State of West Bengal v.Union of India AIR 1963 SC 1241

(B.P.Sinha, C.J. and S.J.Imam, K.Subba Rao, J.C.Shah, Rajagopala Ayyangar and J.R.Mudholkar, JJ.)

[Nature of the Indian Constitution – (a) Federal [(i) Compact or agreement between independent and sovereign Units to surrender partially their authority in favour of the Union; (ii) Supremacy of the Constitution; (iii) Distribution of Powers between the Union and the Units; and (iv) Supreme authority of the courts to interpret the Constitution], (b) Unitary, (c) Quasi- federal; Power of Union to acquire the property of States.]

The State of West Bengal filed a suit under Article 131 of the Constitution against the Union of India for a declaration that Parliament was not competent to make law authorizing the Union of India to acquire any land or any right in or over land belonging to a state and therefore the Coal Bearing Areas (Acquisition and Development) Act, 1957 (the Act) enacted by the Parliament for the acquisition of coal bearing areas in the whole of the country was unconstitutional. Consequently, two notifications dated September 21, 1959 and January 8, 1960 issued by theCentral Government taking over coal bearing areas lying within the State of West Bengal were also unconstitutional. The suit raised the question as to whether the states enjoyed sovereign authority under the Constitution.

On the basis of the pleadings, the following issues were decided in the suit:

• Whether Parliament had legislative competence to enact a law for compulsory acquisition by the Union of land and other properties vested in or owned by the State?
• Whether the State of West Bengal was a sovereign authority?
• Whether assuming that the State of West Bengal was a sovereign authority, Parliament was entitled to enact a law for compulsory acquisition of its lands and properties?
• Whether the Act or any of its provisions were ultra vires the legislative competence of Parliament?
• Whether the plaintiff was entitled to any relief and, if so, what relief ?

B.P. SINHA, C.J.: 8. 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 impugned 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 interests 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.

10. 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, 1894, 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 required by Government for the additional coal production. It is accordingly considered necessary to take powers by fresh legislation to acquire the lessees’ rights over unworked coal-bearing areas on payment of reasonable compensation to the lessees, and without affecting the State Governments’ 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 licensees 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 effecting the State Governments’ 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 understandingthe 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 legislaturedid 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 byan 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 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 unworked 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 matter 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 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 Union Government.

• 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 Article 246(2) 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 exercisedby 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 byParliament in respect of any of the entries in Lists I and III, the Parliament may legislate so as to affect title of the State to property vested in it 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:
  • 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 Parliament under Entry 42 of List III when it is sought to be exercised in respect of the property owned by a State.
  • Property vested in the States by virtue of Article 294(1) cannot be diverted to Union purposes by compulsion of Parliamentary legislation.
  • 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 Section 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 of legislative power vested in the Parliament under the Constitution.

• Absence of power expressly conferred such as is to be found in the Australian Constitution, to legislate for acquisition of the property of the States indicates that it was not the intention of the Constitution makers to confer that power upon the Union Parliament, under the general legislative heads.
• 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.
• 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 the Constitution to their property. Individuals and Corporations have the guarantee under Article 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 Article 31, and in as much as Fundamental rights are conferred upon individuals and Corporations against executive or legislative actions, and States are not invested with any fundamental rights exercisable against the Union or other States, the right to legislate for compulsory acquisition of State property cannot be exercised.
• 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 necessarily 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 thatsovereignty is void.
• Re. (1): Ever since the assumption of authority by the British Crown under Statute 21 & 22, Vict. (1858) Chapter 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 devolution 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 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 theBritish Parliament.

