{"id":202208,"date":"1978-09-12T00:00:00","date_gmt":"1978-09-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978"},"modified":"2017-07-31T17:56:39","modified_gmt":"2017-07-31T12:26:39","slug":"oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","title":{"rendered":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978<\/div>\n
Equivalent citations: 1979 AIR 248, \t\t 1979 SCR (1) 617<\/div>\n
Author: O C Reddy<\/div>\n
Bench: Chandrachud, Y.V. (Cj), Sarkaria, Ranjit Singh, Untwalia, N.L., Reddy, O. Chinnappa (J), Sen, A.P. (J)<\/div>\n
           PETITIONER:\nORIENTAL GAS CO. LTD. & ORS.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF WEST BENGAL\n\nDATE OF JUDGMENT12\/09\/1978\n\nBENCH:\nREDDY, O. CHINNAPPA (J)\nBENCH:\nREDDY, O. CHINNAPPA (J)\nSEN, A.P. (J)\nCHANDRACHUD, Y.V. ((CJ)\nSARKARIA, RANJIT SINGH\nUNTWALIA, N.L.\n\nCITATION:\n 1979 AIR  248\t\t  1979 SCR  (1) 617\n 1979 SCC  (1) 171\n CITATOR INFO :\n R\t    1983 SC1190\t (14)\n R\t    1984 SC 774\t (15,16)\n R\t    1986 SC1466\t (11,12)\n\n\nACT:\n     Oriental Gas Company Act 1970-s. 8(1)(b) Capitalisation\nof net\tincome for determining compensation payable-Validity\nof-Principles  for   determining  compensation\t payable  on\nacquisition of Public Utility Undertakings discussed.\n\n\n\nHEADNOTE:\n     In 1958,  the Government  of West\tBengal, being of the\nview that  the appellant company which enjoyed a monopoly in\nthe supply of gas in Calcutta was negligent in looking after\nthe interest  of the  consumers\t appointed  a  Committee  to\nenquire into  the unsatisfactory  condition of supply of gas\nin Calcutta  and to  suggest  remedial\tmeasures,  including\nvaluation of  the Undertaking  for the\tpurpose of taking it\nover. The  Committee reported  that the\t distribution system\nwas in\ta bad  state of\t disrepair and\tthat the maintenance\nsystem was  in a  very poor  state. It\trecommended that the\ndistribution system  should be\ttaken over immediately under\nthe management\tof the\tGovernment to  ensure  and  maintain\nsupply of gas to consumers in Calcutta.\n     On the  basis of  this recommendation, the oriental Gas\nCompany (West Bengal Act XV of 1960) was passed by the State\nLegislature. Section  3 of  the Act  provided for the taking\nover for  a limited period of the management and control and\nsubsequent acquisition\tof the\tUndertaking of\tthe  Company\nSection 7 provided for the acquisition of the Undertaking of\nthe Company  at any  time within  a period  of\tfive  years.\nSection 8(1)(b) provided for payment of compensation for the\nacquisition of the Undertaking of the Company, by the method\nof cost\t less depreciation  or the  method of capitalisation\nwhichever  was\t less.\tSection\t  9(2)\tprovided   that\t the\ncompensation should be paid in bonds carrying interest at 3%\np.a. from  the date  of issue and payable in 20 equal annual\ninstalments. The  Act was  amended in  1968. The amended Act\nprovided for  the determination of compensation on the basis\nof full\t market value  of the  Undertaking  and\t payment  of\ncompensation in\t the shape  of bonds  carrying interest from\nthe date  of enactment\tof the 1968 Act. In 1970 the Act was\nagain  amended.\t  It  provided\t for  the  determination  of\ncompensation by\t the method of capitalisation and payment of\ncompensation in\t bonds carrying\t interest from\tthe date  of\nacquisition.\n     Aggrieved\t by   the   method   of\t  determination\t  of\ncompensation the  appellant filed a writ petition under Art.\n32 of  the Constitution\t questioning the vires of s. 8(1)(b)\nand s. 9(2) of the Act.