesaid considerations should result in stalemate of the pOlicy Or State monopoly ·or nation~lisation. f756 HJ

C1v1L APPELLATE JURISD.!CTION : Civil Appeal Nos. 957-966(N) of 1973 and 435-442 of 1976.

(1984] . l . S.C.R.

A.TM. Sampath, M.N. Rangachari, S. Srinl1•asan and Mahabir Singh for K.A. Kanappa Chetty & T.R . .Subhraj.

B. Parthasarthy for Adv. Genl. Orissa and Cherran Trarisport Employ.ees Union ..

Ashak Grover for Adv. Genl. J & K.

A.K. Sen, A.il'.M .. Sampath and[(. Ram Kuinar for D. Kannia Pillai, M/s. Sundaram Finance 'P.T. Krishnan an"d S.K. Nandy for State of Assam. ·' ·

The Judgm~nt of the Court was delivered by.·

. . FAZAL Au, J. One of the planks of building an egalitarian society in order to achieve socio·economic emancipation is the policy of nationalisation of industries. Easy, cheap and dependable lrans· port is prime social necessity. Unfortunately, no State has beeb. able to achieve 1his goal so far .by full-fledged nationalisation. Reliance is largely placed on schemes framed under Chapter IV·A of the Motor Vehicles Act.

Perhaps Karanataka was the only State wliich having become 'sadder and wiser' took the lead in enunciating the bold step of complete nationalisation of the entire transport industry but, unfor· lunately, ii .has not yet been able to implement it fully.

There are two methods by which the transport industry can ·be nationalised :--

(l) where the Government acts under Chapter IV (s.68 (b) &(c) of the Motor Veliic!es Act) and after due pub!i~ation formu· · !ates scheme for taking over route or routes and invites objections , thereto. After the objections .have been received they are decided and :ultimately processed. This method ·however is dilatory and involves time consuming process which leads to delaying tactics . adopted. by the operators. Even so, after the objections have .been decided,· the operators or the persons concerned are not satisfied but go up in appeals to the law courts: · These delaying tactics have resulted in most . cases in. an: indefinite postponement Or the , scheme of nationalisation. Moreover, normally this process is

applied to a. route or routes selected by the Government and is accomplished by stages which also takes long time .

. (2) Another method which is the· more effective one is to take . over 'the running of the entire transport services by nationalising them, alongwith their units (vehicles, workshops, etc.) either by one strok-e.or by stages·. spread· over· short time. This cours~ is clearly permissible under els. (b) & (c) of Art. 39 of. the Constitution· as would . be discussed . in later part of the judgment. . .

The Karnataka State tried th.e second method and succeeded, . to some extent, but ran into difficulties for one reason or the other. The Tamil Nadu State following the Karqataka 'pattern passed the impugned Ordinance, which later took the shape of the Tamil Nadu Stage C11rriages and Contract Carriages ·(Acquisition) Act, 1973 . (hereinafter referred to as the 'Act') to nationalise the State transport industry by stages. The Madras High' Court sta~ed the operation of the Ordinance as also the Act and declared void all Its ptovisions, -As result, nationalisation of transport became still-born child and its progressive policy was stifled the day ·it was put into action.

It is this judgment of the High Court which is the subject · matter of appeals and writ petitio~s . before us. The Madras. High C0urt declared the Act ult1a vires as being violative of Arts. 14 and 19 of the Constitution as it did not fall within the protective umbrella contained in Art. 31C and on number of other grounds which-would be examined hereafter.

It is manifest that the attempt of the Tamil Nadu legislature to·give effect to the principles enshfined in-Art.39(b)&(c) would have .secured the socialist objective aimed by the Constitution in order to build up an egalitarian society. By virtiie of complete nationali-sation the numbers of the public or the community would. have got much better and greater facilities than afforded to them by tbe private operators runnfog vehicles ·under permits. Secondly, the efficiency and· efficacy of ihe· services would ·undoubtedly m~ke 'marked· improvement in the manner and method of running ,the vehicles as compared to the Services run by private . operators: Thirdly, prior to the passing of the Act, the entire services were actually run behind the screen through - varioqs financiers in ·the name of the operators with whom they had entered into hire-purchase agreements. This obviously led to concentration of wealth in the .hands of few. With the coming into force of the total

[1984) 1 S.C.R.

nationalisation scheme,. this device of concentration of wealth would l;>e completely nipped in· the bud resulting in an equal distribution of wealth and services among the people of the country. Fourthly, the private services run by. the operntors mainly inspired. by profit making motive neither had the will nor the capacity to penetrate as deep as possible into areas so far iaaccessible to the travelling public and would confine their running of tb,e services only to serve impor-tant points. \Vhen the State takes over the entire transport services, it WQUld ·undoubtedly be its duty to see that the vehicles reach the most distant part or corner oft.he State and serve as many travelling public as possible so that nobody is· caused any inconvenience. These are.some of the in\tial advantages of total na.tion.alisation scheme, which would be brought to the fore and provide an ideal service for the members of the community at large.· Jt.may be that in this process some financiers would suffer loss and some operators may also be wiped out of the Jiusiness but this cannot be helped as the scheme of our Constitution is that Individual rights or benefits must yield to the larger benefits and good of the entire community. Some of ihese points were very elaborately d~ali with in the case of State· . of Karn at aka & Anr. etc. v. Ranganatha Reddy & Anr. · etc.([1]) (for facility, hereinafter referred to as 'Karnataka case').

The Act wa' for the purpose of carrying out and impleuienting · the objects specified in Art.39(b)&(c) and was,. therefore; immune from ·challenge on the ground that the Act or its provisions were violative of Art. 14, 19 or 31. This was accomplished by virtue· ~f Art.31 C, introduced by the '25th Constitution Amendment, which. gave ~ protective umbrella to such acts so as lo exclude them from the operation of Arts.14; 19 or 31. Before dealing ·with the provi-sions of the Act we might give resume of the importance and significance of the directive principles contained in Art.39(b)&(c). which may be extracted thus : ·

"39. The · State shall, in particular,' direct its policy towards securing-

(b) that .the ownership and control of the material resources of the community are so distr'ibuted as best to subserve the common good;

(1) , (1978] I SCR 641.

(1984] 1 S,C,R. ,

SUPREME COURT REroRTS

• · to implement these principles from time to time according to capacity, situations· and cfrcunistances that may arise .

. . On c~reful c.onsideration of the legal and historical aspects· of the directive principles aii.d lhe fundamental rights, there' appears . : ·to he complete unanimity of judici~I opinion of t]1e various decisions of this Court on the point that although the directive prlncipies are. -nQt enforceable yet the court should make a· real. atiempt at harmo· nising and reconciling the directive p(inciples and the fundamental rights and any collision between the two ·should be.avoided as far as possible. · ·

In ti)e instant case, we are really concerned with the. ~econd · limb of the Constituti<:m, · viz., the Importance and significance of . the directive principles contained in part IV. We now propose to discuss the purport, signific~uce, scope, ambit and rationale of Art.31 C, which may be extr~cted thus ::

"31C. Saving of laws giving effept to certain directive principles

· Notwithstanding anything contained in article 13, no law ·giving effect to ihe policy'• oi' the .State towards securing all or.any of the principles la,id down in part IV shall be (jeemed to be v'o-id on the ground that it is. ·inconsistent with, or takes away or . .,bridges any or' the rights' conferred by article 14 or article 19; and no law containing ·declaration· that it is for giving effect to ·. such policy shall be· called in question in any court on · the ground that it doe_s not give effect to such policy :

· Provided that where such law is made by the legis-lature. of St~te, the. provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President,. has. received his .assent."