• By the Indian Independence Act, 1947 a separate dominion of India was carved out and by Section 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 wererepugnant to the laws 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 asrespects governance of the territories which were immediately before that date included in British India, and suzerainty of the Crown over the Indian States lapsed and with it all treaties and agreements in force on the date of the passing of the Act between the Crown and therulers of Indian States. The bond of agency which bound the administration in India to function as agent of the British Parliament was dissolved, and the Indian Dominion to that extent became sovereign. Then the Constitution came into existence. The territory was evidently too large for a democratic set-up with wholly centralised form of Government. Imposition of a centralised form might also have meant a reversal of political trends whichhad led to decentralisation of the administration and to distribution of power. The Constitution had, therefore, to be in a form in which authority was decentralised. 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 becentralised 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 II, 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 aConstitution which was not true to any traditional pattern of federation. There is no warrantfor the assumption that the Provinces were sovereign, autonomous units which had partedwith such power as they considered reasonable or proper for enabling the Central Governmentto function for the common good. The legal theory on which the Constitution was based was the withdrawal or resumption 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 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 compact or agreement: Units constituting a unitary State which were non-sovereign were transformed by abdication of power into a Union,
• 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.
• 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 States.
• 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 in many respects independent.

• Legal sovereignty of the Indian nation is vested in 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 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 Article 299 contracts may be entered into by the Union and the States in exercise of their respective executive powers, and Article 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 legislateon certain matters exclusive, and concurrently in certain other matters, and entrustment of executive authority co-extensive 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 Statelegislation 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 Article 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 II and for any other purpose and under Article 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 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 Article 247 power 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 havebeen constituted.
• Sovereignty in executive matters of the Union is declared by Article 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 Article 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 Article 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 the President to make such provision as he thinks fit for the discharge of the function of a Governor of the State in any contingency not provided for in Chapter II of Part 6 By Article 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 limited by the executive power expressly conferred by the Constitution or by any law made by Parliament upon the Union or authoritiesthereof. 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 importanceand for protection of railways. The Parliament has power to declare highways or waterways tobe 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 andair 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; Article 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 uponthe State, or officers or authorities thereof: Article 258(2). Article 365 authorises the Presidentto 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 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 co- extensive 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 Article 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 II 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 Article 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 concerned with the regulation of local problems are vested in the States, and the residue especially those, which tend to maintain the economic, industrial and commercial unity of the nation are left with the Union. By Article 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 Article 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-thirds of the members present andvoting that it is necessary or expedient in the national interest that Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution. By Article 252 power is conferred upon Parliament to legislate for two or more States by consent even though the Parliament may have no power under Article 246 to make laws for the State except as provided in Articles 249 and

250. Such a law may be adopted by a legislature of anyother State, By Article 253 Parliament has the power notwithstanding anything contained in Article 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 ConcurrentList 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.

• The normal corporate existence of States entitles them to enter into contracts and invests them with power to carry on trade or business and the States have the right to hold property. But having regard to certain basic features of the Constitution, the restrictions on the exercise of their powers executive and legislative and on the powers of taxation, and dependence for finances upon the Union Government it would not be correct to maintain that absolute sovereignty remains vested in the States. This is illustrated by certain strikingfeatures of our constitutional set-up. There is no dual citizenship in India: all citizens are citizens of India and not of the various States in which they are domiciled. There are no independent Constitutions of the States, apart from the national Constitution of the Union of India: Chapter II, Part VI from Articles 152 to 237 deals with the States, the powers of the legislatures of the States, the powers of the executive and judiciary. What appears to militate against the theory regarding the sovereignty of the States is the wide power with which the Parliament is invested to alter the boundaries of States, and even to extinguish the existence ofa State. There is no constitutional guarantee against alteration of the boundaries of the States. By Article 2 of the Constitution the Parliament may admit into the Union or establish new States on such terms and conditions as it thinks fit, and by Article 3 the Parliament is by law authorised to form a new State by redistribution of the territory of a State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, increase thearea of any State, diminish the area of any State, alter the boundaries of any State, and alterthe name of any State. Legislation which so vitally affects the very existence of the Statesmay be moved on the recommendation of the President which in practice means the recommendation of the Union Ministry, and if the proposal in the Bill affects the area,

boundaries or name of any of the States, the President has to refer the Bill to the legislature of that State for merely expressingitsviewsthereon.Parliament is therefore by law invested with authority to alter the boundaries of any State and to diminish its area so as even todestroy a state with all its powers and authority. That being the extent of the power of the Parliament it would be difficult to hold that the Parliament which is competent to destroy a State is on account of some assumption as to absolute sovereignty of the State incompetent effectively to acquire by legislation designed for that purpose the property owned by the Statefor governmental purpose.