\n     The petitioner  contended that  (1)  the  principle  of\ncapitalising net  profit as  the sole factor for determining\ncompensation payable for the acquisition of a public utility\nundertaking was\t not a\trelevant principle  because a public\nutility concern\t was under an obligation to provide services\nto the\tcommunity irrespective\tof  whether  its  activities\nresulted in  profit or loss; (2) the choice of the period of\nfive years  immediately\t preceding  the\t take  over  of\t the\nmanagement and\tcontrol of  the company\t for the  purpose of\ncalculating the\t average annual income was arbitrary; (3) at\nthe time when the Undertaking was\n618\nacquired in  1962 the gilt edged securities were fetching 6%\np.a. and  therefore a  higher multiplier  than eight  should\nhave  been  provided  and  (4)\tthe  method  of\t payment  of\ncompensation in\t the shape  of bonds payable in twenty years\nat 3%  interest had  the effect of reducing the compensation\nto less than half of what was determined.\n     Dismissing the petition,\n^\n     HELD: (1)\t(a) The\t principles specified by the law for\ndetermination  of   compensation  are  beyond  the  pale  of\nchallenge, if  they are\t relevant to  the  determination  of\ncompensation and are recognised principles applicable in the\ndetermination  of  compensation\t for  property\tcompulsorily\nacquired  and\tif  the\t  principles  are   appropriate\t  in\ndetermining the\t value of the class of property sought to be\nacquired. The  science of  valuation of\t property recognised\nseveral principals  or methods\tfor determining the value to\nbe paid\t as compensation  to  the  owner  for  loss  of\t his\nproperty.  If\tan  appropriate\t  method  or  principle\t for\ndetermination of  compensation was applied, the fact that by\nthe  application   of  another\t principle  which  was\talso\nappropriate a different value was reached, would not justify\nthe court in entertaining the contention that out of the two\nappropriate methods,  one more\tgenerous to the owner should\nhave been  applied by the Legislature. If several principles\nwere appropriate  and one  was selected for determination of\nthe value  of the property to be acquired, selection of that\nprinciple to  the exclusion of other principles was not open\nto challenge since the selection to be left to the wisdom of\nthe Parliament. [633 F-H]\n     R. C.  Cooper v.  Union of\t India,<\/a>\t [1970]\t 3  SCR\t 530\nfollowed.\n     Case law discussed.\n     (b) It is well established that tangible and intangible\nproperty of a public utility undertaking may not necessarily\nbe valued  separately and  it is  a sound principle to treat\nthem  as  indivisible  aqud  value  the\t undertaking  as  an\nintegrated whole.  The authorities also treat capitalisation\nof net\tprofit\tas  one\t of  the  recognised  principles  of\nvaluatior; of Public Utility Undertakings, though it may not\nbe the\tbest in\t the sense that it may not yield that result\nwhich is  most advantageous to the owner of the undertaking.\nAny purchaser will put himself the question what profit does\nthe undertaking\t make ? and how much should he invest to get\nthe return.  He may  pay more  if the  prospects  of  better\nincome in  the future are bright and if the plant, machinery\nand buildings are in an excellent condition. He may pay less\nif the\tfuture is  not so bright and if the plant, machinery\nand buildings  are in  a poor  state and require replacement\nand repair.  He may pay more if the undertaking is possessed\nof substantial,\t unencumbered properties. He may pay less if\nthe lease  of land  on which the factory is located is about\nto expire.  Thus the  price may\t vary depending\t on  various\nfactors but  the basic\tconsideration is  bound\t to  be\t the\nprofit-yielding capacity of the undertaking. [639 E, G-H]\n     In the  instant case  there  is  nothing  in  the\twrit\npetition to  indicate that  lands were\tpurchased by  way of\ninvestment and\tnot for the purpose of gas works or that the\nlands were  capable  of\t being\tsold  independently  of\t the\nUndertaking. The  petitioner's assertions  are not borne out\nby any\tstatement to  that ecect in the petition. Therefore,\nthere would  be no justification now to allow the petitioner\nto amend the petition filed in 1971. Had there been\n619\nany substance  in this\tassertion the  petitioner would have\nmentioned it  prominently in  the petition  itself. It would\nnot have  taken it  so many years to discover a circumstance\nclaimed to  be so  very vital.