judgement:
vil Appeal Nos.
2839 40 of 1989 etc.
From the Judgment and Order dated 6.12.
1984 of the Delhi High Court in R.F.A. Nos. 113 and 114 of 1968.
K. Parasaran, Attorney General, T.S. Krishnamurthy Iyer, B.R.L. Iyengar, M.S. Gujaral, F.S. Nariman, A.K. Ganguli, K. Swamy, C.V. Subba Rao, R.D. Agrawala, P. Parmeshwaran, O.P. Sharma, R.C. Gubrele, K.R. Gupta, R.K. Sharma, K.L. Rathee, Chandulal Verma, Subhash Mittal, section Balakrishnan, N.B. Sinha, K.K. Gupta, Sanjiv B. Sinha, M.M. Kashyap, P.C. Khunger, Swaraj 321 Kaushal, Pankaj Kalra, S.K. Bagga, Ravinder Narain, Sumeet Kachwala, section Sukumaran, K.R. Nagaraja, S.S. Javali, Ms. Lira Goswami, D.K. Das, B.P. Singh, Ranjit Kumar, Santosh Hegde, M.N. Shroff, P.N. Misra, D.C. Taneja, P.K. Jena, A.K. Sanghi and M. Veerappa for the appearing parties.
The Judgment of the Court was delivered by PATHAK, CJ.
The question of law referred to us for decision in these cases is: "Whether under the Land Acquisition Act, 1894 as amended by the Land Acquisition (Amendment) Act, 1984 the claimants are entitled to sola tium at 30 per cent of the market value irre spective of the dates on which the acquisition proceedings were initiated or the dates on which the award had been passed"? It would suffice if we briefly refer to the facts in the Civil Appeals arising out of Special Leave Petitions Nos.
8194 8195 of 1985: Union of India & Another vs Raghubir Singh.
The land belonging to the respondents in village Dhaka was taken by compulsory acquisition initiated by a notifica tion under section 4 of the Land Acquisition Act, 1894 issued on 13 November, 1959.
The award with regard to compensation was made by the Collector on 30 March, 1963.
A reference under section 18 of the Act was disposed of by the Additional District Judge on 10 June, 1968.
He enhanced the compensation.
The respondents preferred an appeal to the High Court claiming further compensation.
During the pendency of the appeal the Land Acquisition (Amendment) Bill 1982 was introduced in Parliament on 30 April, 1982, and became law as the Land Acquisition (Amendment) Act, 1984 when it received the assent of the President on 24 September, 1984.
The High Court disposed of the appeal by its Judgment and Order dated 6 December, 1984.
While it raised the rate of compensation, it also raised the rate of interest payable on the compensa tion, and taking into account the change in the law effected by the Land Acquisition (Amendment) Act, 1984 (referred to hereinafter as "the Amendment Act") it awarded solatium at 30 per cent of the market value.
The Judgment and Order of the High Court is the subject of these appeals.
When these cases came up before a Bench of two learned Judges 322 (E.S. Venkataramiah and R.B. Misra, JJ.) on 23 September, 1985, they referred to two earlier decisions of this Court and expressed the view that the question set forth above required re examination by a larger Bench of five Judges.
It was further directed that the other questions involved in the petitions would be considered after the aforesaid ques tion had been resolved by the larger Bench.
The two deci sions referred to in the Order of the learned Judges are K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisi tion Officer, decided by O. Chinnappa Reddy and Sabyasachi Mukharji, JJ.
on 14 February, 1985 and Bhag Singh and Ors.
vs Union Territory of Chandigarh, ; decided by P.N. Bhagwati, C.J., A.N. Sen and D.P. Madon, JJ.
on 14 August, 1985.
Solatium is awarded under sub section
(2) of section 23 of the Land Acquisition Act.
Before the Amendment Act was enacted the sub section provided for solatium at 15 per cent of the market value.
By the change introduced by the Amendment Act the amount has been raised to 30 per cent of the market value.
Sub section
(2) of section 30 of the Amendment Act specifies the category of cases to which the amended rate of solatium is attracted.
In K. Kamalajammanniavaru, (supra), the two learned Judges held that sub section
(2) of section 30 referred to orders made by the High Court or the Supreme Court in ap peals against an award made between 30 April, 1982 and 22 September, 1984, and that therefore solatium at 30 per cent alone pursuant to sub section
(2) of section 30 had to be awarded in such cases only.
In Bhag Singh (supra), however, the three learned Judges held that sub section
(2) of section 30 referred to proceedings relating to compensation pending on 30 April, 1982 or filed subsequent to that date, whether before the Collector or before the Court or the High Court or the Supreme Court, even if they had finally terminated before the enactment of the Amending Act.
In taking that view they overruled K. Kamalajammanniavaru, (supra) and approved of the opinion expressed in another case, State of Punjab vs Mohinder Singh and another, decided by section Murtaza Fazal Ali, A. Varadarajan and Ranganath Misra, JJ.
on 1 May, 1985.
At the outset, a preliminary objection has been raised by Shri B.R.L. Iyengar to the validity of the reference of these cases to a larger Bench.
He contends that the mere circumstance that a Bench of two learned Judges finds itself in doubt about the correctness of the view taken by a Bench of three learned Judges should not provide reason for refer ring the matter to a larger Bench.
The preliminary objection raised by Shri Iyengar has been vigorously resisted by the 323 appellants.
Having regard to the submissions made before us, we think it necessary to lay down the law on the point.
India is governed by a judicial system identified by a hierarchy of courts, where the doctrine of binding precedent is a cardinal feature of its jurisprudence.
It used to be disputed that Judges make law.
Today, it is no longer a matter of doubt that a substantial volume of the law govern ing the lives of citizens and regulating the functions of the State flows from the decisions of the superior courts.
"There was a time: ' observed Lord Reid, "when it was thought almost indecent to suggest that Judges make law They only declare it . .
But we do not believe in fairy tales any more "The Judge as law Maker" p. 22.
" In countries such as the United Kingdom, where Parliament as the legislative organ is supreme and stands at the apex of the constitution al structure of the State, the role played by judicial law making is limited.
In the first place the function of the courts is restricted to the interpretation of laws made by Parliament, and the courts have no power to question the validity of Parliamentary statutes, the Diceyan dictum holding true that the British Parliament is paramount and all powerful.
In the second place, the law enunciated in every decision of the courts in England can be superseded by an Act of Parliament.
As Cockburn CJ.
observed in Exp.
Canon Selwyn, "There is no judicial body in the country by which the validity of an Act of Parliament could be questioned.
An act of the Legislature is superior in authority to any Court of Law".
And Ungoed Thomas J., in Cheney vs Conn, referred to a Parliamentary statute as "the highest form of law . .which prevails over every other form, of law.
" The position is substantially different under a written Consti tution such as the one which governs us.
The Constitution of India, which represents the Supreme Law of the land, envis ages three distinct organs of the State, each with its own distinctive functions, each a pillar of the State.
Broadly, while Parliament and the State Legislature in India enact the law and the Executive government implements it, the judiciary sits in judgment not only on the implementation of the law by the Executive but also on the validity of the Legislation sought to be implemented.
One of the functions of the superior judiciary in India is to examine the compe tence and validity of legislation, both in point of legisla tive competence as well as its consistency with the Funda mental Rights.
In this regard, the courts in India possess a power not known to the English 324 Courts.
Where a statute is declared invalid in India it cannot be reinstated unless constitutional sanction is obtained therefore by a constitutional amendment or an appropriately modified version of the statute is enacted which accords with constitutional prescription.
The range of judicial review recognised in the superior judiciary of India is perhaps the widest and the most extensive known to the world of law.
The power extends to examining the validi ty of even an amendment to the Constitution, for now it has been repeatedly held that no constitutional amendment can be sustained which violates the basic structure of the Consti tution.
(See His Holiness Kesavananda Bharati Sripadagalava ru vs State of Kerala, ; Smt.
Indira Nehru Gandhi vs Shri Raj Narain, ; Minerva Mills Ltd. and others vs Union of India and others, [1980] 2 SCC 591 and recently in S.P. Sampath Kumar etc.
vs Union of India and Ors.
, ; With this impressive expanse of judicial power, it is only right that the superi or courts in India should be conscious of the enormous responsibility which rests on them.
This is specially true of the Supreme Court, for as the highest Court in the entire judicial system the law declared it is, by Article 141 of the Constitution, binding on all courts within the territory of India.
Taking note of the hierarchical character of the judi cial system in India, it is of paramount importance that the law declared by this Court should be certain, clear and consistent.
It is commonly known that most decisions of the courts are of significance not merely because they consti tute an adjudication on the rights of the parties and re solve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases.
In this latter aspect lies their particular value in developing the jurisprudence of the law.
The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transaction forming part of his daily affairs.
And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court.
But like all principles evolved by man for the regula tion of the social order, the doctrine of binding precedent is circumscribed in its governance by perceptible limita tions, limitations arising by reference to the need for re adjustment in a changing society, a re adjustment of legal norms demanded by a changed social context.