· brief setiing and origin of this Article is contained in the. Obj~cts and Reas(mg of the Con.stitution (25th Amendment) Act, · 1971, .,;hich show that· the amendment was introduced with the main. objective of getting over· the difficulties· placed in the wP.y of $ivin(l effect to the c:ljrective prinCiples of Stat~ policy~ ~

TAMIL NADU V:'L, ABU (FtizalA/i, J.)

It is manifest from- bare re.ading of the newly added .Art.3\C · that any law effectuating the policy of the State in· order to secure· or.comply with the directive principles specified in clauses (b) and ' . fC.. (c) of Art)9 would not be deemed to·be void even if it is inconsis-.----1' . tent with or vi0Jates Arts. 14, 19 or ·31. It wasfnrthe« provided· that any law which contains declaration that it was put on the statute book for giving effect to such policy, the same coyld not be called. into qu·estion in any court on the ground that the new· law does n_ot give effect to the. policy. In other words, the_ position. , was that once Art.31C was put' on the statute book, the question of. any law being in . violation or infraction Of the fundamental rights I contained in part III (Arts.14, 19 and 31) ' ceased t~ be justiciable. · Art.31C further provided ihat where ·1aw is inade by the legislature . of State, the pr~visions of this Article would . apply only if the law had received the assent of -the President of India. We might mention ·here that it is undisputed in the instant case that the impugned law had received the assent · of the Presihent and is, therefore, fully · enforceable in -the State of Tamil . Na du if it fulfils the conditions of Art. 3 t C, whfoh it doubtless does. . ~ubstantial part of . this amendment appears to have ·been held to be valid by.a majority of 7:6 in His Holiness Kesavan_anda Bharti· Sripadaga/averu v. State of Ketala(') (he~einafter referred to as 'Bharti's case'), but portion. of Art.3 IC was held to be invalid. · ·

While-consdering the scope,' ambit and cons.titutional. validity of Art.31C, the majority judgment 'in Bharati's case (supra) held that the first part of Art. 31 was valid but the second part, vi~ .• · '.'and no· iaw containing declaratipn that if is for giving effect to such policy shall be called in questio!' in any court on the ground that it does not give effect.to. such"policy" was held to be Invalid . .In other· wotds, so far as the . present aspect of the case before us is concerned, the majority judgment clearly held that while Art.3 lC . permitted Parliament to make .any law giving effect t~ the policy. of · the State towards securing the principles contaitted}n els. (b) and (c) of Art.39, such . law could not be declared· void even if such c!lurse of action violates or. abridge any of the . rights conferre9. by Art.' 14, 19 or 31. · ·

Anolher cr'ucial- stage in the history of Art.31C arose when the famous 42nd amendment of the Constitution was passed by the

(1984) 1 s.c.R.

Parliament. By virtue of this arriendinent complete, irrevocable and impregnable constitutional' protection was given to Jaws passed . not only to implement die principles· specified in els. (b) & (c) of Art.39 bnt also the principles contained in all the clauses of Art.39. However, to put the record straight and to complete the history of Art.31 we may briefly indicate the distinction between the .25th and 42nd amendments thus :

Whereas in the 25th amendment, the protective. umbrella given :·by the Constitution was restricted to Jaws passed only to promote objects in els. (b) & (c) of Art.39, by virtue of ihe 42nd amendment tbe limitations which were confined to . els. (b) and (c) of Art.39 were taken away and the Article was given much wider connota-tion by legislating that Acts or laws given effect to all or ·any of the principles laid down in part IV of the .Constitution would be protected by the umbrella contained in Art.31C and would be immune from challenge on the ground· that they were violative· of Art.14 or 19. Even so, in Minerya Mills Ltd. & Ors. v. UniOn of India India & Ors.,(') one of us of us us (Chandrachud, CJ) while referring to the ratio of of Bizarati's case on the unamended Art.31C observed as foJlows: ~'Indeed, if there 'is one topiC on which all the · 13 13 Jud~es.in Kesavananda Bharati were Kesavananda Bharati were were agreed, it is is thiS: that the only question open to judicial review under the unamended' Art.3/C was whether there is 'a direct and reasonable nexus betwee~ the . impugned laiv and the F. pro.visions of Art.39(b) and Art.39(b) and (c). Reasonableness is regard-

Even so, in Minerya Mills Ltd. & Ors. v. UniOn of India India & Ors.,(') one of us of us us (Chandrachud, CJ) while referring to the ratio of of Bizarati's case on the unamended Art.31C observed as foJlows: ~'Indeed, if there 'is one topiC on which all the · 13 13 Jud~es.in Kesavananda Bharati were Kesavananda Bharati were were agreed, it is is thiS: that the only question open to judicial review under the unamended' Art.3/C was whether there is 'a direct and reasonable nexus betwee~ the . impugned laiv and the pro.visions of Art.39(b) and Art.39(b) and (c). Reasonableness is regard-ing the nexus and not regarding the law." •

(Emphasis ours) t

Thus, it would appear from combined· reading of Bharati' s and Minerva Mills cases as also of the subsequent decisions·. that the undisputed position is that Art.3 lC, as. inti:oduced by the 25th amendment, is constitutioryally valid in all respects .and has survive\\ the stormy decision of Bharati's case. •

Similar observations were inade in Woman Rao & Ors. etc. v. Union of India & Ors.,([1]) where one of us (Chandrachud, CJ) observed thus : ·

"Article 31 is now out of harm's way. In fact, far from damaging ·the basic structure of the Constitution, laws passed truelY and bona fide for giving 'effect ti) dire• • · ctive principles. contained in clauses (b) and (c) of Article 39 will fortify that struciure." · •

(E!i:nphasis supplied)

In the latest Constitution Bench ·decision of this Court in Sanjeev Coke Manufacturing Co. v. M/s. Bharat Cokinz Coal, Ltd. & Anr.,(') it has 'been emphasised that the constitutional. validity Of-Art.31C is now beyond challenge and in this 'connection one of us (Redd;y, J.) speaking for the C,ourt made the folio.wing · obser~ations .:

"In the second place, the question of the.constitu· tional validity of Art.31C appears to us to be concll!ded by the ·decision of' the Court in Kesavananda Bharati case."

In view of t~e aforesaid decisions, it is not necessary for ·US to dilate further on the question of the constitutional validity of Art.31C.

Another important facet of Art.31C which has been empha· sised by this Court is that there should be close nexus· between the statute passed by the legislatur~ an'd the twin objects .mentioned in clauses (b) and (c) of Art.39. In approaching this problem and considering the question· of nexus narrow approach ought ·not to be made because it is well.settled that the 'courts should interpret constitutional provision in order to suppress tile mischief and advance the object' of the Act. The · doctrine of nexus cannot be . extended to such a:n extreme limit that the very purpose of Art.39 (b)&tc) is d~feated. By requiring that there · should be qexus - . between the law· and Art.39(b)&(c) w):tat is ment is that there must be reasonable connection between the Act passed arid the objects

[1984] 1 s.c.tt.

. mentioned ill Art.39(b)&(c)before'the said· Artfole can apply. If the · neimsis present'in the law then. the protection of Att.31C becomes complete and irrevocable. .

