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The High Court, after deciding various issues, remanded the cases to the Compensation Officer under the Act, after over-ruling most of the contentions pressed before it by the appellant FAC |
Shri Achutananda Purohit, appellant, was the intermediary in respect of vast forests and other lands comprised in the estate of Jujumura in the district of Sambalpur FAC |
This estate vested in the State on April 1, 1960 by force of the Act and the crucial question agitated before us, consequentially turns on the quantum of compensation awardable under Chapter V of the Act Ratio |
The appellant has received around Rs FAC |
3,00,000/- but much more, according to him, is due and this controversy can be settled by examining his specific points FAC |
Shri Purohit, appellant, is an Advocate by profession and is 83 years old FAC |
He has argued in person and with passion Ratio |
We have listened with patience to all his submissions, good, bad and indifferent Ratio |
If we may anticipate ourselves, none of the nine submissions has appealed to us, save to the extent the High Court has upheld Ratio |
Even so, a minimal narration of the facts and a brief consideration of each argument is necessary and we proceed to do so Ratio |
While his arguments did not impress us, we were touched by his concluding words that he had been born and had grown in an adivasi village, in the only brahmin family and, in his evening years of life, proposed to give a substantial part of the compensation the State would give him for adivasi welfare Ratio |
Although he waxed sentimentally on this note, he did not convince us on his contentions Ratio |
With these prefatory observations, we proceed to formulate the many points urged and give our findings and reasons, one after the other Ratio |
We are directly concerned with the issue of compensation which is dealt with, as earlier stated, in Chapter V of the Act Ratio |
The Compensation Officer is charged with fixing the quantum in the prescribed manner Ratio |
A compensation assessment roll containing the gross asset and net income of each estate, together with the compensation payable in respect of such estate, has to be prepared by him Ratio |
Of course, when there is joint ownership, s. 24 stipulates that the compensation shall be determined for the estate as a whole and not separately for each of the shares therein STA |
S. 26 has great relevance as it lays down the method of arriving at the gross asset and s. 27 has like significance as it focuses on the manner in which the net income from an estate shall be computed by deducting certain items from the gross asset of the estate STA |
s STA |
28 states how the amount of compensation is to be determined and the methodology of payment STA |
There are a few other s.s in Chapter VI which deal with payment of compensation STA |
the Act also provides for appeal, second appeal and revision, the last being to the High Court and the earlier ones being to the Collector and a Board constituted under s. 22 STA |
The rule-making power is vested in the government under s. 47 and there is a routine 'removal of difficulties' clause contained in s. 50 STA |
These furnish in bare outline the provisions with which we are directly concerned STA |
Against the background of law just projected, we may set out Shri Purohit's points which, if we may say so, are substantially the same as have been argued by him in revision before the High Court with partial success Ratio |
For convenience of reference, we may extract the statement by the High Court of the contentions urged before it (and repeated before us) by the appellant Ratio |
The provisions of s. 37(3) read with s. 26(2 RLC |
b) (v) of the Act make it clear that the date of vesting is the last date by which the calculation of compensation should have been made RLC |
As admittedly compensation had not been calculated by the date of vesting, the Compensation Officer lost his statutory jurisdiction to do so RLC |
It is this Court which, by its order dated 10-4-1969 in Civil Revisions 201, 202 and 203 of 1968 conferred new jurisdiction on the Compensation Officer to deal freshly with the case and therefore notwithstanding anything contained in the Act, the compensation has to be calculated according to the directions given by th... |
b) (v) of the Act, but in spite of it, the direction was that the Divisional Forest Officer should make the appraisement RLC |
There was no direction that this report of the D.F.O. should be further subject to the approval of the Chief Conservator of Forests RLC |
The calculation made by the Chief Conservator of Forests therefore has no statutory force but could be just a piece of evidence RLC |
But as the Court directed that no further evidence on behalf of the State should be received, Ext RLC |
A/1 is inadmissible in evidence RLC |