This need for 325 adapting the law to new urges in society brings home the truth of the Holmesian aphorism that "the life of the law has not been logic it has been experience".
Oliver Wendell Holmes, "The Common Law" p. 5 and again when he declared in another study that Oliver Wendell Holmes, "Common Carriers and the Common Law", (1943) 9 Curr.
L.T. 387, 388 "the law is forever adopting new principles from life at one end," and "sloughing off" old ones at the other.
Explaining the conceptual import of what Holmes had said, Julius Stone elaborated that it is by the introduction of new extra legal propositions emerging from experience to serve as premises, or by experience guided choice between competing legal propositions, rather than by the operation of logic upon existing legal propositions, that the growth of law tends to be determined.
Julius Stone, "Legal Systems & Lawyers Rea soning", pp.
58 59.
Legal compulsions cannot be limited by existing legal propositions, because there will always be, beyond the frontiers of the existing law, new areas inviting judicial scrutiny and judicial choice making which could well affect the validity of existing legal dogma.
The search for solu tions responsive to a changed social era involves a search not only among competing propositions of law, or competing versions of a legal proposition, or the modalities of an indeterminacy such as "fairness" or "reasonableness", but also among propositions from outside the ruling law, corre sponding to the empirical knowledge or accepted values of present time and place, relevant to the dispensing of jus tice within the new parameters.
The universe of problems presented for judicial choice making at the growing points of the law is an expanding universe.
The areas brought under control by accumulation of past judicial choice may be large.
Yet the areas newly presented for still further choice, because of changing social, economic and technological conditions are far from inconsiderable.
It has also to be remembered, that many occasions for new options arise by the mere fact that no generation looks out on the world from quite the same van tage point as its predecessor, nor for the matter with the same perception.
A different vantage point or a different quality of perception often reveals the need for choice making where formerly no alternatives, and no problems at all, were Perceived.
The extensiveness of the areas for judicial choice at a particular time is a function not only of the accumulation of past decisions, not only of changes in the environment, but also of new insights and perspec tives both on old problems and on the new problems thrown up by changes entering the cultural and social heritage.
326 Not infrequently, in the nature of things there is a gravity heavy inclination to follow the groove set by prece dential law.
Yet a sensitive judicial conscience often persuades the mind to search for a different set of norms more responsive to the changed social context.
The dilemma before the Judge poses the task of finding a new equilibri um, prompted not seldom by the desire to reconcile opposing mobilities.
The competing goals, according to Dean Roscoe Pound, invest the Judge with the responsibility "of proving to mankind that the law was something fixed and settled, whose authority was beyond question, while at the same time enabling it to make constant readjustments and occasional radical changes under the pressure of infinite and variable human desires." Roscoe Pound, "an Introduction to the Phi losophy of Law" p. 19.
The reconciliation suggested by Lord Reid in "The Judges as Law Maker" pp. 25 6 lies in keeping both objectives in view, "that the law shall be certain, and that it shall be just move with the times.
" An elaboration of his opinion is contained in Myers vs Director of Public Prosecutions, , where he expressed the need for change in the law by the court and the limits within which such change could be brought about.
He said: ibid at p. 1021.
"I have never taken a narrow view of the functions of this House as an appellate tribu nal.
The common law must be developed to meet changing economic conditions and habits of thought, and I would not be deterred by ex pressions of opinion in this House in old cases.
But there are limits to what we can or should do.
If we are to extend the law it must be by the development and application of fundamental principles.
We cannot introduce arbitrary conditions or limitations: that must be left to legislation.
And if we do in effect change the law, we ought in my opinion only to do that in cases where our decision will produce some finality or certainty.
" Whatever the degree of success in resolving the dilemma, the Court would do well to ensure that although the new legal norm chosen in response to the changed social climate repre sents a departure from the previously ruling norm, it must, nevertheless.
carry within it the same principle of certain ty, clarity and stability.
The profound responsibility which is.borne by this Court in its choice between earlier established standards and the formulation of a new code of norms is all the more sensitive and significant because the 327 response lies in relation to a rapidly changing social and economic society.
In a developing society such as India the law does not assume its true function when it follows a groove chased amidst a context which has long since crum bled.
There will be found among some of the areas of the law norms selected by a judicial choice educated in the experi ence and values of a world which passed away 40 years ago.
The social forces which demand attention in the cauldron of change from which a new society is emerging appear to call for new perceptions and new perspectives.
The recognition that the times are changing and that there is occasion for a new jurisprudence to take birth is evidenced by what this Court said in The Bengal Immunity Company Limited vs The State of Bihar and Others, , when it ob served that it was not bound by its earlier judgments and possessed the freedom to overrule its judgments when it thought fit to do so to keep pace with the needs of changing times.
The acceptance of this principle ensured the preser vation and legitimation provided to the doctrine of binding precedent, and therefore, certainty and finality in the law, while permitting necessary scope for judicial creativity and adaptability of the law to the changing demands of society.
The question then is not whether the Supreme Court is bound by its own previous decisions.
It is not.
The question is under what circumstances and within what limits and in what manner should the highest Court over turn its own pronouncements.
In the examination of this question it would perhaps be appropriate to refer to the response of other jurisdictions, specially those with which the judicial system in India has borne an historical relationship.
The House of Lords in England provides the extreme example of a judicial body which until recently disclaimed the power to overrule it self.
It used to be said that the House of Lords did never overrule itself but only distinguished its earlier deci sions.
An erroneous decision of the House of Lords could be set right only by an Act of Parliament.
(See Street Tramways vs London County Council, ; and Radcliffe vs Ribble Motor Services Ltd., ,245. ) Apparent ly bowing to the pressure of a reality forced upon it by reason of a rapidly gathering change in the prevailing socio economic structure, on 26 July, 1966, Lord Gardiner, L.C., made the following statement on behalf of himself and the Lords of Appeal in Ordinary: "Their lordship regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases.
It provides at least 328 some degree of certainty upon which individu als can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules.
Their lordships nevertheless recog nise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law.
They propose therefore to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.
In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal Law.
" Since then the House of Lords has framed guidelines in a series of cases decided upto to 1975 and the guidelines have been summarised in Dr. Alan Paterson 's "Law Lords" 1982: pp.
156 157.
He refers to several criteria articulated by Lord Reid in those cases.
The freedom granted by the 1966 Practice Statement ought to be exercised sparingly (the 'use sparingly ' crite rion) (Jones vs Secretary of State for Social Services, [1972] A.C. at 966.
A decision ought not to be overruled if to do so would upset the legitimate expectations of people who have entered into contracts or settlements or otherwise regulated their affairs in reliance on the validity of that decision (the 'legitimate expectations ' criterion) (Ross Smith vs Ross Smith, , 303 and Indyka vs Indyka, [1969] I A.C. 33, 69.) 3.
A decision concerning questions of construction of statute or other documents ought not to be overruled except in rare and exceptional cases (the 'Construction ' criterion) Jones, at 966.
4(a) A decision ought not to be overruled if it would be impracticable for the Lords to foresee the consequences of departing from it (the 'unforseeable consequences ' crite rion) (Steadman vs Steadman, ,542.
(b) A decision ought not to be overruled if to do so would involve a change that ought to be part of a 329 comprehensive reform of the law.
Such changes are best done 'by legislation following on a wide survey of the whole field ' (the 'need for comprehensive reform ' criterion) (DPP vs Myers, , 1022; Cassell vs Broome, ; , 11086 and Haughton vs Smith, [1975] A.C. 476,500).
In the interest of certainty, a decision ought not to be overruled merely because the Law Lords consider that it was wrongly decided.
There must be some additional reasons to justify such a step (the 'precedent merely wrong ' crite rion) Knuller vs DPP, [1973] A .C. 435,455; 6.
A decision ought to be overruled if it causes such great uncertainty in practice that the Parties ' advisers are unable to give any clear indication as to what the courts will hold the law to be (the 'rectification of uncertainty ' criterion) Jones, at 966; Oldendroll & Co. vs Tradex Export, S.A. 1974 479,533,535. 7.
A decision ought to be overruled if .in relation to some broad issue or principle it is not considered just or in keeping with contemporary social conditions or modern conceptions of public policy (the 'unjust or outmoded ' criterion) ibid Conway vs Rimmer, ; ,938.
Dr. Paterson noted that between the years 1966 and 1988 there were twenty nine cases in which the House of Lords was invited to overrule one of its own precedents, that the House of Lords did so in eight of them, while in a further ten cases at least one of the Law Lords was willing to overrule the previous House of Lords precedent.
In a consid erable number of other cases, however, the Law Lords seemed to prefer to distinguish the earlier decisions rather than overrule them.
The High Court of Australia, the highest Court in the Commonwealth, has reserved to itself the power to reconsider its own decision, but has laid down that the power should not be exercised upon a mere suggestion that some or all the member of the later Court would arrive at a different con clusion if the matter were res integra.