\tThe case  of the  petitioner\nright through  had been that the principle of capitalisation\nof income was irrelevant. [640 C-E]\n     (2)(a).  There   is  no   force  in   the\t charge\t  of\narbitrariness. There is nothing wrong with the choice of the\nperiod of five years preceding the take-over for the purpose\nof calculating the average annual income. [640 F-G]\n     (b) If  the legislature  wanted to\t be  unfair  to\t the\ncompany, the previous year's profit could have been taken as\ncriterion on the ground that the value to be ascertained was\nthe value on the date of take-over and not somo hypotheticol\nanterior date,\tor instead  of taking  the  average  of\t the\nperiod of  the proceeding  five years  the legislature could\nwell have taken the average of the preceding three years. If\neither of  these courses had been adopted compensation would\nbe much less. Instead, the legislature fairly adopted a five\nyear period  for calculating  the average  annual income. It\nmay be\tthat in\t the historical\t part  the  undertaking\t was\nmaking much  profit It\tmay be\tthat in\t the past there were\nlean years.  Neither a\tspecially fat  nor a  specially lean\nperiod from the past could properly be taken into account as\nthat would  be. irrelevant.  The legislature  was  concerned\nwith the  value of  the undertaking  on or about the date of\nacquisition. It,  therefore, very  properly chose the period\nof five\t years immediately  preceding The take-over. [640 H;\n641 A-B]\n     Appleton Water  Co. v.  Railroad Commission,  154\tWis.\n121, 148, 142, N.W. 476, 47 L.R.A. (N.S.) 770 referred to.\n     Eminent Domain  by Alfred\tJahr, Valuation\t by  Bright,\nPrinciples and\tPractice of  Rating Valuation by Roger Emeny\nand Hector M. Wilks referred to.\n     (3) There\tis equally no force in the argument that the\nlegislature should  have specified  a higher multiplier than\n'eight' in  fixing  the\t compensation.\tIf  the\t legislature\nthought that  a. return\t of  12%  in  the  case\t of    large\nindustrial  undertaking\t  such\tas   the  petitioner's\t was\nreasonable and on that basis adopted the multiplier 'eight',\nit is  not for\tthis Court  to sit  in\tjudgment  over\tthat\ndecision  and\tattempt\t to  determine\ta  more\t appropriate\nmultiplier. The\t use of\t the term  'normal  cases'  used  in\nCooper's  case\t where\t this\tCourt\tpointed\t  out\tthat\ncapitalisation of  the net annual value of the property at a\nrate equal  in normal  cases to\t the return  from gilt-edged\nsecurities was\tan  important  method  of  determination  of\ncompensation, showed  that it  was not\tintended to lay down\nany invariable rule that whenever a method of capitalisation\nof  net\t  profits  was\t adopted,  return   from  gilt-edged\nsecurities was\tto be  the basis.  That should\tdepend on  a\nvariety of circumstances such as the nature of the property,\nthe  normal   return  which   could  be\t  expected  on\tlike\ninvestment, the state of the capital market and several such\nfactors. [641 G-H; 642 A]\n\n\n\nJUDGMENT:\n<\/pre>\n
     ORIGlNAL JURISDICTION: Writ Petition No. 343 of 1972.
\n     (Article 32 of the Constitution.)
\n     A. K.  Sen, Anil  Bhatnagar, K.  Khaitan, S. R. Agarwal
\nand Praveen Kumar for the Petitioners.\n<\/p>\n
     A. P.  Chatterjee, Govind\tMukhoty and G. S. Chatterjee
\nfor the Respondent.\n<\/p>\n
620<\/span><\/p>\n
     The Judgment of the Court was delivered by
\n     CHINNAPPA\tREDDY,\t J.  The   old\tquestion   “what  is
\ncompensation” is  back\tagain,\tFortunately,  Constitutional
\nAmendments and\tJudicial precedents  have narrowed the scope
\nfor controversy. The question has arisen this way:\n<\/p>\n
     The  appellant,  the  oriental  Gas  Company  Ltd.\t was
\noriginally constituted in England by a deed of settlement in
\nApril 1853,  as the  oriental Gas Company for the purpose of
\nmanufacture, supply  distribution and  sale of\tfuel gas  in
\nCalcutta. It  was later\t incorporated in accordance with the
\nprovisions of  the English  Joint Stock Companies Act, 1862.