• The Parliamentary power of legislation to acquire property is, subject to the express provisions of the Constitution, unrestricted. To imply limitations on that power on the assumption of that degree of political sovereignty which makes the States coordinate with and independent of the union, is to envisage a Constitutional scheme which does not exist in law or in practice. On a review of the diverse provisions of the Constitution the inference is inevitable that the distribution of powers – both legislative and executive does not support the theory of full sovereignty in the States so as to render it immune from the exercise of legislative power of the Union Parliament particularly in relation to acquisition of property of the States. That the Parliament may in the ordinary course not seek to obstruct the normal exercise of the powers which the States have, both legislative and executive in the field allotted to them will not be a ground for holding that the Parliament has no such power if it desires, in exercise of the powers which we have summarised to do so. It was urged that to hold that property vested in the State could be acquired by the Union, would mean, as was picturesquely expressed by the learned Advocate-General of Bengal, that the Union could acquire and take possession of writer’s buildings where the Secretariat of the State Government is functioning and thus stop all State Governmental activity. There could be no doubt that if the “Union did so, it would not be using but abusing its power of acquisition, but the fact that a power is capable of being abused has never been in law a reason for denying its existence for its existence has to be determined on very different considerations.
• It is pertinent also to note that under several entries of List I it is open to the Union Parliament to legislate directly upon properties which are situate in the States including properties which are vested in the States, for instance, Railways (Entry 22), Highways declared by or under law made by Parliament to be national highways (Entry 23), Shipping and Navigation on inland waterways, declared by Parliament by law to be national waterways (Entry 24), Lighthouses including lightships etc. (Entry 26), Ports declared by or under law made by Parliament or existing law to be major ports (Entry 27), Airways, aircraft and air navigation, provision of aerodromes etc. (Entry 29), Carriage of passengers and goods by railway, sea or air, or by national waterways in mechanically propelled vessels (Entry 30), property of the Union and the revenue therefrom, but as regards property situated in a State subject to legislation by the State, save insofar as Parliament by law otherwise provides (Entry 32), Industries, the control which by the Union is declared by Parliament by law to be expedient in the public interest (Entry 52), Regulation and development of oilfields and mineral oil resources, petroleum and petroleum products other liquids and substances declared by Parliament by law to be dangerously inflammable (Entry 53), Regulation of mines and, in mineral development (Entry 54). Regulation and development of inter-State rivers and river-

valleys (Entry 56), Ancient and historical monuments and records and archaeological sites and remains declared to be of national importance (Entry 67). These are some of the matters in legislating upon which the Parliament may directly legislate in respect of property in the States. To deny to the Parliament while granting these extensive powers of legislative authority to legislate in respect of property situate in the State, and even of the State, would beto render the Constitutional machinery practically unworkable. It may be noticed that in the United States of America the authority of Congress to legislate on a majority of these matters was derived from the “Commerce clause”. The commerce clause is not regarded as so exclusive as to preclude the exercise of State legislative authority in matters which are local,in their nature or operation, or are mere aids to commerce .… Our Constitution recognises no such distinction between the operation of a State law in matters which are local, and which are inter State, If an enactment falls within the Union List, whether its operation is local or otherwise State legislation inconsistent therewith, will subject to Article 254(2) be struck down.

