‘Mere power, fair compensation not sufficient for valid acquisition,’ SC enlists 7 sub-rights under right to property

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Court has said these sub-rights have synchronously formed part of laws and have attained judicial recognition

The Supreme Court has on May 16, 2024 said the mere presence of power to acquire land coupled with a provision for payment of fair compensation by itself is not sufficient for a valid acquisition of a private property.

A bench of Justices P S Narasimha and Aravind Kumar interpreted “authority of law” in Article 300A of the Constitution, holding that a minimum content of a Constitutional right to property comprises of seven sub-rights or procedures such as the right to notice, hearing, reasons for the decision, to acquire only for public purpose, fair compensation, efficient conduct of the procedure within timelines and finally the conclusion. 

“These sub-rights have synchronously formed part of our laws and have attained judicial recognition,” the bench said.

Dealing with an appeal, the bench held that since Section 352 of the Kolkata Municipal Corporation Act does not provide for these sub-rights or procedures, it can never be a valid power of acquisition.

“We have also held that a valid power of acquisition coupled with the provision for fair compensation by itself would not complete and exhaust the power and process of acquisition. Prescription of the necessary procedures, before depriving a person of his property is an integral part of the ‘authority of law’, under Article 300A and, Section 352 of the Act contemplates no procedure whatsoever,” the bench said.

The court also noted so far as Section 363 relating to payment of compensation is concerned, the High Court has clarified that this provision related to payment of compensation upon an agreement and not for compulsory acquisition.

The bench dismissed Kolkata Municipal Corporation’s appeals against rejection by the High Court’s with regard to acquisition of land, saying, “There is no doubt in our mind that the exercise of the power is illegal, illegitimate and has caused great difficult to the respondent-land-bearer.”

The bench held the High Court was fully justified in allowing the writ petition and rejecting the case of the appellant-Corporation acquiring land under Section 352 of the Act.

Explaining Article 300A of the Constitution related the right to property, the bench said, “The binary reading of the constitutional right to property must give way to more meaningful renditions, where the larger right to property is seen as comprising intersecting sub-rights, each with a distinct character but interconnected to constitute the whole.”

The court stressed procedural justice is a cornerstone of Article 300A when the acquisition of private property by the State is for a public purpose and on the payment of compensation. 

“A valid acquisition of property is premised on the law providing a procedure for such acquisition and the State complying with this statutory procedure. Procedural justice is therefore a significant mandate of Article 300A. The existence of and adherence to procedural safeguards is crucial for the protection of the right to property as they ensure fairness, transparency, natural justice, and non-arbitrary exercise of power in the process of acquisition,” the bench said.

These sub-rights weave themselves into each other, and as a consequence, State action or the legislation that results in the deprivation of private property must be measured against this constitutional net as a whole, and not just one or many of its strands, it said.

The bench said seven such sub-rights can be identified, albeit non-exhaustive. 

These are:

i) Duty of the State to inform the person that it intends to acquire his property – the right to notice,

ii) The duty of the State to hear objections to the acquisition – the right to be heard, 

iii) The duty of the State to inform the person of its decision to acquire – the right to a reasoned decision, 

iv) The duty of the State to demonstrate that the acquisition is for public purpose – the duty to acquire only for public purpose, 

v) The duty of the State to restitute and rehabilitate – the right of restitution or fair compensation, 

vi) The duty of the State to conduct the process of acquisition efficiently and within prescribed timelines of the proceedings – the right to an efficient and expeditious process, and 

vii) Final conclusion of the proceedings leading to vesting – the right of conclusion.

The court pointed out these seven principles are integral to the authority of law enabling compulsory acquisition of Private property. 

“Union and State statutes have adopted these principles and incorporated them in different forms in the statutes provisioning compulsory acquisition of immovable property. The importance of these principles, independent of the statutory prescription have been recognised by our constitutional courts and they have become part of our Administrative law jurisprudence,” the bench said.