\nBy a  subsequent arrangement  the control  and management of
\nthe Company  passed from British into Indian hands. Over the
\ncourse\tof   the  years\t  the  Company\t acquired  extensive
\nproperties and\tbecame the owner of large plants. machinery,
\nbuildings, lands  pipelines, stores  etc. ‘the\ttotal market
\nvalue of the appellants industrial undertaking was estimated
\nby  the\t  appellant  as\t  on  22nd   March,  1962,   at\t Rs.
\n7,00,00,000\/-. In 1958, the Government of West Bengal, being
\nof the view that the Company which enjoyed a monopoly in the
\nsupply of Gas in Calcutta was negligent in looking after the
\ninterest of  the consumers, appointed a Committee to inquire
\ninto the  unsatisfactory  condition  of\t supply\t of  gas  in
\nCalcutta  and\tto  suggest   remedial\tmeasures   including
\nvaluation of  the undertaking for the purpose of taking over
\nthe gas\t supply undertaking.  The Member  of  the  Committee
\nwere: the  Chief Secretary,  the Sheriff  of  Calcutta,\t the
\nSecretary,   Commerce\tand   Industries   Department,\t the
\nAdministrator, Durgapur\t Project and  the Director,  Central
\nFuel Research  Institute.  The\tCommittee  was\tassisted  by
\nseveral experts.  The Committee re-F ported that the present
\nGas Works  in Calcutta including the distributing system was
\nin a  bad state\t of disrepair  and  a  very  poor  state  of
\nmaintenance. The  Committee recommended\t that the  Gas Works
\nand the distribution system should be taken over immediately
\nunder the  management of  the State Govt. in order to ensure
\nand maintain the supply of gas to the consumers in Calcutta.
\nAfter the  report of  the Committee   was  received  by\t the
\nGovernment of  West  Bengal,  the  West\t Bengal\t Legislature
\nenacted the  oriental Gas Company Act (West Bengal Act XV of
\n1960) providing for the taking over for a limited period, of
\nthe management and control and the subsequent acquisition of
\nthe  undertaking   of  the   oriental  Gas   Co.  Ltd.\t The
\n“undertaking of\t the  Company”\twas  defined  to  mean\t“the
\nproperties of  the company,  movable or immovable other than
\ncash  balances\t and  reserve  funds  but  including  works,
\nworkshops, plants,  machineries, furniture,  equipments\t and
\nstores, and  lands appertaining\t thereto,  actually  in\t use
\nimmediately
\n621<\/span>
\nbefore the commencement of this Act, or intended to be used,
\nin connection  with the\t production of gas or supply thereof
\nin Calcutta  and  its  environs;”.  Section  3\tof  the\t Act
\nprovided for  the taking  over of the management and control
\nof the undertaking of the Company for a period of five years
\nfrom the  date specified  in a\tnotification to\t be  issued.
\nSection 7 provided for the acquisition of the undertaking of
\nthe Company  at any  time within the period of the said five
\nyears. Section\t8(])(a) provided  for the  payment of annual
\ncompensation during  the period\t of the\t take  over  of\t the
\nmanagement and\tcontrol of  the undertaking  of the Company.
\nSection 8(1)(b)\t provided for  the compensation\t payable for
\nthe acquisition\t of the\t undertaking of\t the Company. In the
\npresent\t appeal\t we  are  concerned  with  the\tcompensation
\npayable for  the  acquisition  of  the\tundertaking  of\t the
\nCompany, that  is, we  are concerned  with Section  8(1) (b)
\nonly. Section  8  (1)  (1)  as\toriginally  enacted  was  as
\nfollows:\n<\/p>\n
\t  “8 (1)  (b) in  the case  of\tacquisition  of\t the
\n     undertaking of  the  company,  the\t total\tcompensation
\n     payable shall  be a sum representing the purchase price
\n     of the  undertaking of  the  company  reduced  by\tsuch
\n     depreciation as may he allowed by the Tribunal referred
\n     to in  sub-section (2) after considering the period and
\n     the nature\t of the use and the present condition of the
\n     properties concerned  on the  date of  vesting  in\t the
\n     State Government under Section 7, or a sum representing
\n     eight times  the average  net income of the undertaking
\n     of the  company over  a period  of five  complete years
\n     preceding the  year in  which the\tundertaking  of\t the
\n     company has  been transferred  to the  State Government
\n     under clause  (a) of  Section  4  for  the\t purpose  of
\n     management and control, whichever is less.