F.utJ1ermore, the fact that there is. declaration in the Act · regarding the purpose mentione in Art.39(b)&(~) may generally be -·· \ ·evicjence of the µexus between the law and the objects of Art.39(b) &(c). : In this connecti9n, Iyer,J., in the Karnataka case observed.· '• thus·: '·

"The requisite declaration co~temp1ated. in Article 31 is thus made iri'the preamble as well as in section 2 of the Act...... . •.. T.he. nexus between . the taking of ··property and the public purpose springs necessarily into . . existence if the former is capable of answering the latter."

· There iS no particular magical tinsel or .ritualistic formula in Jhe term 'nexus' . which 'may be closed in .a strait·jac~et. Even nationalisation scheme meant for. the purpose of distribution or · preventing co.ncentration ·of wealth, as in this case, would be suffi.,. cient nexus to· attract the. operation of Art.39(b)&(c). On this aspect oftlie matter,· lyer,J. in the.Karnataka case further observed thus : · t · "The next . question is whether natronalisation ·can have nexus with distribution .......... To.'di.stribute'; even in its simple dictionary meaning, is to, ·allot, to divid.e into classes or into groups' . and 'distrilmtion' embraces ··'arrangement, classification, placeme11t, disposition, apportionment, the way in which items, quantity, or · the like, is divided or apportion~d; the ;ystem· of dispers-· ing. goods· throughout community.''.

. In 1aier decision in.Sanjay. Coke Manufacturing Co.'s case (supra), adverting to tills very point, one of u·s (Reddy; J.) made the . f· . . · )G following observations :

· "We ate firmly of the opinion that where Article· 31C . comes i.n Ar.ticle 14 goes out.· There is no· scope for _bringing in Article 14 by side wind as it were, that 'is, by equating the rule of equality before the law. of Article · . • · 14 with the broad egalitarianism· of Article 39 (b) or by treating the principle of Article 14 as included in the principle.of Article 39 (b)." · ·'

. 1 •. •. ABU (Fazal Ali, ' Ali, . '

We might. no.w mention in passing · some important facets of Art. 31C which we shall discuss in detail when we deal with the var~ous provisions of the Act in the light of the reasons given· by. the· High Court and· ihe contentions adv.ariced before us. At this stage, suffi~e it to say that on proper and true construciion of Art. 31C· in the light ,of the decisions of this Court, the question of compensation becomes totally irrelevant. If, once the conditions mentioned in Art. 3 lC are fulfilled by the law,. no question of compensation arises because. the said Article expressly excludes not only Arts. 14 and :19 but also 31 which, l:iy virtue of the 25th amei\dment, had· replaced the word 'amount' for·tbe word 'compensation( ·in Art. 31 {2). As already extracted, Chandrach11d, CJ. in· Waman .Ra<>'s case has observed that once Art. llC is;attracted, Arts. 14, 19 and 31 are out.· of harm's.way.

[1984) i.s.C.k.

which gives protective umbrella against Art. 31 (2) also, the court cannot strike down the Act merely because the compensation for taking over the transport services or its units is not provided for. The reason for this is that Art. 31C was not merely pragmatic approach io'socialism but imbibed·a theoretical aspect by which all means ofproduction, key industries, mines, minerals, public supplies, ntilities and services may be taken gradually under public ownership, management ·and control. ·

Even a~ far back ·as 1963 in Akadasi Padhan v. State of Orissa,([1]) Gajeiidragadkar, J., speaking for the Constitution Bench, observed thus : ' "To the rationalist, nationalisation or State ownership is matter of expediency dominated by consi-derations of economic efficiency and increased output of production ..... .

The apendmerit made by the Legislature in' Art. 19 (6) shows .that according to the Legislature, a· law • relating to the creation of State monopoly should be presumed to .be in the interests of the genera!' public. Art. 19 (6) (ii) clearly shows that there is no limit placed on the· power of. the State in respect of the creation of State monopoly ... ,.. Iri ·our opinion, the amendment clearly indicates. that State monopoly in respect of. any. irade or business must be presumed to be reasonable. and in the interests of general public, so.far as Art. 19 (!) (gj' is conc~rned."

Thus, even in 1963 the change in tl\e approach by the Supreme Court towards social problems had come to be seriously felt so much so that any policy of nationalisation of assets or State monopoly was held to be so necessary to acquire the goal of building an egalitarian society as .to make the· restrictions contained in Art. 19 \I) (g) reasonable. In other·words,.even if Art. 31C was not there, the policy of nationalisation of transport services could be held. to· be valid on the basis·ofthis decision and would not violate Art. 19, being reasonable restriction. The major part of the spirit of Art. · . 3!C, w.hich was introdµced almost decade ·after the above decision,

·was clearly anticipated and accepted in Akadasi Padhan'scase (supra). and this Court in way paved the way for more socialistic reform which niaf destroy any obstacle coming in the way of achieving the important directive prh1ciples of the Constitniion. More than this · we would not. like to say anything regarding this decision because Arts~ 14, 19 and 31 are completely excluded by Art. 31C. The provisions to validate laws made to secure the objects .in Art. 39 (b) &(c) seem to be.the conclusive chapter of humble beginnig vlith an appeal to the courts to make doctrinaire and pragmatic approach in such cases.·

· Mr. Ray rightly argued that in view of the prov1s1ons of Art. · 31C, the Act squarely falls within the protective umbrella of the said Article inasmuch ~as in pith and substance, the Act seeks to subserve and secure the:objects contaibed in clauses.'(b) & (c) of. Art. 39.and is, therefore, fully protected from the onslaught of Arts. 14, 19· and 31. To counter the argument of Mr. Ray, S/S.hri Ashoke Sen, Venugopal a~d Sanghi made two f~ld. submissions. In the first place ii was argued that the manner in which the transp.ort services had been nationalised under the Act does not fall within the· ambit of Art. 39. (b) & (c) as the buses or the vehicles were not an integral part of the policy of nationalisation. Secondly, .Mr. Vonugopal submitted that if. the ~ct would have· nationalised the transport services without taking over the units and the workshops, etc., then the operators could have had something to fail back upon to earn their livelihood. Complete deprivation of livelihood by the Act amounts to confiscatory. piece of legislation and therefore void. Although the arguments are attractive, on closer scrutiny they seem to be without substance. Once it is held that the policy of,riationalisation 'of transport services is valid, which is no doubt an essential service and type of State mµnopoly, any co.nse· quence that may follow cannot be taken into consideration·· otherwise . no social reform can ever be brought about. All schemes 'of mono· · poly or nationalisation are meant to serve the public. good and individual interests in such cases must.· yield to the. good· of the general public. Moreover, on ·a close examiriatioµ. of the argument it seems to us tqat it is wholly untenable. The various provisions of the Act clearly provide for just and reasonable compensation which may not be equal to market value of the units taken over but cannot be said to be illusory or shocking to the consience of the court. ·

Alth'ough we have found that Art. JI having been excluded no question of compensation arises, even sci it seems to us tMt the courts while interpreting the policy of total nationalisation and being : imbued With keen sense of the doctrine of justice and .fair play have projected the question of compensatio11 'in. ·very ·limited sense .~nd a:restiicted extent by· holding that the word 'amoOnt' merely means spme sort of reasonable amount w.hich may or -.may not be adequate in the circuriistances. . We feel that in view of the· explicit and express provisions of Art. 3JC the question of compensation does not arise at all and even if it does, t!)e matter is concluded by · 7-Judge Bench decision of this Court in the Karnataka case.Having dealt with the various aspects of Art. 31C, we now proceed to examinC: the provisions of the Act in -the light· of the law laid .do;.vn by this Court and the aforesaid conclllsions reached by us. To being with, the Act gives 'detailed preamble describing the. ends .and. objects of the Act We might mention that in the first paragraph of the. pr0amhle, cl. (c) of Art; 39 was not mentioned in the . Ordinance but whel) the Ordinance was replaced by the. Act,• cl. (c) of Art. 39 was inserted. . perusal. of the various clauses of. the preamble reveals that the legislation was purely progressive measure meant not to confiscate the property or destroy -the business of the stage carriage operators but to take . absolute control of the State transport services.by stages in'various revenue dirtricts.