In the Tramways case; , , Griffith, C.J., while doing so administered the following caution: "In my opinion, it is impossible to maintain as an abstract proposition that Court is either legally or technically bound by previ ous decisions.
Indeed, it may, in a proper case, be 330 its duty to disregard them.
But the rule should be applied with great caution, and only when the previous decision is manifestly wrong, as, for instance, if it proceeded upon the mistaken assumption of the continuance of a repealed or expired Statute, or is contrary to a decision of another Court which this Court is bound to follow; not, I think, upon a mere suggestion, that some or all of the members of the later Court might arrive at a different conclusion if the matter was res integra.
Otherwise there would be grate danger of want of continuity in the interpretation of law.
" In the same case, Barton, J. observed at p. 69: " . .
I would say that I never thought that it was not open to this Court to review its previous decisions upon good cause.
The question is not whether the Court can do so, but whether it will, having due regard to the need for continuity and consistency in the judicial decision.
Changes in the number of appointed Justices can, I take it, never of themselves furnish a reason for review . .
But the Court can always listen to argument as to whether it ought to review a particular decision, and the strongest reason for an overruling is that a decision is manifestly wrong and its continuance is injurious to the public interest".
In the United States of America the Supreme Court has explicitly overruled its prior decision in a number of cases and reference will be found to them in the judgment of Brandeis, J. in State of Washington vs Dawson & Co., ; where he said: "The doctrine of Stare decisis should not deter us from overruling that case and those which follow it.
The decisions are recent ones.
They have not been acquiesced in.
They have not created a rule of property around which vested interests have clustered.
They affect solely matters of a transitory nature.
On the other hand, they affect seriously the lives of men, women and children, and the general welfare.
Stare decisis is ordinarily, a wise rule of action.
But it is not a univer sal, inexorable command.
The instances in which the Courts have disregarded its admonition a re many.
" 331 Elaborating his point in his dissenting judgment in David Burnel vs Coronado Oil & Gas Company, ; ; 76 L.Ed. 815, Brandeis, J. observed: "Stare decisis usually the wise policy, because in most matters it is more important that the applicable rule of law be settled right.
Compare National Bank vs Whitney, 103 U.S. 99; 26 L.Ed.
443 444.
This is commonly true even where the error is a matter of serious concern, provided correction can be had by legislation.
But in cases involving the Feder al Constitution, where correction through legislative action is practically impossible, this Court has often overruled its earlier decisions.
The Court bows to the lessons of experience and the force of better reasoning recognising that the process of trial and error, so fruitful in the physical sciences, is appropriate also in the judicial function.
" The Judicial.
Committee of the Privy Council also took the view that it was not bound in law by its earlier deci sions, but in In re Compensation to Civil Servants, L.R. ; A.I.R. 1929 P.C. 84, 87 it declared that it "would hesitate long before disturbing a solemn decision by a previous Board, which raised an identical or even a simi lar issue for determination" and reiterated that reservation in the Attorney General of Ontario vs The Canada Temperance Federation, L.R. 76 Q.A. 10 and Phanindra Chandra Neogy vs The King; , These cases from England, Australia and the United States were considered by this Court in The Bengal Immunity Company Limited vs The State of Bihar and others, (supra), perhaps the first recorded instance of the Supreme Court in this country being called upon to consider whether it could overrule an earlier decision rendered by it.
A Bench of seven Judges assembled to consider whether the majority decision of a Constitution Bench of five Judges in State of Bombay vs The United Motors (India) Ltd., ; should be reconsidered.
Four Judges of the Bench of seven said it should and voted to overrule the majority decision in the United Motors, (supra).
The remaining three voted to the contrary.
Das, Acting C.J., speaking for himself and on behalf of Bose, Bhagwati and Jafar Imam, JJ, preferred the approach adopted by the United States Supreme Court since, in the view of that learned Judge, the position in India approximated more closely to that obtaining in the United states rather than to the position in England, where Parlia ment could rectify the situation by a simple majority, and to that in Australia, where the mistake could be 332 corrected in appeal to the Privy Council.
The learned Judge observed: "There is nothing in our Constitution which pre vents us from departing from a previous decision if we are convinced of its error and its baneful effect on the general interests of the public." And reference was made to the circumstance that Article 141 of the Constitution made the law declared by this Court binding on all Courts in India.
Speaking with reference to the specific case before the Court, the learned Judge referred to the far reaching effect of the earlier decision in the United Motors (supra) on the general body of the consuming public, and that the error committed in the earlier decision would result in perpetuat ing a tax burden erroneously imposed on the people, giving rise to a consequence "manifestly and wholly unauthorised." The learned Judge observed: "It is not an ordinary pronouncement declaring the rights of two private individuals inter se.
It involves an adjudication on the taxing power of the States as against the consuming public generally.
If the decision is errone ous, as indeed we conceive it to be, we owe it to the public to protect them against the illegal tax burdens which the States are seeking to impose on the strength of that errone ous recentdecision".
Cautioned that the Court should not differ merely because a contrary view appeared preferable, the learned Judge affirmed that "we should not lightly dissent from a previous pronouncement of this Court.
" But if the previous decision was plainly erroneous, he pointed out, there was a duty on the Court to say so and not perpetuate the mistake.
The appeal to the principle of stare decisis was rejected on the ground that (a) the decision intended to be overruled was a very recent decision and it did not involve overruling a series of decisions, and (b) the doc trine of stare decisis was not an inflexible rule, and must, in any event, yield where following it would result in perpetuating an error to the detriment of the general wel fare of the public or a considerable section thereof.
Since then the question as to when should the Supreme Court overrule its own decision has been considered in several cases.
Relying on the Bengal Immunity case, Khanna, J. remarked that certainly in the law, which was an essen tial ingredient of the Rule of Law, would be considerably eroded if the highest court of the land lightly overruled the view expressed by it in earlier cases.
One instance where such overruling could be permissible was a situation where contextual values giving birth to the earlier view had altered substantially since.
333 In Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Ors.
, ; he explained: "Some new aspects may come to light and it may become essen tial to cover fresh grounds to meet the new situations or to overcome difficulties which did not manifest themselves or were not taken into account when the earlier view was pro pounded.
Precedents have a value and the ratio decidendi of a case can no doubt be of assistance in the decision of future cases.
At the same time we have to, as observed by Cardozo, guard against the notion that because a principle has been formulated as the ratio decidendi of a given prob lem, it is therefore to be applied as a solvent of other problems, regardless of consequences, regardless of deflect ing factors, inflexibly.
and automatically, in all its pristine generality (see Selected Writings, p. 31).
As in life so in law things are not static.
" In Lt. Col. Khajoor Singh vs The Union of India & Anoth er; , the majority of this court emphasised that the court, should not depart from an interpretation given in an earlier judgment of the court unless there was a fair amount of unanimity that the earlier decision was manifestly wrong.
In Keshav Mills Company vs Commissioner of Income Tax, ; ,921 this court observed that a revision of its earlier decision would be justified if there were compelling and substantial reasons to do so.
In Sajjan Singh vs State of Rajasthan, ; ,947 948 the court laid down the test: 'Is it absolutely necessary and essential that the question already decided should be reo pened? ', and went on to observe: 'the answer to this ques tion would depend on the nature of the infirmity alleged in the earlier decision, its impact on public good and the validity and compelling character of the considerations urged in support of the contrary view. ' There can be no doubt, as was observed in Girdhari Lal Gupta vs D.H. Mill, ; that where an earlier relevant statutory provision has not been brought to the notice of the court, the decision may be reviewed, or as in Pillani Investment Corporation Ltd. vs I.T.O. 'A ' Ward, Calcutta & Anr., ; , if a vital point was not considered.
A more compendious examination of the problem was undertaken in Keshav Mills Company vs Commissioner of Income Tax, (supra) where the Court pointed out: "It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should 334 govern the approach of the Court in dealing with the ques tion of reviewing and revising its earlier decisions.
It would always depend upon several relevant considerations: What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any relevant and materi al statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the general administration of law or on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconven ience, hardship or mischief? These and other relevant con siderations must be carefully borne in mind whenever this Court is called upon to exercise its jurisdiction to review and revise its earlier decisions.
These considerations become still more significant when the earlier decision happens to be a unanimous decision of the Bench of five learned Judges of this Court.
" Much importance has been laid on observing the finality of decisions rendered by the Constitution Bench of this Court, and in Ganga Sugar Company vs State of Uttar Pradesh, ; , 782 the Court held against the finality only where the subject was 'of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong '.
It is not necessary to refer to all the cases on the point.
The broad guidelines are easily deducible from what has gone before.
The possibility of further defining these guiding principles can be envisaged with further juridical experience, and when common jurisprudential values linking different national systems of law may make a consensual pattern possible.
But that lies in the future.
There was some debate on the question whether a Division Bench of Judges is obliged to follow the law laid down by a Division Bench of a larger number of Judges.
