The following example essay on “Gajapati Narayan Deo v. State of Orissa Summary” is a detailed analysis of the lawsuit as to the validity of Orissa Agricultural Income-tax.
The appellant firstly contended validity of Orissa Agricultural Income-tax (Amendment) Act, 1950 claiming it to be colourable legislation as its object was to reduce income of intermediaries in order to pay them less compensation and as it was based upon provisions of Bihar Land Reform Act. Secondly that in relation to Madras Estates Land (Amendment) Act, 1947 that improper delegation of legislative power to Provincial Government and provision were against Article 14 of Constitution.
Thirdly that building was treated as part of gross assets of estates thereby reducing compensation payable to intermediaries and provisions of Act give no compensation in relation to kudivaram rights. Fourthly that manner of payment of compensation was invalid Supreme Court decided that bill receiving assent of President was protected from ground of non-compliance with provisions of Article 31 (2).
Even if deductions stated in Bihar Act were improper it did not make Legislation invalid unless it was unrelated to facts upon which it was based – in relation to Madras Act contention were not relevant as provisions of Orissa Estates Abolition Act, 1952 relating to computation of gross asset on basis of rent payable was not illegal .
No objection in relation to inadequacy of compensation on rental basis can be raised in view of provision of Article 31 (4) ? Contentions In the first place, there were contentions raised, attacking the validity of the Act as a whole.
In the second place, the validity of the Act was challenged as far as it related to certain specified items of property included in an estate, e. g. private lands, buildings, waste lands, etc. Thirdly, the challenge was as to the validity of certain provisions in the Act relating to determination of compensation payable to the intermediary, with reference either to the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income. . Under the first head the appellants’ main contention relates to the validity of the Orissa Agricultural Income-tax (Amendment) Act of 1950.
This Act, it is said, is not a bona fide taxation statute at all, but is a colourable piece of legislation, the real object of which is to reduce, by artificial means, the net income of the intermediaries, so that the compensation payable to them under the Act might be kept down to as low a figure as possible. There was an Agricultural Income-tax Act in force in the State of Orissa from the year 1947 which provided a progressive scale of taxation on agricultural income, the highest rate of tax being 3 annas in the rupee on a slab of over Rs. 0,000 received as agricultural income.
The object of this amended legislation, according to the appellants, was totally different from what it ostensibly purported to be and the object was nothing else but to use it as a means of effecting a drastic reduction in the income of the intermediaries, so that the compensation payable to them may be reduced almost to nothing It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature.
The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power Though apparently the Act purported to be a taxation statute coming under entry 46 of List II, really and in substance it was not so.
It was introduced under the guise of a taxation statute with a view to accomplish an ulterior purpose, namely, to inflate the deductions for the purpose of valuing an estate so that the compensation payable in respect of it might be as small as possible. Under section 26 of the Orissa Estates Abolition Act, the gross asset of an estate is to be calculated on the basis of rents payable by raiyats for the previous agricultural year.
According to the appellants, the State Government made use of the provisions of the amended Madras Estate Land (Orissa Amendment) Act to reduce arbitrarily the rents payable by raiyats and further to make the reduction take effect retrospectively, so that the diminished rents could be reckoned as rents for the previous year in accordance with the provision of section 26 of the Estates Abolition Act and thus deflate the basis upon which the gross asset of an estate was to be computed.
The appellants’ main contention is that although in these private lands both the melvaram and kudivaram rights, that is to say, both the proprietor’s as well as the raiyat’s interests are united in the land-holder, the provisions of the Act indicated above have given no compensation whatsoever for the kudivaram or the tenant’s right and in substance this interest has been confiscated without any return The last contention of the appellants is directed against the provision of the Act laying down the manner of payment of the compensation money.
The relevant section is section 37 and it provides for the payment of compensation together with interest in 30 annual equated instalments leaving it open to the State to make the payment in full at any time prior to the expiration of the period. The validity of this provision has been challenged on the ground that it is a piece of colourable legislation ? Ratio Decidendi The arguments advanced on behalf of the appellants before the High Court have been classified by the learned Chief Justice in his judgment under three separate heads.
In the first place, there were contentions raised, attacking the validity of the Act as a whole. In the second place, the validity of the Act was challenged as far as it related to certain specified items of property included in an estate, e. g. private lands, buildings, waste lands, etc. Thirdly, the challenge was as to the validity of certain provisions in the Act relating to determination of compensation payable to the intermediary, with reference either to the calculation of the gross assets or the deductions to be made therefrom for the purpose of arriving at the net income.
The Act cannot be regarded as a colourable legislation in accordance with the principles indicated above, unless the ulterior purpose which it is intended to serve is something which lies beyond the powers of the legislature to legislate upon Under entry 42 of List III which is a mere head of legislative power the legislature can adopt any principle of compensation in respect to properties compulsorily acquired.
Whether the deductions are large or small, inflated or deflated they do not affect the constitutionality of a legislation under this entry The fact that the deductions are unjust, exorbitant or improper does not make the legislation invalid, unless it is shown to be based on something which is unrelated to facts. In the first place, if these buildings are really appurtenant to the estate, they can certainly be valued as parts of the estate itself.
In the second place, even if the compensation provided for the acquisition of the buildings is not just and proper, the provision of article 31(4) of the Constitution would be a complete answer to such acquisition. . The entire interest of the proprietor in these lands has been acquired and the compensation payable for the whole interest has been assessed on the basis of the net income of the property as represented by the share of the produce payable by the temporary tenants to the landlord. It . It is difficult to appreciate this argument of the learned counsel.
Section 37 of the Act contains the legislative provision regarding the form and the manner in which the compensation for acquired properties is to be given and as such it comes within the clear language of entry 42 of List III, Schedule VII of the Constitution. It is not a legislation on something which is non-existent or unrelated to facts. There is no substance in this contention and we have no hesitation in overruling it. The result is that all the points raised by the learned counsel for the appellants fail and the appeals are dismissed
Obiter Dicta There is no doubt that the Act does not give anything like a fair or market price of the properties acquired and the appellants may be right in their contention that the compensation allowed is inadequate and improper; but that does not affect the constitutionality of the provisions. It is true that the Orissa Tenants Protection Act is a temporary statute, but whether or not it is renewed in future, the rent fixed by it has been taken only as the measure of the income derivable from these properties at the date of acquisition.
The appellants’ main contention is that although in these lands both the melvaram and kudivaram rights, that is to say, both the proprietor’s as well as the raiyat’s interests are united in the land-holder, the provisions of the Act indicated above have given no compensation whatsoever for the kudivaram or the tenant’s right and in substance this interest has been confiscated without any return.
Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration. 18. Land, that is to say, right in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; and improvement and agricultural loans; colonization. The Supreme Court held that “The salutary goal of ‘from each according to his capacity, to each according to his needs’ was sought to be achieved by the impugned Act.
The essential need of shelter for other segments of society such as the State Administration, Semi-Government bodies, PSUs and the likes were also protected in public interest as otherwise their activities would have been jeopardized, which in turn would have had an adverse effect on the society. Thus, if any grey area of impugned Amending Act is left out uncovered by entries 6, 7 & 13 of List-III is covered by entry 18 of List-II, i. e. ‘economic and social planning’.