• The question may be approached from another angle. Even under Constitutions which are truly federal and full sovereignty of the States is recognised in the residuary field both executive and legislative, power to utilise or as it is said “Condemn” property of the State for Union purposes is not denied.
• The power to acquire land sought to be exercised by the Union, which is challenged by the State of West Bengal, is power to acquire in exercise of authority conferred by Sections 6, 7 and 9 of the Coal Bearing Areas (Acquisition and Development) Act, 1957, The Act was enacted for establishing in the economic interest of India greater public control over the coal mining in industry and its development by providing for the acquisition by the State of 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. By Entries 52 and 54 of List I the Parliament is given power to legislate in respect of:

(52) Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.

(54) Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.

In exercise of powers under Entry 36 of the Government of India Act, 1935 which corresponds with Entry 52 of the Constitution the Central legislature enacted the Minerals & Mining (Regulation & Development) Act, 53 of 1948. By Section 2 of the Act it was declaredthat it was expedient in the public interest that the Central Government should take under its control the regulation of mines and oil fields and development of minerals in the extent specified in the Act. ‘Mine’ was defined under the Act as meaning any excavation for the purpose of searching for or obtaining minerals and includes an oil well. No mining lease could be given after the commencement of the Act, otherwise than is accordance with therules made under the Act. By Section 13 the provisions of the Act were to be binding on the Government, whether in the right of the dominion or of State. By the declaration by Section 2 the minerals became immobilized. The Act is on the Statute Book, and the declaration, in the

future application of the Act since the Constitution must also remain in force, as if it were made under entry 52 of the Constitution.

• After the Constitution, the Industries (Development & Regulation) Act, 65 of 1951 was enacted by the Parliament. By Section 2 it was declared that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. In the Schedule item (3) “Coal, including Coke; and other ‘derivatives’ was included as one of such industries. The legislature then enacted the Mines & Minerals(Regulation & Development) Act 67 of l957. By Section 2 a declaration in terms similar tothe declaration in Act 53 of 1948 was made. The Act deals with all minerals except oil, and enacts certain amendments in Act 53 of 1948. There being a declaration in terms of Item 52 the Parliament acquired exclusive authority to legislate in respect of Coal industry set out in the schedule to Act 65 of 1951 and the State Government had no authority in that behalf.

• Therefore the power of the Union to legislate in respect of property situate in the States even if the States are regarded quathe Union as Sovereign, remains unrestricted, and the State property is not immune from its operation. Exercising powers under the diverse entries which have been referred to earlier, the Union Parliament could legislate so as totrench upon the rights of the States in the property vested in them. If exclusion of a State property from the purview of Union legislation is regarded as implicit in those entries in ListI, it would be difficult if not impossible for the Union Government to carry out its obligations in respect of matters of national importance. If the entries which we have referred to earlierare not subject to any such restriction as suggested, there would be no reason to suppose that Entry 42 of List III is subject to the limitation that the property which is referred to in thatitem is of individuals or corporations and not of the State. In its ultimate analysis the question is one of legislative competence. Is the power conferred by Entry 42 List III as accessory to the effectuation of the power under Entries 52 & 54 incapable of being exercised in respect of property of the States? No positive interdict against its exercise is perceptible in the Constitution: and the implication of such an interdict assumes a degree of sovereignty in the States of such plenitude as transcends the express legislative power of the Union. The Constitution which makes a division of legislative and executive powers between the Union and the States is not founded on such a postulate, and the concept of superiority of the Union over the States in the manifold aspects already examined negatives it.
• Re. (2). By Article 294(a) all property and assets which immediately before the commencement of the Constitution were vested in the British Crown for the Dominion of India, became vested in the Union, and property vested for the purposes of the Government ofthe Provinces, became vested in the corresponding States. Under the Government of India Actall property for governmental purposes was vested in the British Crown, and by virtue of the Constitution that property became vested in the Union and the Provinces. By virtue of clause

(b) the rights, liabilities and obligations of the Government of India and the Provinces, devolved upon the Union and the corresponding Provinces.