Doubt has arisen on the point because of certain observations made by O. Chinnappa Reddy, J. in 335 Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, AIR 1985 SC 23 1.
Earlier, a Division Bench of two Judges, of whom he was one, had expressed the view in T.V. Vatheeswaran vs The State of Tamil Nadu, that delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle a person under sentence of death to invoke Article 21 of the Constitution and demand the quashing of the sentence of death.
This would be so, he observed, even if the delay in the execution was occasioned by the time necessary for filing an appeal or for considering the reprieve of the accused or some other cause for which the accused himself may be responsible.
This view was found unacceptable by a Bench of three Judges in Sher Singh & Ors.
vs State of Punjab, ; where the learned Judges observed that no hard and fast rule could be laid down in the matter.
In direct disagreement with the view in T.V. Vatheeswaran, (supra), the learned Judges said that account had to be taken of the time occupied by pro ceedings in the High Court and in the Supreme Court and before the executive authorities, and it was relevant to consider whether the delay was attributable to the conduct of the accused.
As a member of another Bench of two Judges, in Javed Ahmed Abdul Hamid Pawala, (supra) O. Chinnappa Reddy, J. questioned the validity of the observations made in Sher Singh, (supra) and went on to note, without express ing any concluded opinion on the point, that it was a seri ous question "whether a Division Bench of three Judges could purport to overrule the judgment of a Division Bench of two Judges merely because there is larger than two.
The Court sits in Divisions of two and three Judges for the sake of convenience and it may be inappropriate for a Division Bench of three Judges to purport to overrule the decision of a Division Bench of two Judges.
Vide Young vs Bristol Aero plane Co. Ltd., It may be otherwise where a Full Bench or a Constitution Bench does so.
" It is pertinent to record here that because of the doubt cast on the validity of the opinion in Sher Singh, (supra), the question of the effect of delay on the execution of a death sentence was referred to a Division Bench of five Judges, and in Triveniben vs State of Gujarat, AIR 1989 SC 142 the Constitution Bench overruled T.V. Vatheeswaran, (supra).
What then should be the position in regard to the effect of the law pronounced by a Division Bench in relation to a case raising the same point subsequently before a Division Bench of a smaller number of Judges? There is no constitu tional or statutory prescription in the matter, and the point is governed entirely by the practice in India of the Courts sanctified by repeated affirmation over a century of time.
It cannot be doubted that in order to promote consist ency and certainty 336 in the law laid down by a superior Court, the ideal condi tion would be that the entire Court should sit in all cases to decide questions of law, and for that reason the Supreme Court of the United States does so.
But having regard to the volume of work demanding the attention of the Court, it has been found necessary in India as a general rule of practice and convenience that the Court should sit in Divisions, each Division being constituted of Judges whose number may be determined by the exigencies of judicial need, by the nature of the case including any statutory mandate relative there to, and by such other considerations which the Chief Jus tice, in whom such authority devolves by convention, may find most appropriate.
It is in order to guard against the possibility of inconsistent decisions on points of law by different Division Benches that the rule has been evolved, in order to promote consistency and certainty in the devel opment of the law and its contemporary status, that the statement of the law by a Division Bench is considered binding on a Division Bench of the same or lesser number of Judges.
This principle has been followed in India by several generations of Judges.
We may refer to a few of the recent cases on the point.
In John Martin vs The State of West Bengal, ; a Division Bench of three Judges found it right to follow the law declared in Haradhan Saha vs State of West Bengal, ; decided by a Division Bench of five Judges, in preference to Bhut Nath Mate vs State of West Bengal, ; decided by a Division Bench of two Judges.
Again in Smt.
India Nehru Gandhi vs Shri Raj Narain, Beg, J. held that the Constitution Bench of five Judges was bound by the Constitution Bench 01 ' thirteen Judges in His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala, [1973] Suppl.
1 SCR.
In Ganapati Sitaram Balvalkar & Anr.
vs Waman Shripad Mage (Since Dead) Through Lrs., this Court expressly stated that the view taken on a point of law by a Division Bench of four Judges of this Court was binding on a Division Bench of three Judges of the Court.
And in Mattulal vs Radhe Lal, ; this Court specifically observed that where the view expressed by two different Division Benches of this Court could not be reconciled, the pronouncement of a Division Bench of a larger number of Judges had to be, preferred over the deci sion of a Division Bench of a smaller number of Judges.
This Court also laid down in Acharaya Maharajshri Narandrapra sadji AnandprasadjiMaharaj etc.
vs The State of Gujarat & Ors., ; that even where the strength of two differing Division Benches consisted of the same number of Judges, it was not open to one Division Bench to decide the correctness or other wise of the views of the other.
The principle was reaffirmed in Union of India & Ors.
vs Godfrey Philips India Ltd., [1985] 4 337 SCC 369 which noted that a Division Bench of two Judges of this Court in Jit Ram vs State of Haryana, ; had differed from the view taken by an earlier Division Bench of two Judges in Motilal Padampat Sugar Mills vs State of U.P., ; on the point whether the doctrine of promissory estoppel could be defeated by invoking the defence of executive necessity, and holding that to do so was wholly unacceptable reference was made to the well accepted and desirable practice of the later Bench referring the case to a larger Bench when the learned Judges found that the situation called for such reference.
We are of opinion that a pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or a smaller number of Judges, and in order that such decision be binding, it is not necessary that it should be a decision rendered by the Full Court or a Constitution Bench of the Court.
We would, however, like to think that for the purpose of imparting certainty and endowing due authority decisions of this Court in the future should be rendered by Division Benches of at least three Judges un less, for compelling reasons that is not conveniently possi ble.
Upon the aforesaid considerations, and in view of the nature and potential of the questions raised in these cases we are of the view that there was sufficient justification for the order dated 23 September, 1985 made by the Bench of two learned judges referring these cases to a larger Bench for reconsideration of the question decided in K. Kamalajam mannivaru (dead) by Lrs., (supra) and Bhag Singh and Ors., (supra).
The preliminary objection raised by learned counsel for the respondents to the validity of the reference is overrruled.
We now come to the merits of the reference.
The refer ence is limited to the interpretation of section 30(2) of the Land Acquisition (Amendment) Act of 1984.
Before the enact ment of the Amendment Act, solatium was provided under section 23(2) of the Land Acquisition Act (shortly, "the parent Act") at 15% on the market value of the Land computed in accordance with section 23(1) of the Act, the solatium being provided in consideration of the compulsory nature of the acquisition.
The Land Acquisition Amendment Bill, 1982 was introduced in the House of the People on 30 April, 1982 and upon enactment the Land Acquisition Amendment Act 1984 commenced operation with effect from 24 September, 1984.
section 15 of the Amendment Act amended section 23(2) of the parent Act and substituted the words '30 per centum ' in place of the words '15 per centum '.
Parliament intended that the be 338 nefit of the enhanced solatium should be made available albeit to a limited degree, even in respect of acquisition proceedings taken before that date.
It sought to effectuate that intention by enacting section 30(2) in the Amendment Act, section 30(2) of the Amendment Act provides: "(2) the provisions of sub section
(2) of section 23 . of the principal Act, as amended by clause (b) of section 15 . . of this Act . . shall apply and shall be deemed to have applied, also to, and in relation to, any award made by the Collector or Court or to any order passed by the High Court or Supreme Court in appeal against any such award under the provisions of the principal Act after the 30th day of April, 1982 [the date of introduction of the Land Acquisition (Amendment) Bill, 1982, in the House of the People] and before the commencement of this Act." In construing section 30(2), it is just as well to be clear that the award made by the Collector referred to here is the award made by the Collector under section 11 of the parent Act, and the award made by the Court is the award made by the Principal Civil Court of Original Jurisdiction under section 23 of the parent Act on a reference made to it by the Collector under section 19 of the parent Act.
There can be no doubt that the benefit of the enhanced solatium is intended by section 30(2) in respect of an award made by the Collector between 30 April 1982 and 24 September, 1984.
Likewise the benefit of the enhanced solatium is extended by section 30(2) to the case of an award made by the Court between 30 April 1982 and .24 September 1984, even though it be upon reference from an award made before 30 April, 1982.
The question is: what is the meaning of the words "or to any order passed by the High Court or Supreme Court on appeal against any such award?" Are they limited, as con tended by the appellants, to appeals against an award of the Collector or the Court made between 30 April 1982 and 24 September 1984, or do they include also, as contended by the respondents, appeals disposed of between 30 April, 1982 and 24 September 1984 even though arising out of awards of the Collector or the Court made before 30 April, 1982.
We are of opinion that the interpretation placed by the appellants should be preferred over that suggested by the respondents.
Parliament has identified the appeal before the High Court and the appeal before the Supreme Court by describing it as an appeal against 'any such award '.