As already.indicated, the Act was preceded by an Ordinance, contaii1ing identical·provisions, Which was issued on 12.1.1973.' The. constitutional validity of the Ordinance was challenged in the Madras High Court arid ~bile the judgment of the High Court· wa~ pending, the Ordinance wanepiaced by tbe Act on March 14, 1973. The High Court struck down the Ordinance as being unconstitutional and an interim. order was passed by which all the provisions of the Act .. were stayed, pending appeal to tliis Couri. : ome t~me in June 19'73, . an interim order was passed by this Court by which tlie transport '·vehicles not taken over by the State were stayed from being taken . over.

Coming to the provisions of ihe Act, it w~uld be seen that so far as s: I is concerned, it is more. or less descriptive with the only ·difference that 'as (ar .as the Nilgiri District is concerned, the provision says that the policy· of nationalisation shall come into force -·. on the 14th of January 1973. In other words, the intention . ~ -of . the

TAMIL NADU v. L. ABU .(Paza/ Ai;, J.)

AC! is to start the nationalisation scheme with the Nilgiri districl first . and then extend it to .other districts as and when it becomes necessary. Clause (iii) of sub-cl. (4) (b) of s. 1 lays down .that with respecno stage carriages in any oth~r district in the. State, the Act will come into force on ·such date as the Gov~rnment. may by ·notifica-tion appoint. Section 2 co<lifies one of the clauses of the prealiible by enacting declaration that the Act is meant for giving effect" to the policy of the State towards securfog the·principles specified in· els. (bl and (c} of Art. 39 of the Constitution and the. acquisitfon in respect of the stage carriages and coniract carriages and other proper-ties referred to fo. section 4. .After the Act was passed,. by virtue of the decision in the Bharat i's case whatever may have been the legal status or position of the directive principles so far as dauses (b) & (c) of Art. 39 are·concerned, they were held to be constitutional-and any Act passed to enforce these_ principles clearly. fell within the protective umbrella of Art. 31 ·and was therefore immune from challenge. We have.already adverted to thi.s aspect of th.e matter heretofore.

Sub·s. 2 (a) of s. 2 provides that the acqu1s1t10n of the stage carriages _shall commence with the districts wherein .-comparatively· fewer number of. stage carriages were -operating. This provision appears to have been incorporated in order to cause the least possible inconvenience to the bus operaiors so that the op~rators·~f tM other. districts were the nationalisation of the scheme has not been enforced . may make due preparations and alternative arrangements in case the concerned ·districts are also included ,Jn the nationalisation scheme by virtue o(the notifications issued from time to time under the Act.

Section 3 orily gives the denuitions of the various expressions u.sed in the Act and, for the time being, it may·not be necessary for us to give detailed description of els. (a) to (s) of this se~tion. . . .

Section 4, which is the pivotal section, provides that on and · from the date as may be specified by the ·Government in respect of · any"stage carriage or contract-carriage operato~; the permit issued to the operator shall vest in the Government . absolutely. free from all encumbrances and such carriages or contract carriages, which vest' in the Government, shall by force of such vestipg be freed and dis--· charged fram any trust, obligation and encumbrances, etc. · In other words, the intention of the Act was tha_t While nationalising·the ·state transport services . the State should not .encumber itself with th~ liabilities. that may have been incurrecl by th~ .bus ope~ators ·prior· to

l 19841 i s:c.ll..

SUPREME COURT RBPORTs

the enforcement of t4e Ac! so that the policy of nationalisation may run smoothly and without any obstruction or obstacle. At the same timl:, s. 4 also provides that any person interested shall have ·no claim . in relation to such carriages or contract carriages taken over by the State in pursuance of the aforesaid nationalisation policy and the claim, if any, would be limited to the amount payable in respect of such stage carriages or contract carriages as provided under the Act. Sub-s. (2) of s .. 4 lays down an important sa'feguard that all ·rights, title and interests of the stage carriage oper.at.ors or contract carriage operators, including'·lands, buildings, workshops and other places, stores, instruments, machinery, tools, platits and other equipments . used in connection with the service of these carriages would also vest in the St.ate.

There was serious controversy regarding .this prov1s10n and it was vehe~entiy attack~d by the counsel for the respondents on tbe ground that this is very hlfrsh and strident provision of ·the Act which completely. destroys not only the fundamenta.1 right of .the operators but also the right to equality under Art. H. Even if Art. 14 or 19 apply, the vesting of machillery, tools, etc., which were the pers~nal. property. of the operators meant to carry on thei.r business,. ·would amount ·to confiscatory piece of legislation. We shall . deal with this aspect of the case when we consider the various contentions advanced before us by counsel for both the parties. At this Stage, it is sufficient to remark that e,ven the books of account, registers, etc., would vest in the Government on the issue of the notification and all hire-purchase agreements and transaction, etc .. would be deemed to have been withdrawn. The main object in enacting this provision is that when .the Government : decides to· nationalise the tran11port services or its units; all the means of business should. vest in the Government so that after the vesting the Government does not · feel itself bound by any commitment or contracts made by the operators which' might make the policy abortive as result of which the schemeof nationalisation itself may Fun into rough weather.

Silb-s, (3) of s. 4 contains declaration that the vesting of-the stage carriages and other properties shall be deemed ·to have been . acquired for public purpose, that is.to say, acquisition of not only 'the stage carriages or the contract carriages used by the operators but also their tools, implements and workshops would be in public interest in· order to prevent any legal or constitutional objection being .taken against the various moveables which by virtue of the. provisions of the Act vest in the Govefnment. ·

....... 1 '

TAMIL NADU v. L. ABU (Faza/ Ali, J.) .

