- (1.) This was a petition under Article 226 of the Constitution of India. It prayed that in the circumstances stated in the affidavit filed therewith, the High Court would be pleased to issue a Writ in the nature of a Writ of Certiorari calling for the papers relating to the notification issued under Section 3(2) of Madras Estates Land (Reduction of Rent) Act, 30 of 1947, in respect of fixation of rent in the petitioner's village of China Venkatapuram Agraharam in Narasannapeta Taluk (now Srikakulam District) covered by Notification No. 4773, at page 2092 of Fort. St. George Gazette elated 27-6-1950 and to quash the proceedings therein. This petition was heard by Hon'ble Mr. Justice Bhimasankaram. It was argued before him, inter alia that the Rent Reduction Act itself was ultra vires for the reason that it was contrary to the terms of Article 31 of the Constitution and Section 299 of the Government of India Act, 1935. As this involved interpretation of the Constitution, he was of the opinion that the matter should be considered by a Bench. Accordingly the writ petition was heard, on 19th July 1955 by a Division Bench consisting of Hon'ble Mr. K. Subba Rao, Chief Justice and Hon'ble Mr. Justice Bhimasankaram. It was argued before this Division Bench that the decision in Rajah of Bobbili v. State of Madras (A.I.R. 1952 Madras 203) needed to be reconsidered in the light of the two subsequent decisions of the Supreme Court respectively in State of West Bengal v. Subodh Gopal Bose (A.I.R. 1954 Supreme Court 92), and Dwarkadas Srinivas v. Sholapur Spinning and Weaving Co. Ltd., (A.I.R. 1954 Supreme Court 119). It was, therefore, thought desirable that the question being a matter of considerable general importance it should be decided by a Full Bench. Hence, it formulated the question to be decided by the Full Bench as follows:- "Whether the decision in A.I.R. 1952 Madras 203 in so far as it held that Madras Act XXX of 1947 does not offend against Section 299 of the Government of India Act 1935 is good law". The Full Bench consisting of the Hon'ble Sri K. Subba Rao, Chief Justice, Hon'ble Mr. Justice Viswanatha Sastry and the Hon'ble Mr. Justice Krishna Rao expressed on 15-3-1956 the following:- OPINION OF FULL BENCH. Subba Rao, C.J. :- The following question has been referred to the Full Bench by a Divisional Bench of this Court:- "Whether the decision in Rajah of Bobbili v. State of Madras, 1952-1 Mad LJ 174 , in so far as it held that Madras Act XXX of 1947 does offend against Section 299 of the Government of India Act, 1935, is good law?"
(2.) Before I proceed to consider the question, it will be convenient to notice briefly the provisions of Madras Estates Land (Reduction of Rent) Act, XXX of 1947 (hereinafter referred to as 'the Act'), and the scope of the decision in Rajah of Bobbili v. State of Madras (supra). The descriptive title of the Act is : 'An Act to provide for the reduction of rents payable by ryots in estates governed by the Madras Estates Land Act, 1908, approximately to the level of the assessments levied on lands in ryotwari areas in the neighbourhood (and for the collection of such rents exclusively by the State Government)." The preamble says : "Whereas the rents now payable by ryots in estates governed by the Madras Estates Land Act, 1908, are in many cases substantially higher than the assessments levied on lands in ryotwari areas in the neighbourhood; and whereas it is expedient to provide for the reduction of such rents approximately to the level of the ryotwari assessments in the neighbourhood; (and for the collection of such rents exclusively by the State Government)." The words in the brackets, both in the long title as well as in the preamble, were added by Section 2 of the Madras Estates Land (Reduction of Rent) Amendment Act, 1951 (Madras Act VII of 1951). Sections 2 and 3 prescribe the matter in which the rents are reduced to ryotwari level and fixed. The rent fixed shall take effect from the commencement of the fasli year 1357. Sub-section (4) of Section 3 provides that the rents due in respect of ryoti lands with effect from the commencement of the fasli year 1357 as well as the rents which have fallen or may fall due in respect of such lands for any fasli subsequent to fasli 1357 until the commencement of the fasli year in which the estate may be finally taken over by the State Government shall be recovered by the State Government as if such rents were arrears of land revenue due to them. It also enjoins on the State Government to hand over to the landholder the amount so recovered after deducting therefrom the cost of such recovery as determined in accordance with such rules as may be made by the State Government in that behalf, and also the peshkash, cesses, and other moneys due from the landholder to the State Government and constituting a charge on the estate. Under Sub-Section (7) (which was added by Madras Act VII of 1951), the landholder shall be entitled to collect, and the provisions of Chs. V and VI of the Madras Estates Land Act, 1908, shall cease to apply to, any rents or interest recoverable by the State Government under Sub-Section (4). The said Act applies to all estates as defined in Section 3(2) of the Madras Estates Land Act, 1908. The effect of the aforesaid provisions is that, in regard to such estates, after the notified date, the rents are reduced to the ryotwari level in the manner prescribed; the landholder ceases to have any power to collect the rents therefrom; the State takes over the said power to collect the rents and collects them and pays the landholder the net amount after deducting the various amounts charged on the land.