The submission on behalf of the respondents is that the words 'any such award ' mean the award made by the Collector or Court, and carry no 339 greater limiting sense; and that in this context, upon the language of section 30(2), the order in appeal is an appellate order made between 30 April 1982 and 24 September 1984 in which case the related award of the Collector or of the Court may have been made before 30 April 1982.
To our mind, the words 'any such award ' cannot bear the broad meaning suggested by learned counsel for the respondents.
No such words of description by way of identifying the appellate order of the High Court or of the Supreme Court were neces sary.
Plainly, having regard to the existing hierarchical structure of for a contemplated in the parent Act those appellate orders could only be orders arising in appeal against the award of the Collector or of the Court.
The words 'any such award ' are intended to have deeper signifi cance, and in the context in which those words appear in section 30(2) it is clear that they are intended to refer to awards made by the Collector or Court between 30 April, 1982 and 24 September, 1984.
In other words section 30(2) of the Amendment Act extends the benefit of the enhanced solatium to cases where the award by the Collector or by the Court is made between 30 April, 1982 and 24 September, 1984 or to appeals against such awards decided by the High Court and the Su preme Court whether the decisions of the High Court or the Supreme Court are rendered before 24 September, 1984 or after that date.
All that is material is that the award by the Collector or by the Court should have been made between 30 April, 1982 and 24 September, 1984.
We find ourselves in agreement with the conclusion reached by this Court in K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisi tion Officer, (supra), and find ourselves unable to agree with the view taken in Bhag Singh and Others vs Union Terri tory of Chandigarh, (supra).
The expanded meaning given to section 30(2) in the latter case does not, in our opinion, flow reasonably from the language of that sub section.
It seems to us that the learned judges in that case missed the sig nificance of the word 'such ' in the collocation 'any such award ' in section 30(2).
Due significance must be attached to that word, and to our mind it must necessarily intend that the appeal to the High Court or the Supreme Court, in which the benefit of the enhanced solatium is to be given, must be confined to an appeal against an award of the Collector or of the Court rendered between 30 April, 1982 and 24 Septem ber, 1984.
We find substance in the contention of the learned Attorney General that if Parliament had intended that the benefit of enhanced solatium should be extended to all pending proceedings it would have said so in clear language.
On the contrary, as he says, the terms in which section 30(2) is couched indicate a limited extension of the benefit.
The Amendment Act has not been made generally retrospective with 340 effect from any particular date, and such retrospectivity as appears is restricted to certain areas covered by the parent Act and must be discovered from the specific terms of the provision concerned.
Since it is necessary to spell out the degree of retrospectivity from the language of the relevant provision itself, close attention must be paid to the provi sions of section 30(2) for determining the scope of retrospective relief intended by Parliament in the matter of enhanced solatium.
The learned Attorney General is also right when he points out that it was never intended to define the scope of the enhanced solatium on the mere accident of the disposal of a case in appeal on a certain date.
Delays in the superi or Courts extend now to limits which were never anticipated when the right to approach them for relief was granted by statute.
If it was intended that section 30(2) should refer to appeals pending before the High Court or the Supreme Court between 30 April, 1982 and 24 September, 1984, they could well refer to proceedings in which an award had been made by the Collector from anything between 10 to 20 years before.
It could never have been intended that rates of compensation and solatium applicable to acquisition proceedings initiated so long ago should now enjoy the benefit of statutory en hancement.
It must be remembered that the value of the land is taken under section 11(1) and section 23(1) with reference to the date of publication of the notification under s.4(1), and it is that date which is usually material for the purpose of determining the quantum of compensation and solatium.
Both section 11(1) and section 23(1) speak of compensation being determined on the basis, inter alia, of the market value of the land on that date, and solatium by section 23(2), is computed as a per centage on such market value.
Our attention was drawn to the order made in State of Punjab vs Mohinder Singh, (supra), but in the absence of a statement of the reasons which persuaded the learned Judges to take the view they did we find it difficult to endorse that decision.
It received the approval of the learned Judges who decided Bhag Singh (supra), but the judgment in Bhag Singh, (supra) as we have said earlier, has omitted to give due significance to all the material provisions of section 30(2), and consequently we find ourselves at variance with it.
The learned Judges proceeded to apply the principle that an appeal is a continuation of the proceeding initiated before the Court by way of reference under section
18 but, in our opinion, the application of a general principle must yield to the limiting terms of the statutory provision itself.
Learned counsel for the respondents has strenuously relied on the general principle that the appeal is a re hearing of the original matter, but we are not satisfied that he is on good ground in invoking that principle.
Learned counsel 341 for the respondents points out that the word 'or ' has been used in section 30(2), as a disjunctive between the reference to the award made by the Collector or the Court and an order passed by the High Court or the Supreme Court in appeal and, he says, properly understood it must mean that the period 30 April, 1982 to 24 September, 1984 is as much applicable to the appellate order of the High Court or of the Supreme Court as it is to the award made by the Collector or the Court.
We think that what Parliament intends to say is that the benefit of section 30(2) will be available to an award by the Collector or the Court made between the aforesaid two dates or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the Court made between the said two dates.
The word 'or ' is used with reference to the stage at which the proceeding rests at the time when the benefit under section
30(2) is sought to be extended.
If the proceeding has terminated with the award of the Collector or of the Court made between the aforesaid two dates, the benefit of section 30(2) will be applied to such award made between the aforesaid two dates.
If the proceeding has passed to the stage of appeal before the High Court or the Supreme Court, it is at that stage when the benefit of section 30(2) will be applied.
But in every case, the award of the Collector or of the Court must have been made between 30 April, 1982 and 24 September, 1984.
In the result we overrule the statement of the law laid down in Mohinder Singh, (supra) and in Bhag Singh and Anoth er, (supra) and prefer instead the interpretation of section 30(2) of the Amendment Act rendered in K. Kamalajammanniava ru (dead) by Lrs.
(supra).
The cases will now be listed before a Division Bench of three learned Judges for hearing on the merits of the other points raised in the cases.

summary:
A common question of law having arisen in this group of cases for determination by this Court, they were heard together.
Lands of Respondents in Civil Appeal Nos.
2839 40 of 1989 were acquired under the Land Acquisition Act.
The Collector made the award for compensation on March 30, 1963 and on a reference, being made under Section 18 of the Act, the Additional District Judge enhanced the compensation by his order dated June 10, 1968.
The Respondents appealed to the High Court seeking further enhancement.
During the pendency of the appeal, Land Acquisition (Amendment) Bill 1982 was introduced on April 30, 1982 and became an Act on Sept. 24, 1984.
The High Court disposed of the appeal on Dec. 4, 1984 and apart from raising the quantum of compensa tion, also awarded a solatium at 30 per cent in terms of the Amendment Act 1984.
The State appealed to this Court.
The matter initially came up before a Division Bench on September 23, 1985.
The Bench had before it two decisions of this Court wherein divergent views were expressed.
The two decisions were: In K. Kamalajammanniavaru 's (dead) by Lrs.
vs Special Land 317 Acquisition Officer,, This Court (composed of.two Judges) took the view that award of 30 per cent solatium under the amended Section 23(2) by the High Court or the Supreme Court were applicable only where the award appealed against was made by the Col lector or the Court between April 30, 1982 and Sept. 24, 1984.
In the second decision, Bhag Singh & Ors. vs Union Territory of Chandigarh, ; , this Court (comprised of three Judges) took a contrary view and ruled that even if an award was made by the Collector or the Court on or before April 1982 and an appeal against such award was pending before the High Court or this Court on 30.4.1982 or was filed subsequent to that date, the provisions of amended Section 23(2) and 28 of the Land Acquisition Act would be applicable as the appeal was a continuation of the reference made under Section 18 and as such the appellate Court must apply the amended provision on the date of the decision of the appeal.
In this way the decision in Kamalajammanniava ru 's case was overruled by this Court in Bhag Singh 's case and the Court approved another decision of Division Bench comprised of three Judges in Mohinder Singh 's case which merely directed payment of enhanced solatium and interest without giving any reasons.
In view of the conflicting decisions on the point of two Judges Bench before, whom these cases come up for considera tion, referred to this Larger Bench the question: whether under the Amended Section 23(2), the claimants were entitled to solatium at 30 per cent of the market value irrespective of the dates on which the land acquisition proceedings were initiated or on the dates on which the award had been passed.
Overruling the preliminary objection as to the maintain ability of the reference of matters to a larger Bench, this Court disposing of the reference and directing that the appeals be now listed for hearing on merits, HELD: Solatium is awarded under sub section (2) of Section 23 of the Land Acquisition Act.
Before the Amendment Act was enacted, the Sub section provided for solatium at 15 per cent of the market value.
By the change introduced by the Amendment Act the amount has been raised to 30 per cent of the market value.
Sub section (2) of Section 30 of the Amendment Act specifies the category of cases to which the amended rate of solatium is attracted.
[322D] 318 What Parliament intends to say is that the benefit of Section 30(2) will be available to an award by the Collector or the Court made between 30th April 1982 and 24th September 1984 or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the Court made between the two said dates.