• A considerable point was made of the fact that Article 294 had vested certain property in the State and it was submitted that subject to the right of the State by agreement to convey that property under Article 298, the Constitution intended that the State should continue to be the owner of that property and that this vesting must be held to negative the Union’s right to

acquire any property vested in the State without its consent. It was pointed out by the learned Attorney-General that so far as the plaintiff – the State of West Bengal was concerned it did not own the coal-bearing lands on the date of the Constitution and that it got title there to onlyafter they vested in the State by virtue of the provisions of the Bengal Acquisition of Estates Act of 1954(Act 1 of 1954) and that the property thus acquired subsequently was not within the scope of Article 294. We have no doubt that this would be an answer to the claim of the plaintiff in this suit and particularly in the context of the challenge to the validity of the notification now impugned but we do not desire to rest our decision on any such narrow ground.

• The argument was that the Constitution intended and enacted that property allotted to or vested in a State under the provisions of Article 294 or 296 shall continue to belong to that State unless and until by virtue of the power conferred on the State by Article 298 it chose to part with it, and that without a Constitutional amendment of these Articles such property cannot be divested from the State. We consider that this submission proceeds on a misconception of the function of Articles 294 and 298 in the scheme of the Constitution. To start with, it has to be pointed out that when Article 298 confers on States the power to acquire or dispose of property, the reference is to the executive power of the State to acquireor dispose of property which would apply without distinction to property vested under Article 294 or under 296 by escheat or lapse or as bona vacantia, or property acquired otherwise. Besides, Article 298 is merely an enabling Article conferring on the State as owner of the property, the power of disposal. That cannot on any reasonable interpretation be construed as negativing the possibility of the State’s title to property being lost by the operation of other provisions of the Constitution. Article 298 has therefore no relevance on the proper construction of Article 294.
• Article 294 was modeled on Section 172 of the Government of India Act, 1935. Section 172 which effected this distribution ran:

172. (1) All lands and buildings which immediately before the commencement of Part III of this Act were vested in His Majesty for the purposes of the Government of India shall as from that date (a) in the case of lands and buildings which are situate in a Province, vest in His Majesty for the purposes of the government of that Province unless they were then used, otherwise than under a tenancy agreement between the Governor-General in Council and the Government of that Province, for purposes which thereafter will be purposes of the Federal Government or of His Majesty’s Representative for the exercise of the functions of the Crown in its relations with Indian States, or unless they are lands and buildings formerly used for such purposes as aforesaid, or intended or formerly intended to be so used and are certified by the Governor-General in Council or, as the case may be. His Majesty’s Representative to have been retained for future use for such purposes, or to have been retained temporarily for the purpose of more advantageous disposal by sale or otherwise;…

Just like Section 172 being the forerunner of Article 294, Sections 174 and 175 are phrased in terms similar and correspond to Articles 296 and 298.

• The right of the States to property which devolved upon them by Article 294(a) was therefore no different from the right they had in the after acquired property: the Constitution does not warrant a distinction between the property acquired at the inception of the Constitution, and in exercise of executive authority. Article 294 does not contain any prohibition against transfer of property of the State and if the property is capable of being transferred by the State it is capable of being compulsorily acquired.
• Re. (3)Power to acquire land was vested under the Government of India Act, 1935 by Entry 9 in List II of the Seventh Schedule, exclusively in the Provinces. For any purpose connected with a matter in respect of which the Central legislature was competent to enact laws, the Central Executive could require the Province to acquire land, on behalf of and at the expense of the Union. This however did not mean that incidental to the exercise of the right tolegislate in respect of Railways, Ports, Lighthouses, power to affect the right of the citizens and corporations and of Provinces in land was not exercisable. As already observed, even under Constitutions where a larger slice of sovereignty remains effectively vested in the competent units such as the United States of America power to legislate vested in the Central or national subjects includes the power to legislate so as to extinguish rights in State property.