3) Assuming that in spite of the directions of the court the Compensation Offi cer is entitled to follow the procedure laid down in S. 26(2)(b)(v), the expression 'subject to the approval of the Chief Conservator of Forests' does not refer to the appraisement made by the D.F.O. but refers to his appointment RLC |
4) Assuming that s. 26(2) (b) (v) would have full force, what it contemplates is that the appraisement must be made by the D.F.O., and it is subject to the approval by the Chief Conservator of Forests RLC |
But what has happened here is that the Chief Conservator himself made the appraisement without referring to the appraisement made by the D.F.O. and as such the appraisement made by the Chief Conservator is invalid RLC |
The report of the Chief Conservator of Forests is also invalid because of the fact that the appraisement is made only with reference to the area of the disputed forests without taking into consideration the density of growth therein RLC |
6) Unlike in case of fisheries etc RLC |
where the Actual income is to be included in the gross assets, in the case of forests, the assumed income and not the Actual income is to be included RLC |
During the agricultural year immediately preceding the abolition, the petitioners had not actually derived any income from the forests and as such they were under no obligation to pay any income-tax on such income RLC |
Therefore, deduction of income-tax from the gross assets is illegal and unwarranted RLC |
The slab-system of calculation of compensation in the Act providing smaller multiples for estates yielding larger income is unconstitutional RLC |
8) Compensation money should be so calculated that the purchasing power of the amount of compensation to be paid on the date of actual payment will not be less than its purchasing power on the date of vesting; and (9) Interest should be calculated at not less than 12% per annum from the date of vesting till payment RLC |
The meat of the matter, the primary question agitated in the appeal, lopping off the fringe issues of lesser import, consists in the statutory methodology and functionaries prescribed by the Act for quantifying the compensation and the compliance therewith by the statutory machinery in the case of the appellant Ratio |
But before examining this essential issue we may dispose of the minor points pressed, so that the deck may be cleared for dealing with what deserves to be dealt with Ratio |
Point No. 9, in the catalogue already given, relates to the claim for 12% interest on the amount of compensation as against the statutory rate of 2 1/2 Ratio |
The policy of the law of agrarian reform postulates the extinguishment of ancient privileges and cornering of land resources, and the socioeconomic yardstick is different from what applies to ordinary purchases of real estate and this is manifest in the special provisions contained in Art STA |
31A and Art STA |
31B of the Constitution STA |
A similar principle applies to the award of interest which may sometimes be notional when feudal interests are puffed out Ratio |
We cannot import the notion of prevailing bank rates in such situations Ratio |
The dynamic rule of law, with a social mission, makes a meaningful distinction between rights steeped in the old system and compensation for deprivation of those interests, on the one hand, and the ordinary commercial transactions or regulation of rights untinged by social transformation urges, on the other Ratio |
This gives rationality to the seeming disparity Ratio |
Holmes once commented: 'It is revolting to have no better reason for a rule of law than that Ratio |
so it was laid down in the time of Henry IV Ratio |
Here there is good reason to depart from the old rule of full compensation and it perhaps legitimates the reduced rate of recompense Ratio |
Moreover, the High Court has rightly pointed out that the validity of s. 37(3) of the Act which fixes a small rate of interest on the compensation amount has been upheld by the Supreme Court in Gajapati Narayan's Case Ratio |
Point No. 8 has only to be stated to be rejected Ratio |
The contention is that on the date of vesting, which was well over two decades ago, the purchasing power of the rupee was much higher than its present value Ratio |
It is more or less a world phenomenon that the erosi on in value of the unit of currency has been taking place, but this invisible devaluation owing to the inflationary spiral does not affect the quantum of monetary compensation prescribed by statute Ratio |
For the purposes of the law, the rupee of long ago is the same as the rupee of today, although for the purposes of the market place and cost-of living, the housewife's answer may be different Ratio |
Law is sometimes blind Ratio |
The next point in the reverse order is equally unsubstantial and may be disposed of right away Ratio |