The word 'or ', is used with reference to the stage at which the proceeding rests at the time when the benefit under Section 30(2) is sought to be extended.
If the proceeding has terminated with the award of the Collector or of the Court made between the aforesaid two dates, the benefit of Section 30(2) will be applied to such award made between the aforesaid two dates.
If the proceeding has passed to the stage of appeal before the High Court or the Supreme Court, it is at that stage when the benefit of Section 30(2) will be applied.
But in every case the award of the Collector or of the Court must have been made between April 30, 1982 and September 24, 1984.
[339D G] A pronouncement of law by a Division Bench of this Court is binding on a Division Bench of the same or a smaller number of Judges, and in order that such decision be bind ing, it is not necessary that it should be a decision ren dered by the full Court or a Constitution Bench of the Court.
For the purpose of imparting certainty and endowing due authority, decisions of this Court in the future should be rendered by Division Benches of at least three Judges unless, for compelling reasons that is not conveniently possible.
[337C D] The Land Acquisition Bill 1982, was introduced in the House of the People on 30th April, 1982 and upon enactment the Land Acquisition Act, 1984, commenced operation with effect from 24th Sept. 1984.
Section 15 of the Amendment Act amended Section 23(2) of the parent Act and substituted the words "30 per cent" in place of the words "15 per cent".
Parliament intended that the benefit of the enhanced solati um should be made available albeit to a limited degree even in respect of acquisition proceedings taken before the date.
It sought to effectuate that intention by enacting Section 30(2) in the Amendment Act.
[337G H; 338A] There can be no doubt that the benefit of the enhanced solatium is intended by Section 30(2) in respect of an award made by the Collector between 30th April 1982 and 24th September 1984.
Likewise the benefit of the enhanced solati um is extended by Section 30(2) to the case of an award made by the Court between April 30, 1982 and September 24, 1984, even though it be upon reference from an award made before April 30, 1982.
[338E] 319 One of the functions of the Superior Judiciary in India is to examine the competence and validity of legislation both in point of legislative competence as well as its consistency with the Fundamental Rights.
In this regard the Courts in India possess a power not known to the English Courts.
[323G H] Exp.
Canon Selwyn, and Cheney vs Conn, , referred to.
The range of judicial review recognised in the Superior Judiciary of India is perhaps the widest and the most exten sive known to the world of law.
The power extends to examin ing the validity of even an amendment to the Constitution for now it has been repeatedly held that no Constitutional amendment can be sustained which violates the basic struc ture of the Constitution.
[324B] His Holiness Kesavananda Bharti Sripadagalavaru vs State of Kerala, ; Smt.
Indira Nehru Gandhi vs Shri Raj Narain, ; Minerva Mills Ltd. and others vs Union of India and others, [1980] 2 SCC 591; S.P. Sampath Kumar etc.
vs Union of India and Ors.
, ; The Court overruled the statement of the law laid down in the cases of State of Punjab vs Mohinder Singh & Anr.
and Bhag Singh and Others vs Union Territory of Chandigarh and preferred the interpretation of Section 30(2) of the Amend ment Act rendered in K. Kamalajammanniavaru (dead) by Lrs.
vs Special Land Acquisition Officer.
Oliver Wendell Holmes, "The Common Law", p. 5; Oliver Wendell Homes, "Common Carriers and the Common Law", [1943] 9 Curr.
L.T. 387, 388; Julius Stone, "Legal Systems & Law yers Reasoning", p. 58 59; Roscoe Pound, "An Introduction to the Philosophy of Law", p. 19; "The Judge as Law Maker", pp.
Myers vs Director of Public Prosecutions, L.R. 1965 A.C. 1001 & 1021; The Bengal Immunity Company Limited vs The State of Bihar and Others, ; Street Tramways vs London County Council, ; ; Radcliffe vs Ribble Motor Services Ltd., ; 245; Dr. Alan Paterson 's "Law Lords", [1982] pp.
156 157; Jones vs Secretary of State for Social Services, [1972] A.C. at 966; Ross Smith vs Ross Smith, , 303; Indyka vs Indyka, [1969] I A.C. 33, 69; Construction by Jones, at 966; Steadman vs Steadman, , 542; DPP vs Myers, [1965] A.C. 1001, 320 1022; Cassell vs Broome,/1972] A.C. 1027, 1086; Haughton vs Smith, [1975] A.C. 476,500; Knullerv.
DPP, [1973] A.C. 435,455; Conway vs Rimmer, ; , 938; Tramways case; , ; State of Washington vs Dawson & Co., , ; David Burnel vs Coronado Oil & Gas Company, ; , ; Compare National Bank vs Whitney, ; , 26 L.Ed.
443 444; Compensation to Civil Servants, , A.I.R. , 87; Attorney General of Ontario vs The Canada Temperance Federation, L.R. 78 I.A. 10; Phanindra Chandra Neogy vs The King, ; ; State of Bombay vs The United Motors (India) Ltd.; , ; Maganlal Chhagganlal (P) Ltd. vs Municipal Corporation of Greater Bombay & Ors., ; ; Lt.
Col. Khajoor Singh vs The Union of India & Anr., ; ; Keshav Mills Compa ny vs Commissioner of Income Tax; , , 921; Sajjan Singh vs State of Rajasthan, ; , 947948; Girdhari Lal Gupta vs
D.H. Mill; , ; Pillani Investment Corporation Ltd. vs
I.T.O. 'A ' Ward, Calcutta & Ant., ; ; Ganga Sugar Company vs State of Uttar Pradesh; , , 782; Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; T.V. Vatheeswaran vs The State of Tamii Nadu, ; Sher Singh & Ors.
vs State of Punjab, ; ; Triveniben vs State of Gujarat, AIR 1989 SC 142; John Martin vs The State of West Bengal, ; ; Haradhan Saha vs State of West Bengal, ; ; Bhut Nath Mate vs State of West Bengal; , ; Mattulal vs Radhe Lal, ; ; Acharaya Maharajshri Narandraprasadji Anandprasadji Maharaj etc.
vs The State of Gujarat & Ors., ; ; Union of India & Ors.
vs Godfrey Philips India Ltd., ; ; Jit Ram vs State of Haryana, ; ; Motilal.
Padampat Sugar Mills vs State of U. P.; ,


judgement:
vil Appeal Nos.
1924 27 of 1980 etc.
From the Judgment and Order dated 14.11.1979 of the Delhi High Court in Civil Writ No. 1517 of 1979.
359 Soli J. Sorabjee, S.K. Mehta, H.N. Salve, A.N. Banatwa la, Rajiv Datta, R. Ravindran, K.K. Patel, Ujwal Rana, M.K. Dua, S.M. Sarin, Aman Vachher, E.M.S. Anam, P.G. Gokhale, P.B. Agarwala, R.B. Hathikhanawala, Ms. section Manchanda, K.K. Mohan, P.K. Chakravarty, section Srinivasan, K.C. Agarwal, Madan Lokur, A. Minocha, R.B. Datar, K.M.K. Nair, S.K. Gambhir, Sanjay Sarin, Vivek Gambhir, M. Veerappa, Ms. Kamini Jais wal, M.K.D. Namboodiry, D.D. Gupta, E.C. Agrawala, V.K. Pandita, Ms. Purnima Bhatt, Atul sharma, V.N. Ganpule, C.K. Ratnaparkhi, M.M.L. Srivastava, M.C. Dhingra, V. Maya Krish nan, D.N. Misra, K.K. Gupta and Anis Ahmed Khan, for the Appellants.
K. Parasaran, Attorney General, B. Datta, Additional Solicitor General, and Kuldip Singh, Additional Solicitor General, K.N. Bhatt, C.V. Subba Rao, Ms. A. Subhashini, Mrs. Sushma Suri, A. Subba Rao, A.K. Srivastava, P.P. Singh, R.K. Joshi and H.K. Gangwani for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
These appeals by special leave are directed against the judgment and order of the High Court of Delhi dismissing writ petitions complaining of discriminatory treatment between the appellants and the State Trading Corporation in regard to the rate of customs duty levied on the import of edible oils.
A number of writ petitions have also been filed directly in this Court by other private importers based on the same complaint.
They pray for relief in terms of the same rate of customs duty as has been ap plied to the import of edible oils effected by the State Trading Corporation.
As common questions of law arise in these appeals and writ petitions and the facts are substantially similar, we proposed to treat Writ Petition No. 3800 of 1980, M/s Liber ty Oil Mills vs Union of India & Others, as the leading case.
On 17 January, 1977 the Government of India issued a Public Notice permitting private parties to import edible oils for direct human consumption.
It was not permissible to use such imported oils for the manufacture of Vanaspati or for any industrial purpose.
Under the Import Policy of 1978 79, the Government canalised the import of edible oils so that the State Trading Corporation alone was permitted to import edible oils.