Section 5 contains provisions of routine nature regarding the · submission of accounts, agreements, inspection by Government officers, furnishing of data and details and the like. . Another impor-tant provision of the Act is section· 6 Whi~h pFovides for reasonable -"mount of compensation to be paid to the' operators on their proper-ties vesting in the Government. Sub-s. (I) of s. 6 says that every person interested shall be entitled to receive such amount.as may be determined in the second schedule to the Act, that· is ·to say, where .the amount can be fix~d by agreement, the same shall be determined .in accordance with the agreement. Secondly, where no agreement can be reached, the Government shall appoint a.s arbitrator person who is or has been or is qualified for appointment as District Judge. While appointing an arbitrator, the Government may, if necessary, nominate person having expert knowledge as 'to the nature ofthe acquired property to assist the arbitrator. · These two . provisions clearly show the attitude· of fairness that the Act displayed towards the operators on the vesting· of their properties in the Government. Cl. (e) of sub·s .. (I) of s. 6 provides that tM arbitrator after hearing the dispute and the parties concerned, would determine the amount which appears to him to be jus! and reasonable and also· specify the person .or persons who would be entitled to the aforesaid compensation. Clause I (f} of s. 6 provides that. where there is dispute of titJe.with respect to the" distribution of the ·amount the same would be apportioned amongst the pers6ns concerned by the Arbitrator. At the same time, to exclude any further disputes during the process of arbitration, cl. (g) of sub-s. (I) of s. 6 provides· that . the provisions of the Arbitration Act, 1940 (Central Act X of 1940) shall not apply to the arbitrations made under s. 6 .. · '

Sections 7 and 8 contaill the usual procedure for Jiling of claims and the conditions thereon. What is important to be noticed is that the award of the arbitrator is not made final but fo subject Jo an appeal to the High Court.

Section I 2 clearly provides that any per;cin .. aggrieved by an award, may within 30 days from.the date of such award prefer an appeal to the High Court. The proviso however empowers the f!igh Court t<;> condone the del~y in suitable ·cases where stifficieni cause preventing claimant from filing the appeal within the time prescri~ • bed is !]lade out

[1984] t s:c.R.

it would .be seen from perusal of these guii:Jelines that heavy .comp~nsaiion Jias not been provided· for, obviously because if colii-. pensation at the market ·rate is .given it would amount to huge· · drain on the State treasury which. may cause complete financial · breakdown ·and, thus frustrate the very pc;>licy of nationalisation. We inight mention here that the respondents argued that the rates of compensation were ·wholly inadequate and absolutely illusory. because the· arbitrator br the High C:olirt cannot travel beyond the second schedule in assessing the. coinpensation. Mr. S.S. Ray, appearing for the appellant State fairly conceded that the schedule ·was merely sort of guideline' which was not exhaustive for deter-mining the quantum· of compensation and it may .be. taken as concession on behalf of the State tha.t the officer~jixing the com,. pensation were ·entitled to make marginal but not vital departures from the principles of compensatibn laid down ·by the Act which seems t~ be the real i~tentidn of the statuie iii question by providing for broad,based compensation and allowing the same to be decided by the. highest .court of justice in the State, viz., the High· Coqrt. · In tbe circumstances, it cannot be said that the compensa(ion provi-ded is absolutely illusory or shocking to the conscience of the court ·which is the qply requirement of Art. 31(2),.

Then there are other routine provisions contained fa s.11 which provide the manner· in which the ·payment of the amount adjudieated by the compensation authorities. is. to be given: · Clause I-\ , evert . awardsinterest ai the rate amount and cei;tain other options are " ' . of 6 [1]/2 per given cerit to. the operators. per.annum on the said

SeCtion 13 pr~vides the legal procedure to b,e adopted in arbi" tration proceedings and for that. p.urpose the arbitrator would have all the powers of civil court .while· trying suit under the Code of Civil Procedure, 1908; Section 13 also applies .·.this procedure · f~r · summoning and enforcing th.e atteadance of witnesses, requiring discov~ry-and production of documents; reception· of evidence .on affidavits, requisitioning any public .record or copy thereof f~om any co.urt or office and issuing commissions for examination of.wit-nesses or documents. · ·

Section· 14 however· carves out an exception. regarding 'ihe acquisition of the stage carriages or contract carriages from applying for any new permit or renewal of the existing permit· aft~r theacqui- · sition of the stage carriages or contract ·carriages .by the State. It . : [also provides that every application' for grant of new permit or

(1984] I_ S.C.R •..

.SUPREME COURT REPORTS

. renewal of an existing permit or any appeal or revision relating 'thereto made or preferred.before the 14th January 1973, the date of the enforcement of the Act, ·and pending before any court· or any officer pr authority or .tribunal ·shall abate. Th.is appears to us to. be very salutary provision. in order to prevent future recurring disputes. ! . ,

Section 15 provides that the transfer of the stage or contract carriages on or after 14th January, 1973 and before the notified.date, is prohibited. It further provides that no person .shall after the aforesaid date transfer by way of sale or gift any stag~ or contract carriage liable to be acquired unde_r the Act. ·

~ection 16 provides for grant of temporary permits to the operators arid the circumstances ·under which and ·the period for which they could' be 'extended or transferred and as consequence of the pivotal section it also provides that no stage .or contract carriage operator would he able tv obtain any temporary permit in • respect of any area or route which has been notified in the Act.

. Section . 17 prohibits transfers of any stage or contract carriage . and enjoins that if any transfer is made, the shall ·be void' and is . liable to be acquired liy the Government. Section 18 makes pro-vision for the appointment of administrators for arranging the taking over of the acquired property and for carrying out the duties assigned . to them. Seotion 19 also makes an identica!-.provision. for' appoint-ment of authorised officers .. Section. 20-is also an important provision which has been introduced for the purpose pf safeguarding the exist-ing staff of the operators for being abso·rbed in the State . Transport Department of the Government, on _a given scale, or any corporation or company owned by the Government and for this purpose number of steps have been detailed in this section. ·

Section 21 gives the resultant consequences of the policy of _nationalisation and prescribes the modes in which the newly acquired siage or contract carriages arc to be run by the. corporation or the company or the State Transport Department of the Government to which the acquired property is transferred.

Section 25 is also sort of . routine prov1s1on making provisions for issue of orders, notices and the manner of delivering the same, etc. · Section _26 is an important section which exempts

·particular types of stage or contract carriages from the operation· of the Act, such as stage · or contract carriages held by the Central" Government, any State Government, any ·company controlled or owned by the Central Government or any State Government. Section 27 is the usual section which provides immunity -to· persons dis-' charging their duties in good faith in pursuance of the. Act. Section 28 bars jurisdiction of civil courts ill. certain matters. Section 29 is penal provision wh~h provides for pµnishment for, offences commit-ted in violatio~ of the provision_s of the Act. Section 30 invest.s certain officers like administrators; arbitrators, authorised officers, etc., with the st~tus of public servant within tlie meaning of s. 21 of the Indian Penal Code. Section 31 is the saving provision which ov~rrides other laws on the passing of the Act. Section 32 is the rule-making power given to the Act.

Before discussing the reasons given by the High Court for striking down the Act we might dispose o( an important argnment. advanced before us for the appellant to the effect that the provisions of this Act are almost in pari materia with theKarnataka Act which formed the subject-matter of constitution Bench decision of. this Court by which the Kctrnataka Act was upheld. On the basis of the aforesaid decision, it was submitted that the matter stands concluded by· seven-Judge Bench decision of this Coilrfand the appeal should be allowed on·this ground alone, On the o(her hand, the respondents challenged the correctness of the appellant's submission·. and conten-ded that there are marked and sharp points of difference between the two Actj. We are, however, unable to accept this contention for the reas_ons given hereafter.

. By and the large the prov~ions of the two. Acts appear to be identical in many respects and the general structure and the funda-mental features of the two Acts are almost the same. The broad • features of the two Acts may be summarised as follows : ·

(a) both the Acts aim at the policy of nationalisation of transp\)rt services (Karnataka Act started with only stage ~arriages but the Act has also taken within its 'fold contra_ct carriages), .