Under the Government of India Act, 1935 the Central Government could require the Province to acquire land on behalf of the Union if it was private land, and to transfer it to the Union if it was the State land. The Provincial Government had manifestly no option to refuse to comply with the direction. Provision for fixation of compensation did not affect the nature of the right which the Central Government could exercise.

• In broad outline the governmental structure under the Constitution vis-a-vis the Union and the States is based on the relationship which existed between the Central Government and the Provinces under the Government of India Act, 1935, and that in this respect the Constitution has borrowed largely from the earlier constitutional document. But even with theProvinces being autonomous within the spheres allotted to them and these being a distributionof property and assets between the Central Government and the Provinces under Part III of Chapter VII in almost the same terms as is found in the corresponding Articles 294 and 298, itwas not considered an infraction of the autonomy of the Provinces to vest such a power in the Central Government, for Section 127 of the Government of India. Act enacted:

127. The Federation may, if it deems it necessary to acquire any land situate in a Province for any purpose connected with a matter with respect to which the Federal legislature has power to make laws, require the Province to acquire the land on behalf, and at the expense, of the Federation or, if the land belongs to the Province, to transfer it to the Federation on such terms as may be agreed to, in default of agreement, as may be determined by an arbitrator appointed by the Chief Justice of India.

and thus property vested in a Province under Section 172 could be required to be transferred to the Central Government if it was needed for a central purpose.

• It would therefore be manifest that the right of the centre to require the Province to part with property for the effective performance of central functions was not considered as detracting from provincial autonomy.

• What however is of relevance is the presence of Section 127 in that enactment which empowered the Central Government to require the Provinces to part with property owned by them if the same was needed for the purposes of the Government of India. It was however suggested that the compulsory acquisition of provincial property by the Central Government was there specifically provided for, and that the absence of such a provision made all the difference. But this, in our opinion, proceeds on merely a superficial view of the matter. A closer examination of the scheme of distribution of legislative power in regard to compulsory acquisition of property under the Government of India Act discloses that though the power to compulsorily acquire property was exclusively vested in the Provinces, the Central Government could satisfy its requirements of property for Central purposes by utilisingprovincial machinery, and that it was in that context that a specific provision referring to the Provinces having at the direction of the Central Government to transfer provincial property was needed. It is therefore difficult to appreciate the ground on which the existence of a provision in the Government of India Act for assessment of compensation for land which the Provinces were bound to transfer on being so required by the Central Government and the deletion of that provision in enacting the Constitution may affect the exercise of the power vested in the Union Parliament.
• Re.(4): The Australian Constitution contains an express power authorising legislation by the Parliament of Australia for acquisition of State property. But the Constitutions of the United States of America and Canada contain no such express provision. The power of the Union Parliament to enact legislation affecting title of the constituent States to property vested in them, is on that account not excluded. If the other provisions of our Constitution in terms of sufficient amplitude confer power for enacting legislation for acquiring State property, authority to exercise that power cannot be defeated because the express power to acquire property, generally does not specifically and in terms refer to State property.
• Re.(5):In the Constitution of India as originally enacted there was an elaborate division of powers by providing three entries relating to acquisition and requisition of property, List I Entry 33 “Acquisition or requisitioning property for purposes of the Union”; List II Entry 36 “Acquisition or requisitioning of property, except for the purpose of the Union, subject to the provisions of Entry 42 of List III”; List III Entry 42 “Principles on which compensation for property acquired or requisitioned for the purposes of the Union or ofa State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given”. By the Constitution (Seventh Amendment) Act, 1956 the three Entries were repealed, and a single Entry 42 in the Concurrent List “Acquisition and Requisition of property” was substituted.
  • The following findings will accordingly be recorded on the issues: Issue 1 . . . in the affirmative.
    • . . . not such as to disentitle the Union Parliament to exercise its legislative power under Entry 42 List III.
    • . . . answer covered by answer on Issue 2.
    • . . . in the negative.
    • . . . in the negative.

Finding on additional issue, in the affirmative. The suit will therefore stand dismissed.