Some of the private importers who had entered into firm commitments with foreign suppliers, and were now being denied permission to import the edible oils filed writ petitions in vari 360 ous High Courts, and these writ petitions were allowed and they were granted licences to import the edible oils.
Prior to 1 March, 1979 the import of edible oils was exempt from customs duty, but with effect from that date the exemption was partially withdrawn and certain specified oils were made liable to import duty at 12 1/2 per cent.
Exemp tion was granted from additional duty chargeable under section 3 of the .
Auxiliary duty chargeable under the Finance Act was, however, payable.
On 17 March, 1979 the Government passed an order of exemption in favour of the State Trading Corporation under section 25(2) of the whereby the imports of the specified oils by the State Trading Corporation were made liable to customs duty at 5 per cent only, and there was a total exemption from auxiliary and additional duty.
The imports of the same specified oils by private importers were made liable to customs duty at 12.5 per cent ad valorem.
The concessional rate of customs duty in favour of the State Trading Corpora tion was restricted to imports aggregating 3 lakh tonnes initially.
That quantity was enlarged to 6 lakh tonnes on 26 June, 1979.
On 31 October, 1979, a further order of exemp tion was made in favour of the State Trading Corporation granting it exemption for imports of five lakh tonnes of the specified oils, and this was followed on 31 March, 1981 by another order of exemption in respect of an aggregate quan tity of 5 lakh tonnes of oil.
It may be mentioned that on 12 May, 1981 the import of edible oil was exempted from the levy of auxiliary duty.
On 18 July, 1981, the Government reduced the exemption granted to the import of the specified oils by private operators by raising the customs duty to 42 1/2 per cent.
The exemption in favour of the State Trading Corporation continued without change.
Thereafter on 26 July, 1981, by Ordinance No. 9 of 1981 the Government raised the tariff rate of customs duty to 200 per cent ad valorem by amending the .
At the same time exemption was granted insofar that the effective rate of duty on the import of the specified edible oils, except Rape Seed oil and Soybean oil, was fixed at 125 per cent.
The exemption from auxiliary duty was withdrawn.
In the result a private importer had to pay a basic duty of 125 per cent and auxil iary duty of 25 per cent on the import of edible oils.
The oil seeds imported by the State Trading Corporation contin ued to attract customs duty at 5 per cent.
Writ Petitions were filed in the High Court of Delhi by private importers complaining of the differential treatment accorded between 361 the private importers and the State Trading Corporation, but these writ petitions were dismissed by the High Court, and the appeals by special leave have now been placed before us.
As has been mentioned earlier, writ petitions have also been filed directly.
At the outset learned counsel for the private importers states that no objection is being taken to canalisation in favour of the State Trading Corporation.
Nor is there any objection to the permission granted to the State Trading Corporation to import 17 lakh tonnes of edible oils.
The complaint is directed against the differential treatment meted out to the private importers in the rate of customs duty.
The contention of the petitioners is that the discrimi natory treatment has no real or substantial nexus with the proposed object of the exemption orders, having regard to the terms of section 25(2) under which the exemption orders in favour of the State Trading Corporation have been made and, therefore, there is a violation of article 14 of the Constitu tion.
S 25(2) provides: "(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circum stances of an exceptional nature to be stated in such order, any goods on which duty is leviable.
" It is apparent that the power conferred on the Central Government under section 25(2) of the Act is to be exercised by it in its subjective satisfaction.
It must be satisfied that it is necessary in the public interest to pass a special exemption order.
The exercise of the power is controlled by the requirement in the sub section that the exemption order must contain a statement stating the circumstances of an exceptional nature under which the special exemption order has been considered necessary.
The requirement is intended by the statute to ensure that the satisfaction of the Cen tral Government concerning the necessity of the order is not reached arbitrarily but flows from material relevant to the object for which the power has been conferred.
The circum stances recited in the exemption orders are: " . .
In view of high international prices of vegetable oils and in order to keep the domestic prices of vanaspati at reasonable levels, it has been felt that certain speci fied vegetable non essential oils imported by the S.T.C. would need to be exempted from part of the customs duty." 362 The reasons set forth in this statement have been analy sed by learned counsel for the private importers and an attempt has been made to establish that there is no justifi cation for relying on the international prices of vegetable oils nor the stated desirability of keeping the domestic prices of vanaspati at reasonable levels as grounds for making the impugned exemption orders in favour of the State Trading Corporation.
In detailed argument, learned counsel for the private importers urges that the public interest which could be contemplated under section 25(2) must be the reduction of the landed cost in order to reduce the domestic prices of the oils.
That object, it is said, is not served by conferring an advantage upon a particular importer even if it be the State Trading Corporation, who is engaged in the same activity in respect of the same goods.
It is point ed out that the concession must relate to the goods and not to the personality of the importer.
Further, it is argued, the allegation that the international prices of edible oils were high is inconsistent with the reality of the situation; on the contrary, it is pointed out, there had been a fall in the international prices of various oils.
In support of the latter submission, reference has been made before us to the pleadings of the parties and a P.A.C. report.
Elaborating his submission in regard to the stated need for maintaining the domestic prices of vanaspati at reasonable levels, learned counsel for the private importers urges that the oils which were being imported by private importers were intended for direct human consumption and could not have been supplied to the vanaspati industry.
Reference is made to the affidavits of the parties to show that the oils imported by the petitioners could not be utilised in the manufacture of vanaspati as permission to do so had not been granted.
Accordingly, the private importers say, there is no basis for the differential duty set out in the exemption orders and no real or substantial nexus between the differ entiation made and the object of section 25(2).
Then, it is also urged, there is no real or substantial distinction between the private importers and the State Trading Corporation having regard to the object of the statute, the nature of customs duty, the rationale of section 25 and the professed object of the exemption orders under section 25(2).
The State Trading Corporation, it is contended, cannot be equated with the Central Government, and we are referred to S.T.C.v.
Commercial Tax Officer, Vishakapatnam, t19641 4 SCR 99.
It is a private limited company registered under the and liable to be wound up under that Act, and that although it functions under the supervision of the Govern ment of India and its Directors, it is not concerned with the performance of any governmental functions, its functions being entirely commercial and in the nature of a trading activity.
Reliance is also placed on Heavy Engineering Mazdoor Union 363 vs State of Bihar, ; Andhra Pradesh State Road Transport Corporation vs Income Tax Officer, ; and Vidarbha Housing Board vs Income Tax Officer, City and Refund Circle, Nagpur & Others, Assum ing, the private importers contend that the State Trading Corporation can be equated with the Central Government or that it is acting on behalf of the Central Government, once the Government ventures into the commercial field it dons the robes of a trader, and it cannot thereafter claim any special attribute or preference for differentiation from other traders.
Learned counsel has placed before us the observations of this Court in L.I.C. vs Escorts Ltd., ; ,344.
There is no rational basis, it is urged, for making a distinction in the imposition of customs duty in respect of the goods imported by the private importers and the State Trading Corporation as both purchased the same commodity in the open market for direct consumption, that the sales effected by them are on a commercial basis, and there is nothing to show that the State Trading Corporation sold these oils at a price lower than the market price or at subsidised prices.
It is asserted that the Central Govern ment, like any other importer, is liable to customs duty, and we are referred to section 12 of the .
It is also complained that the differential proceeds on excessive classification, and that results in violating the doctrine of equality enshrined in article 14 of the Constitution.
Reli ance is placed on State of J & K vs T.N. Khosa,, ; , 792; Mohammad Shujat Ali vs Union of India, ; , 470 and In Re The Special Courts Bill, 1978, , 561 2.
And, finally, the private importers claim that inasmuch as approximately 17 lakh tonnes of oil were imported by the State Trading Corporation as against a mere 1 lakh tonnes of oil imported by all the private im porters together, and the exemption from duty has been granted in the public interest, namely, to control or reduce the price of edible oils, the relief which should be granted is to include the imports made by the private importers within the particular customs duty rate of five per cent already extended to the oils imported by the State Trading Corporation.
In some cases, it is alleged that if the im ports effected by the private importers has to bear the duty levied upon them, the impact of the total duty would be so impossible that it would cripple the business of those private importers.
In reply, the learned Attorney General has laid great stress on the submission that the State Trading Corporation, in undertaking the imports, acts solely as an agent or nominee of the Government of India and all the profits and losses are on account of the Government of India, the State Trading Corporation being entitled to service charges 364 only at one per cent irrespective of loss or profit.
It is submitted that the Central Government is not liable to customs duty and we are referred to various considerations in support of that claim.
It seems to us unnecessary to enter into that question because we have before us a situa tion where customs duty has in fact been imposed, even though at the rate of five per cent only.
In accepting the imposition of customs duty, albeit at five per cent, neither the State Trading Corporation nor the Central Government rest their case on any claim to immunity of the Central Government from the levy of customs duty.
It is not neces sary, therefore, to construe the amendment made in section 12 of the Customs Duty Act, 1962, to which both learned counsel have made reference.