• (b) botli the Acts clearly mention that the object of nationalisation was to secure the ends of Art. · 39 (b) & (c),

(1984) 1 S.C.R.

' Thus, all the arguments addres~ed regarding the constitutional validity of the K;unataka Act before this. Court appJy equally · and fully to the present·Act and in view of the·· clear. decision of this Court in the Karnataka case very little survives so far as the · argu-ments in this case, advanced on behalf o( the respondents, are concerned. On the other hand, three important· decisions of this Cotlrt, viz., .Minerva Mills, Wama.rl Rao and Sanjeev ·Coke_ Mimu-. facturing ·Ca. cases; which were given after· the Karnataka case,· reinforce and reiterate lhe conclusions reached by. this Court. in the Karnataka case.

-Before 'examining the reasons given by the High Court. we would like to mention certain important facts which have come into ·existence after the Act was passed by .the Tamil Nadti legislature as also after th.e judgment of the·High Court, which· fall unqer .three . beads:

(I) thai by virtue of the Constitution (25th Amendment) Act.,

1971 new article in the shape of Art. 3.IC was inserted in ·the . Con·stitution with the avowed object of. highlighting the importance . of some of the important directive principles contailled· in part IV of .: -the Constitution. Art. 31C provides that no law made by legislature ii1 order to secure the principles specified in Art. 39 (b) & .(c) shalt deemed to be -void on the groiind that it ii.bridges any .of the rights enshrined in Arts. 14, 19 or- 31. 'the said amendment further provides that no law containing declarati01i that it has been passed for giving ~jfe9t to s11cb policy-.shall be Cl\!led in question in any court 90 the

. ground that is does not five effect to such policy. There is proviso to Art. 31 whic!i mandates that before ihe provisions of the · Article can apply, the law must have received· the assent ·of the President of India.

The Tamil Nadu legislature seems to have taken abundant' precaution of mentioning the objects contained in Art. 31C by providing clearly .in its preamble, as ·indicated above, that the Act . was passed with· the intention ·of giving effect .!o the principles enunciated in Art. 39 (b}&.(c).

· (2) that when. the' new A~t31C created c9ntroversies, .13 Jqdges . of the Supreme Court examined not only the said ·article but also · nµmber of other provisions of the Constitution in <ird~r to decide · .. as to bow far the amended provisions affected the basic structure of the Constitution. It may be sufficient.to state here for the purpose · of this case that so fac as rt 3 JC is coni:erned, it was unanimously b,eld by the entire Court that the first part of Art. 3 LC,. introduced by the Constitution 25th Amendment Act, was valid.

(3) Thus, it is manifest that A.rt. .31 gives compleite · protec-tive umbrella to any law passed with the object ·of achieving the aims and goals of Art. 39 (b) & (c) §o as to make ·it immune froin cha!-· lenge on the ground that the said law violates Arts. 14,' 19 or. JL The. only condition for application of Art. ,3 IC is that there . shou.ld . be direct and reasonable nexl,ls between the law and the provisions. of Art. 39 (b) & (c), and the reasonableness would be regarding the neims rather than the law.'' In view of the aforesaid developments, most of the conclusions '' arrived at and the important reasons given by the High Court no longer surviw and fade into.oblivion. The counsel for. the parties . a!So. realising this difficulty did not press all the arguments that ·were advanced before the High C.ourt or accepted it but coilftned their . arguments to the framework and applicability of Art'.· 39 (fl) & (er · .In fairness to the High Court,, we cannot blame it because the faw on Art. 31C was crystallised .after the delivery .of its, judgmen.t.'. We, therefore, propose to give.a very brief summary. of the reasons given by the High Goµrt for striking down the Act laying stress only on the points that survive. ·

In the first place, the High Court seems· to have accepted the argument of Mr. Chari, appcarin~ for the operators, that by virtue

' [! 984) ! S.C.R.

of the Act the financiers who. were the OW!PfrS of the stage or \:on- · tract carrf;!.ges would be completely wiped out of their. business and therefore .Art. 19.was clearly violated. As Art. 31C gives complete immunity from challenge in respect in of any law made to promote objects enshrined in Art. 39 (b) & (c), this argument .no longer survives and·was wron.gly accepted by the High Court.

This now brings us to the nature of compensation awarded to the operators in the Karnataka case which-appears to be on all fours 'with the facts of this, case. We must hasten to add that as alrefldy discussed above, in view of Art. 31 no .compensation is . necessary as Art. 31 (2) is clearly excluded by Art. 31C but proceeding on. the assumption that some sort' of compensatory relief m~y be necessary, · we approach this questiqn only as piece of an alternative argument. · To begin with, while. dealing with the question .of compensation, U11twalia, J., in the Karnataka case clearly pointed out that by virtue of the 25th amendment, the. question of compensation may not arise, yet right t'rom ilharati's case uptodate it was has nciw been held that the amount payable in respect of acquired property· should · be fixed by the legislature or determined on the basis of principles contained in the law of acquisition and should not be wholly arbi-trary or illusory or monstrously.undervalued, and in this connection, the learned Judge-observed thus :

"For th~ purpose of deciding the point which falls · for consideration in ihese appeals, it will suffic.e to say · that still the overwhelming 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 . determined on the basis of the principle" engrafted in the law of acquisition cannot be wholly arbitrary and illusory. When we say so we are not taking into . account the effect ·of Article 31C inserted in' the Constitution by the· 25th Amendment (leaving out the invalid part . , as declared by the majority).".

(Emphasis supplied) ·

The lines underlined by us· contain an important emphasis to show that the ·complexion of the· necessity of compensation· has completely changed in vie~ of the 25th Amendment' by which Art. · JI <;:was int.rod11ced and Un.twalia, .r. was, th<;refqr~, careflll enough

and hence the argument of the counsel for . the respondent ihat. the · compen~atiori is wholly inadequate or illusory must be overruled. . ' . . .

Applying these principles to the provisions . ' . . . of compensation, . discussed above, it seems to us that .the facts .of this case are identi· · cal with those. of the Karnataka case. The principles on which compensa:tiori was awarded in that case have been bodily lifted· and placed in the present Aci. · The main feature; of the Act relating to compensation may be summarised thus : ·

. ·--:---. ,' .

0) . regular method 'and the manner in which · compensation is to be· assessed ino be found in the . second schedule to the.Act, · ·

(2) we have already mentioned that Mr. Ray conceded during the .course of arguments that the.said schedule is not exch!i.ustive but it .is open to the arbitrator or the High Court to make marginaLchanges as· _and when necessary,

(31 . the factors and circumstances to be taken foto : consideration vide section 6 and the second schedule ciearly spell out that if compensation is .allowed on · the basis. of those· factors it cannot be said te> be arbitrary, illusory or monstrously unconscionable .

. ·it is true that the· compe'nsation awarded· inay not represent

the market value or perhaps may be even inadequate but that is n6w not the test iaid down in the amended Art. 31 (2). On this ground, therefore, the.constit.utionality of the Act cannot be challenged.

All said and done, it was contended by the respondents that at least 'th~ 'faking over of both the stage and . the contract carriages alongwith the workshops, etc. amounts to very harsh provision so to b~ confiscatory. We have already dealt with this argument. ·In addition to what we have stated, it may be .observed that once policy of nationalisation is in ·public interest and . for public goqd, , . some losses; some damages, some prejudices and some harsh conse-quimces' are bound to follow but this does not mean· that the ·afore• said considCrations should result in stalemate of the policy of State monopoly or' nationalisation otherwise the country cannot move forwarded even an ini:h from where it was when out .Constitution came into force. Gajtndragadkar, J., in: Akadasl Pabhan's case (sl!pra)

[1984] 1 S.C.R.