(3.) The validity of this Act was questioned in 1952-1 Mad LJ 174 on the ground, among others, that it infringed the requirements of Section 299(2) of the Government of India Act.1935, and also for the reason that it had become void under Article 13 of the Constitution of India as being inconsistent with the fundamental rights declared in Article 31(2), Article 19 and Article 14 of the Constitution. Rajamannar, C. J. and Venkatarama Ayyar, J., considered the arguments in detail and expressed their opinion in clear terms. Rajamanhar, C J., summarised his view at p. 183 (of Mad LJ) thus:- "Now let us look at the Act now impugned. It provides (a) for the reduction of rents and (b) for the collection of the reduced rents by the Government. I have no hesitation in holding that by reducing the rent payable by a tenant to a landlord, there cannot be an acquisition by the Government of any right or property of the landlord. Undoubtedly, a reduction of rent would adversely affect the landlord. It would deprive him of a part of the benefit which he had been deriving from his property. But that element alone would render the legislation confiscatory or expropriatory. There is no transference of any right of the landlord to the Government. There is no vesting in the Government of any right of the landlord. The provision merely regulates the relationship between the landlord and the tenant. The landlord is entitled to collect from his tenant only the lawful rent and the Act determines that lawful rent is ........ "......This collection must be deemed to be made only on behalf of the landholder, because the Government does have any beneficial interest in the amount collected, except of course, to pay themselves the cost of the collection. The balance of the rents is payable to the landholder. The Government is, as it were, a statutory agent of the landholder for collection........There is no divesting of any right of the landholder and no corresponding vesting of the same in the agent." The aforesaid passage brings out in clear terms why, in the view of the learned Judge, the provisions of Section 299 of the Government of India Act were violated by the passing of the above Act. He accepted the orthodox meaning of the word 'acquisition' and confined it to transference of the landlord's title to, and the vesting of the same in the Government. Dealing with the alternative argument, the learned Chief Justice was inclined to accept the following opinion expressed by Harlan, J., cited in St. Louis and S. F. R. Co. v. Gill, (1895) 156 US 6 : 39 Law Ed 567:- "there is a remedy in the Courts for relief against legislation establishing a tariff of rates which is so unreasonable as to practically destroy the value of the property of companies engaged in the carrying on of business, and that especially may the Courts of United States treat such a question as a judicial one and hold such acts of legislation to be in conflict with the Constitution of the United States as depriving the companies of their property without due process of law, and, as depriving them of the equal protection of the laws." After citing that passage with approval, the learned Chief Justice proceeded to state at p. 190 (of Mad LJ) : (at pp. 214-215 of AIR):- 'I see no reason why this salutary principle enunciated in several American decisions should be applied in this country in construing Articles 14, 19 and 31 of the Constitution. Even applying these principles, I am, however, persuaded by Mr. Vedantachariar to hold that the provisions of the Act as such inevitably transgress the limits allowed to the Legislature by conflicting with the provisions of Part III of the Constitution........ "......It is necessary, therefore, before any landholder can be given relief on the principle above mentioned, that he should allege and prove facts which conclusively show that as a result of the reduced rates of rent fixed under the Act, he has been totally or substantially deprived of the net income available to him." Venkatarama Ayyar, J., summarised his view on the application of Section 299 of the Government of India Act at p. 200 (of Mad LJ) thus:- "(1) For Section 299(2) to apply there must be a transfer of land or interest in land; (2) mere reduction of rent or enhancement of assessment is acquisition even though the value of the property might suffer diminution; (3) an acquisition contemplated by Section 299 (2) is of the entire bundle of rights of the expropriated owner but if all the substantial elements of rights have been taken away it can be treated as an acquisition notwithstanding that some unessential ingredients of the rights are left unaffected; and (4) a legislation which merely takes away the right of management without interfering with the title of the owner or his right to income from the property is within Section 299(2)." Referring to the argument based on Article 31(2) of the Constitution, the learned Judge stated at p. 203 (of Mad LJ) thus:- "The objections put forward on the basis of Article 31(2) are identical with those urged in connection with Section 299(2) of the Government of India Act, 1935, and for the reasons already given they must be overruled." Adverting to the objection based on Article 19(1) (f) of the Constitution, the learned Judge was inclined to hold that Article 19(1) (f) had no application and, in any event, he was prepared to hold that the Act was saved by Article 19(5) as a reasonable limitation on the rights of the proprietor made in the interests of the public. The learned Judge dealt with the special argument of Mr. Vendantachariar, viz., that by the process embodied in the Act the Zamindar was unjustly deprived of his property, as confined only to the infringement of Article 19(1) (f) whereas, the learned Chief Justice met it in the context of Article 31(2) also. The learned Judge held that the answer would depend upon an investigation of facts but they were concerned only with the validity of the legislation as a whole and there was no legal basis to hold that it was invalid. ;