The limited question before us is whether there is justification for the differential treatment accorded be tween the State Trading Corporation and the private import ers.
Now it is significant to note that the import of the specified oils had been entrusted exclusively to the State ' Trading Corporation with effect from 2 December, 1978, and because the private importers had already, prior to that date, entered into contracts for purchase of the edible oils with foreign sellers, they were permitted to make the im ports in question in order to honour their commitment.
In other words, contracts by private importers concluded before 2 December, 1978 were allowed to be worked out after that date without affecting the principle that as from 2 Decem ber, 1978, the business of importing such oils belonged exclusively to the State Trading Corporation.
This is the background in which the questions raised before us need to be considered.
First, as to the contention that both the reasons set forth: in the exemption notifications under section 25(2) of the Act are without foundation.
It seems to us that the two reasons set forth in the exemption notifications can consti tute a reasonable basis for those notifications.
It does appear from the material before us that international prices were fluctuating, the although they may have shown a percep tible fall there was the apprehension that because of the history of fluctuation there was a possibility of their rising in the future.
The need to protect the domestic market is always present, and therefore encouragement had to be given to the imports effected by the State Trading Corpo ration by reducing the rate of customs duty levied on them.
This involved a long term perspective, since the exclusive monopoly to import these edible oils was now entrusted to the State Trading Corporation.
What appears to have dominat ed the policy of the Government in issuing the exemption notifications was the consideration that the domestic prices 365 of vanaspati should be maintained at reasonable levels.
It cannot be doubted that the entire edible oil market is an integrated one, and that it is not reasonable to treat anyone of the edible oils or vanaspati in isolation.
It is well accepted fact that vanaspati manufacturers constitute a powerful organised sector in the edible oil market, and a high vanaspati price would encourage an unauthorised diver sion of the edible oils to vanaspati manufacturing units, resulting in a scarcity in the edible oil market, giving rise to erratic prices and depriving consumers of access to edible oils.
The need for preventing vanaspati prices ruling high was also to prevent people normally using vanaspati from switching over to other edible oils, thus leading to an imbalance in the oil market.
An overall view made it neces sary to ensure that domestic prices of vanaspati remained at reasonable levels.
To all these considerations the learned Attorney General has drawn our attention, and we cannot say that they are not reasonably related to the policy underly ing the exemption orders.
So that the Government would have sufficient supplies of edible oil at hand in order to feed the market, the learned Attorney General says, it was con sidered desirable and in the public interest to reduce the rate of customs duty to five per cent on the imports made by the State Trading Corporation.
Now it is the Central Govern ment which has to be satisfied, as the authority appointed by Parliament under section 25(2), that it is necessary in the public interest to make the special orders of exemption.
It has set out the reasons which prompted it to pass the or ders.
In our opinion, the circumstances mentioned in those notifications cannot be said to be irrelevant or unreasona ble.
It is not for this Court to sit in judgment on the sufficiency of those reasons.
The limitations on the juris diction of the Court in cases where the satisfaction has been entrusted to executive authority to judge the necessity for passing orders is well defined and has been long accept ed.
It is true that the State dons the robes of a trader when it enters the field of commercial activity, and ordi narily it can claim no favoured treatment.
But there may be clear and good reason for making a departure.
Viewed in the background of the reasons for granting a monopoly to the State Trading Corporation, acting as an agent or nominee of the Central Government in importing the specified oils, it will be evident that policy considerations rendered it necessary to make consummation of that policy effective by imposing a concessional levy on the imports.
No such conces sion is called for in the case of the private importers who, in any event, are merely working out contracts entered into by them with foreign sellers before 2 December, 1978.
366 We are also not satisfied that any of the private im porters have made out that their business will be crippled or ruined in view of the rate of customs duty visited on their imports.
The material before us is not sufficient to warrant any conclusion in their favour.
As, in our opinion, the private importers are not enti tled to relief, no question arises of considering whether the exemption orders should be struck down or their benefit extended in favour of the private importers also.
The appeals and Petitions for Special leave to appeal as well as the writ petitions before us are dismissed, but there is no order as to costs.
R.S.S. Appeals and Petitions are dismissed.

dataset_name: IN-Abs

summary:
The appellants/writ petitioners are private importers of edible oils.
Under the Import Policy of 1978 79, the Govern ment canalised the import of edible oils through the State Trading Corporation.
Some of the private importers who had entered into firm commitments with foreign suppliers, and were now being denied permission to import the edible oils, filed writ petitions in various High Courts.
These writ petitions were allowed and they were granted licences to import the edible oils, in order to honour their commit ments.
From March 17, 1979 the import of edible oils was sub jected to differential rates of customs duty at the hands of private importers and the State Trading Corporation, inas much as c oncessional rate of customs duty was levied on the imports by the State Trading Corporation under the order of exemp tion issued under section 25(2) of the .
The order stated that in view of high international prices of vegetable oils and in order to keep the domestic prices at reasonable levels it was considered necessary to exempt the State Trading Corporation from part of the Customs duty.
The appellants filed writ petitions in the High Court of Delhi complaining of the differential treatment accorded between the private importers and the State Trading Corpora tion.
Similar writ petitions were filed in this Court di rectly.
The High Court dismissed the writ petitions.
Before this Court it was contended on behalf of the private importers that (i) there was no basis for the dif ferential duty set out in the exemption orders and no real or substantial nexus between the 357 differentiation made and the object of section 25(2); (ii) there was no real or substantial distinction between the private importers and the State Trading Corporation having regard to the object of the statute, the nature of customs duty, the rationale of section 25 and the professed object of the exemption orders under section 25(2); (iii) the State Trading Corporation could not be equated with the Central Government; (iv) assuming that the State Trading Corporation could be equated with the Central Government or that it was acting on behalf of the Central Government, once the Government ventured into the commercial field it donned the robes of a trader, and it could not therefore claim any special attribute or prefer ence for differentiation; (v) the differentiation proceeded on excessive classification, and that resulted in violation of the doctrine of equality enshrined in article 14 of the Constitution; (vi) the concession must relate to the goods and not to the personality of the importer; and (vii) the allegation that the international prices of edible oils were high was inconsistent with the reality of the situation.
Dismissing the appeals.
special leave petitions and the writ petitions, this Court.
HELD: (1) The power conferred on the Central Government under section 25(2) of the Act is to be exercised by it in its subjective satisfaction.
The exercise of the power is con trolled by the requirement in the sub section that the exemption order must contain a statement stating the circum stances of an exceptional nature under which the special exemption order has been considered necessary.
The require ment is intended by the statute to ensure that the satisfac tion of the Central Government concerning the necessity of the order is not reached arbitrarily but flows from material relevant to the object for which the power has been con ferred.
[361E G] (2) The limitations on the jurisdiction of the Court in cases where the satisfaction has been entrusted to executive authority to judge the necessity for passing orders is well defined and has been long accepted.
[365E F] (3) Contracts by private importers concluded before 2 December, 1978 were allowed to be worked out after that date without affecting the principle that as from December, 1978, the business of importing such oils belonged exclusively to the State Trading Corporation.
This is the background in which the questions raised before the Court need to be considered.
[364E] 358 (4) It is the Central Government which has to be satis fied, as the authority appointed by Parliament under section 25(2), that it is necessary in the public interest to make the special order of exemption.
It has set out the reasons which prompted it to pass the orders.
It is not for this Court to sit in judgment on the sufficiency of those rea sons.
[365D E] (5) The reasons set forth in the exemption notifications can constitute a reasonable basis for those notifications.
International prices were fluctuating, and although they may have shown a perceptible fall there was the apprehension that because of the history of fluctuations there was a possibility of their rising in future.
The need to protect the domestic market is always present, and therefore encour agement had to be given to the imports effected by the State Trading Corporation by reducing the rate of customs duty levied on them.
[364F G] (6) It is true that the State dons the robes of a trader when it enters the field of commercial activity, and ordi narily it can claim no favoured treatment.
But there may be clear and good reason for making a departure.
Viewed in the background of the reasons for granting a monopoly to the State Trading Corporation, acting as an agent or nominee of the Central Government in importing the specified oils, it will be evident that policy considerations rendered it necessary to make consummation of that policy effective by imposing a concessional levy on the imports.
No such conces sion is called for in the case of private importers who, in any event, are merely working out contracts entered into by them with foreign sellers before 2 December, 1978.
[365F H] S.T.C.v.
Commercial Tax Officer, Vishakapatnam, [1964] 4 SCR 99; Heavy Engineering Mazdoor Union vs State of Bihar, ; Andhra Pradesh State Road Transport Corpo ration vs Income Tax Officer; , ; Vidarbha Housing Board vs Income Tax Officer City & Refund Circle, Nagpur, ; L. 1.
Escorts Ltd.; , , 344; State of J & K vs
T.N. Khosa; , ,792; Mohammad Shujat Ali vs Union of India, ; , 470 and In Re The Special Courts Bill, 1978, , 561 2, referred to.