. SUPREME COURT REPORTs

ment of all the inhabitants or residents within given· ' political divisfon, as, for example, state, the sovereign powers of which are ·exercised to promote such. public .purpose or public business."

This matter is concluded by decision of this Court .in the Karnataka case where it was held that the purpose .of public body to run public transport service is'undoubtedly in public interesiand in this connection Iyer, J., observed thus : '

"The purpose of pubiic body to run public transport service for the benefit of the people, operating it . · which·is controlled and corttrollable in responsihle manner through exercise . r by society through its of public power . . organs like the legislature and, at times, even the court, is manifestly pub Ii~ purpose."

. 4,nd Untwalia, J., speaking for the Court made. the observations : ·

following

"Why can_'i moveables be acquired for commercial purposes if the exigencies of the situa\ion so require, particular commercial activity of the State may itself be for public purpose."

, In the .instant case also, it would appear that the State has nationalised the . stage and contract carriages for the purpose of providing general'and expeditious transport at reasonable. rates to the members of the public and in view of the observations referred ·to above, we can conie to no other conclusion except that such policy is undonbtedly in pnblic interest and. involves an important public purpose .

. As limb of this argument, the High Court held that Art. 39 would not be applicable in the· present case:. As extracted above, . Untwalia, J., in the Karnataka case .summarily rejected this very argument and furth~r pointed out that where legislature thought of • preventing misuse in the runµing of the vehicles by private operators . and in order fo provide better facilities to the transport passengers or to the general public. acquisition of vehicles or for that.· matter the rights and interests in t]le contract carriage operators alorigwith their iand, buildings, workshops, etc., would always be permissible. We 'cannot conceive of greater public interest 'in respect of policy .

than where the legislature expressly intends to promote· or. secure the objects of Art. 39 (b) & (c) particularly when, as indicated above, the said two clauses have been conferred speoial status and given an impregnable protectfon by Art .. 3 lC itself. We, therefore, fully agree ~with the view taken by this Court in the Karnatakli case and hold · that the nationalisation of the transport services is· undoubtedly in public interest.

. As regards the application of Art. 39 (b) & (c), the High Court on the basis of previous decisions of this Court held that -.

(1) the objects of Art. 39 (b) & Le) have n6t been ·. subserved, and (2) Art. 39 has no application to mo~eable properties and since the vehicles taken over by the State under ' the Act were moveable properties, Art: 39 was not applicable in the pres.!nt case.

With due respect, this view is not correct and proceeds on misconception of the law and interpretation of the words 'material resources' as mentioned in.Art. 39 (b). In fact, Art. 39 (b)'does not. mention either moveable. or immoveaQle property. The actual expression used is· 'material resources of the community'. Material resources as enshrined in Art. 39 (b} are wide enough to cover not only natural or physical' resources but also moveable or. immoveable properties. Black's Law Di_ctionary· (supra) defined· the word 'resollrces' thus :

"Money or any property that can be converted to meet needs; means of raising money or supplies; capabili-ties 'of raising wealth or 'to supply necessary wants."

(p. 1178)

The mere fact that the resources are mate'rial will make to · difference in the concept of the word 'resources'. In Stroud's Judicial Dictionary (Vol. 3) at page 1634, the word 'material' is defined thus:

"Materials, to_ols, or implements, tobe used. ·by such artificer in his trade or occupation, if such artificer be employed in mining; ...... : .'. wooden props or "'spr~gs ... though neither "tools or implements". were "materials"

. Shri Sen argued that i;naterial resources h.ad first to be acquired by the State before they could be distributed. law providing for acquisi.tion was not law for 'distribution. We are unable io appreciate the submissio.n . . . of Shri Sen.''

. " The above decisio~ therefore furnishes complete fnswer to t)le . reason given by the High Court or the ,arguments advanced before us by the counsel for the respondents on the question as to the· nature and character of material: resources. ..

•Summarising the arguinents relati°ug to compens'ation and the prejudice caused to the . operators, and ·the nationalisation. -Policy contained in the Act, the position seeins . . to. be as follows :•

In the first place, as indicaied above, once Art. 31C applies, the net of tl;te protective umbrella is so.· wide as' to cut at the root of even Art. 31 (2) which. alone. survives after Bharati's case. We have already pointed out that if the State chooses to monopolise trades in · certai~ essential. commodities.or properties, for the purposes men' · tioned in Art. 39 (b) & (c), Art. 31 (21 woul;I be completely excluded, o.therwise ·np State monopoly is ever possible because. reasonable amount which may· have to be paid ·as co.mpensation may completely drain out the financial resources of the State or the public exchequer to such an extent that .the noble endeavour to monopolise a· parti- · 'cular trade would become almost impossibfo, as logical result of which the purposes sanctified in Art. 39 (b) & (c) would also bdcome • incapale qf implementation. , It was· for these reasons that Parliament thOught it advisable to protect the objects contained in Art. 39 (b) & (c) from the purview of Art. 3 l (2).. ·Secondly, Art. 31 (2) by virtue of the 25th amendment has knocked out the word 'compensation' and has substituted the wOrd. ·a~ount' which gives ample discretion _to the State to fix ~ reasonable amount if. the properiy of an individual. is taken over for public purpose., In the in!tant. case, as an-intense. social purpose which is iµdicated by the Constitution, is involved even .an apology· of compensation would be sufficient to comply with the conditions· required by Art. 31 (2). Even so, in the· instant case, as pointed out above, there is a· clear mode of compensation previded which is to . be assessed by an arbitrator an\! is subject to judicial s.crutiny by the; 'highest coilrfin the State, namely, the High Court.· The schedule which contains the principles 'of compensatfon is wide . enough· to

[1984) i S:c,ii.,

ensure fairly reasonable compensation to be given to the operators whose veliicles are taken over. The court in ·such inattets cannot in.terfere with the amount so fixed unless it is shown to the court's satisfaction that the aµ10unt fixed is so monstrous as to shock· its conscience. Having regard to the provisions in the schedule and the ·manner an~ode of grant of compensation, we are unable to hold that the compensation provided for is wholly inadequate or absolutely monstrous.

Thus, so far as this aspect· of the m_atter _is concerned, two ·

~onclusions brodly emerge :--:-

(ll .. that in view of the -express prov1s1ons of ·Att. 31C which excludes Art. 31 (2) a)so where a. property is acquired _in public interest for . the avowed ·purpose giving effebt to the principles enshrined in Art. 39 (b) & (c), no compensation is necessary arid Art. 31 (2) is out of the harm's ~ay, and . ·· (2) that even if the law provides for compensation, the· courts cannot go into the details or adequacy of. the compensation and it is sufficient for the· State to prove that·the compensation was reasonable and not monstrous or illusory so as tO shock the conscience of the court. ·

. The persons whose .properties are taken over cannot be heard to complain that the compensation ·awarded to them. sho11ld be ·according to market value which, if conceded, would defeat the very purpose and objective of Art. 39· (b) & (c). In the instant case, both the conditions mentioned above are fully satisfie<l· having regard to the provisions 61' the Act. ·

The last.contention raised by the respondents was that the conditions or objects mentioned in Art. 39 (bl & (c) are not subser-ved by the nationalisation policy codified by the Statute because there is no.distribution at all in the sense that the property taken over is distribuied to various member of the community for their benefit. · Moreover, the members of the community have been depri-ved of the services rendered to them ~Y the operators under permits issued by the transport authority. So far as this argu.ment·is concer• ned, it is based on serious misconception.of understandin_g the real position. The word 'distribetion' used in Art. 39 (b) must.be broadly

construed so that court may give full and comprehensive effect to statutory intent contained in Art. 39 (b). ·A narrow construction -0f the word 'distribution' might defeat or frustrate the very object which · the Article seeks to subserve. In Black's Law dictionary (supra) the word 'distribution' bas been defined thus·: ."The giving out or diviSion among number, sharing or parcelling out, allo.tting, dispensiµg, apportioning."