The appellant challenges the slab system of compensation provided in the Act which awards smaller multiples for estates yielding larger incomes, on the score of violation of the fundamental rights under the Constitution Ratio |
The short answer is that Art Ratio |
31(3) read with Art Ratio |
31(2) bars any challenge to the amount of compensation on acquisition by the State subject to compliance with the prescriptions in the said sub-Articles, on the ground that the amount so fixed or determined is not adequate Ratio |
Presidential assent has been accorded to this State Act and so the ban operates Ratio |
Moreover, Art Ratio |
31A repels the applicability of Arts Ratio |
14, 19 and 31 to the acquisition by the State of any estate or of any rights therein etc Ratio |
This provision directly demolishes the contention of the appellant Ratio |
Point No. 6 in the list of contentions earlier reproduced is also bereft of force and we may make short shrift of it Ratio |
The argument is that for certain reasons the appellant could not derive and actual income from the forests taken over by the State from him and therefore there was no income-tax payable on any agricultural income from these forests ARG |
The contention is that therefore in arriving at the next income the deduction of income-tax is not permissible ARG |
Here again, the flaw in the submission consists in mis-reading s. 27 of the Act which expressly states that the net income from an estate shall be computed by deducting from the gross assets of such estate any sum 'which was payable by the intermediary as income-tax in respect of any income derived from such estate for... |
No income, therefore no income-tax, and therefore no deduction, is the syllogism of Shri Purohit Ratio |
He forgets that in the case of forests it is the assumed income and not the Actual income that forms the basis of calculation of compensation Ratio |
Indeed, if the Actual income were to be the foundation for computation of compensation on the premise that not actual income has accrued, the compensation might be zero Ratio |
On the other hand, statutory compensation is provided for on the formula of assumed income in the previous year Ratio |
Similarly, an assumed income- tax also has to be worked out and deducted Ratio |
If a notional income on the assumed basis can be used for fixing compensation, a notional income-tax can be calculated and deducted Ratio |
The confusion that vitiates the argument is prompted by a circular letter of government regarding non-deductibility of income-tax due to the State from the amount of compensation lying to the credit of estate holders Ratio |
We have examined the circular letter and are satisfied that it has no relevance to a situation like the present and it deals with a totally different matter Ratio |
In short, s. 27 properly construed, cannot lend itself to the meaning imputed to it by the appellant Ratio |
The serious question that survives for consideration is covered by the remaining points which more or less overlap Ratio |
The statutory scheme of compensation for forest lands consists of machinery for assessment of the net income which is multiplied on a sliding scale and the method of challenge to the determination by the aggrieved owner of State Ratio |
S. 26(2 STA |
b) (v) is relevant here and may be set out:- "26(2 STA |
gross asset' when used with reference to an estate means the aggregate of the rents, including all cesses, which were payable in respect of the estate for the previous agricultural year- (b) by the raiyats or any other persons cultivating the land other than the land settled with the intermediary or intermediaries unde... |
1) of S. 7 and includes STA |
v) gross income from forests calculated on the basis of the appraisement made of annual yield of the forests on the date of vesting by a Forest Officer subject to the approval of the Chief Conservator of Forests, such Forest Officer being not below the rank of a Divisional Forest Officer to be appointed in this behalf ... |
The expression 'Forest Officer', used here, has been explained in s. 26 STA |
So the first step is for the Government to appoint Forest Officers from out of D.F.Os Ratio |
in the Forest Department, for the purposes of the Act Ratio |
Those Officers ascertain the income from the forest concerned and the figure so fixed is subject to the approval of the C.C.F. (Chief Conservator of Forests), presumably the top expert in the department Ratio |
The power to approve implies the power to disapprove or modify but not to report or arrive at an income de hors the Forest Officer's Report altogether Ratio |
The section is clear that the gross income from forests must be calculated on the basis of appraisal of the annual yield on the date of vesting firstly, by a Forest Officer and, secondly, by the Chief Conservator of Forests screening it and approving it Ratio |
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