(p. 426)

Similarly, Webster's Thr_id International dictionary at page 660 defines '<listribution' thus :

"the position, placement, or arrangement (as · of mass or the members of group); the disposition or arrange-ment in rational groups or classes : CLASSIFICA TIQN the accurate disttibution of several rare zoological' specimens; delivery or conveyance(as of newspapers or goods)· to the members _of group (the distribution of telephone directorieSto consumers) in charge of company . • · .sales and distribution; dev'ice, mechanism, or system. b9 which something is distributed (as from main souree); the marketiryg or merchandising of commodities."

Jn 'Family Word Finder' published by Readers Digest the word 'distribution'· has been defined at page 237 thus :

"dissemination, scattering, spreading, circulation, group-ing, organisation, apportionment, allotment, allocation, division."

it is obvious, therefore, that ·in view of the vast range 0 ( transactions ·contemplated by the word 'distribution' as mentioned in the dictionaries referred to above, it will noi . be correct to construe the word 'distribution; in a· purely literal sense so as to. mean only division of.a particular kind or to' particular persons. The words, apportionment, allotment, allocation, clas'sification, clearlr fall· within t~e. br?ad. sw;ep of th~ word 'distrib~tio~'· so construed, the word distnbut10n as used m Art.39(b) wdl mclude various facets, asp~cts, methods and · te~minology of a· broad,based concept of dis_tribution. In other words, the word 'distribution' does. n'ot merely mean that property of one should be taken over and distributed to others like land reforms where the lands from the big

(19841 I s.c.R.

landlords are taken away .and glven to landless labourers or for that matter the . various urban and rural ceiling A~ts. That is only one of the modes of distribution ·but not .the only mode .. In the instant case, as we have already· pointed out, distribution is undoubtediy· there th9ugli in. different shape.· So far as the operators were concerned they were mainly motivated by making huge profits and were mqst reluctant.to go to villages or places where the passenger tarffic is low or the track is difficult.· This naturally caused serious inconvenience to the poor members of the community who were· denied the facility of visiting the towns or other areas in .a transport. . By nationalising the transport as also the units the vehicles would . be able to go to the farthest corner of the State. and pepetrate as deep as possible and provided bette;· and 'quicker· and more effica- . · cious facilities.. This would ~ndotlbt~dfy be distribution for the ·common' good ·of the people. and would be clearly covered by cl.(b) of Art.39. · •

In the Karnataka caiie~ the word 'distribution' . clearly fell for interpretatiori and Iyer,J. made the following observations : . · ·

"The key· word is 'distribute' and the genius of the article, .if we .may say so, cannot· but. be given full play as iffullils the basic purpose of restructuring the economic order. Eacl1 word in the article has strategic role and the whole artklc i; social mission. It embiaces the entire material resOJJrces of the community. Its task is to distribute stii:h resourees. Its goal is so to undertake distribution as best .to subserve the common good. It reorganizes by such distribution the ownership and control .......... ..

·Futhermore, in . the Sanjeev Coke Manufacturing. Co.'s .case, Reddy,J., observed thus:

. "To 'distribute', even in its simple .dictioqary · mean-. · ing, is to 'allot, t<;> divide into classes Of irito groups' and 'distribution' embraces 'arrangement, cfassification, place-ment, dispo.sition, apportionment, the way in which items,. quantity, or the. like, is divided or apportioned; the system of dispersing go'ods throughout community." ' . . . .

· The very ·pertinent expression used by Reddy,J. is that those econ~mists who 'believe in bringing a:bout social· revolution would

TAMIL NADU v. !;., ABU (Fazal Ali, J.)

hardly find any . difficulty in treating nationaiisation of transport as dfat.ributive process for the good of the community. _This is ' exactly what the, Act seems to achieve in securing the objects eon• taine.d in Art:39(b)&(c) of the .Con,stitution. · ·

' ' By. nationalisin·g the transport services the transport business which was run by handful of'capitalists would prevent the· concen-tration of wealth in the hands <;.f few and would therefore· benefit the community at large.

This aspect of the . matter was·. also argued in the Karlia{aka case·btit strongly repelled, were Untwalia,J. pointed out that .taking over the transport services was undoubtedly for the common good of the people and was not meant for augmenting the revenue of the State _because ·the profits, if any, made by the services would ·go to accomplish project_s for' the bett.erment of the ~omniunity ·and made . 'the foliowibg observation's :

"The legislature thought that to prevent_ such misuse • and to provide.for. better facilities to transport passengers and to t.he 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 all stores, .instruments,' machinery: tools, plants, etc., a; mentioned in sub-section (2) of section4 of the Act." ·

Thus, in short, the position seems to be that by virtue'.of the ·nationalisation policy the twin objects ofArt.39(b)&(c) are fully secured.

· Finally, it was argued by the respondents !hat even if the transport services were nationalised, there_ was absolutely no rationale . behind the taking over of the vehicles· of , the operators, soni.e of whom were running on hire-purchase basis; . This argument has no force because once it is recognised that for the purpo;es mentioned in ATt.39(b)&(c) the entire service including its units, workshops, etc., could be taken over . on payrnent of some compensaTion, the fact that the. xehicles should be spared is only an argument of desperation.

. These are, therefore, the iawortant contentions advanced before ,.us by the respondents and the reasons given by. the High Court in st.riking .. down the Act. We are of the opinion that in fact this

(19841 1 s.c:R.

. SUPREME COURT REpORTS

case is .clearly covered by ihe decision of the Karnataka case as· rein· forced by the later.decision ofSanjeev Coke Manufacturing Co.'s" case and· all the contentions raised before ·us by the resp~ndents -(operators) fail.- The Act is, therefore, held to be constitutionally, 4l .valid in all respects. We allow the appeals, dismiss the writ petitions, -,~ set aside the· judgment of the High Court arid hold that the Act is constitutionally valid. ·

However, as some portions of the Act, in view of the timelag, may have become out of date, few consequential amendments may . have to be made. Mr:Ray, appearing for the appellant, had also •conceded that so .far as the question of. compensation was concerned, it was open to.the arbitrator or the compensation authority not to confine itself strictly to . the yardsticl.< contain~d · in the second· schedule to the Act but they can make marginal changes as the circumsta11ces require.

As appellants have succeeded in the appeals, we revoke the the interim order passed by this Court on June 26,.1973 directing the appellants to pay Rs. 100 (Rupees one hundred) per day'to the' respondents •. In the peculiar circ.umstances _of this case we make no order as to costs. '

Appeals a/lowed.and· Petitions dismissed.