\n\t  Explanation-In this sub-section-\n<\/p><\/blockquote>\n
\t  (i) “Purchase\t price of  the\tundertaking  of\t the
\n     company” means  the aggregate  of\tthe  prices  of\t the
\n     different parts  of the  undertaking of  the company at
\n     the respective  dates on  which parts  were  purchased,
\n     acquired or constructed by the Company;\n<\/p><\/blockquote>\n
\t  (ii)\t“net   income  of  the\tundertaking  of\t the
\n     Company” means  the difference  between the  amount  of
\n     gross revenue,  receipts and  other  general  receipts,
\n     accountable in  the  assessment  of  Indian  Income-tax
\n     arising from,  and\t ancillary  or\tincidental  to,\t the
\n     business of  the company  and the amount of expenditure
\n     incurred on the following-\n<\/p><\/blockquote>\n
622<\/span><\/p>\n
\t  (a) rents, rates and taxes,\n<\/p><\/blockquote>\n
\t  (b) interest on loans and security deposits,\n<\/p><\/blockquote>\n
\t  (c) maintenance and repair,\n<\/p><\/blockquote>\n
\t  (d) collection charges,\n<\/p><\/blockquote>\n
\t  (e)  cost    of    management,    including\t the
\n\t  remuneration of managing agents, if any,\n<\/p><\/blockquote>\n
\t  (f)  other expenses  admissible under\t the law for
\n\t  the time  being in  force  in\t the  assessment  of
\n\t  Indian income-tax  and arising from, and ancillary
\n\t  or incidental to, the business of the Company, and\n<\/p><\/blockquote>\n
\t  (g)  such other  expenses as\tmay be prescribed by
\n\t  rules made under this Act”.<\/p><\/blockquote>\n
     Section 8(2)  provided that  the compensation was to be
\ndeter mined  by a  Tribunal to\tbe appointed  by  the  State
\nGovernment. The\t decision of  the Tribunal was subject to an
\nappeal to  the High  Court. Section  9(2) provided  that the
\namount\tof   compensation  was\tto  be\tpaid  by  the  State
\nGovernment in  bonds carrying interest at the rate of 3% per
\nannum from  the date of issue and payable in 20 equal annual
\ninstalments.\n<\/p>\n
     Pursuant to  the provisions of the oriental Gas Company
\nAct, 1960,  a notification  dated  3rd\tOctober,  1960,\t was
\nissued to  take over  the  management  and  control  of\t the
\nundertaking  for   a  period  of  five\tyears.\tLater  by  a
\nnotification dated  22nd March, 1962, the undertaking of the
\noriental Gas  Company Ltd.,  was acquired  by the Government
\npursuant to  the power\tvested in  it by  Section 7  of\t the
\nOriental Gas Company Act. In the meanwhile the Company filed
\na petition  under Article 226 of the Constitution before the
\nCalcutta High  Court challenging  the vires  of the  Act  on
\nvarious grounds.  The Calcutta High Court dismissed the writ
\nPetition upholding  the validity  of the Act. Ray, J. (as he
\nthen was)  held: (i)  The appellant  has no  legal right  to
\nmaintain the  petition (2)  The appellant could not question
\nthe validity  of the  Act on  the ground that its provisions
\ninfringed its  fundamental rights under Articles 14, 19, and
\n31 in view of Article 31A(1)(b) of the Constitution; (3) The
\nWest Bengal  Legislature had  the legislative  competence to
\npass the  impugned Act\tby virtue of Entry 42 of List III of
\nthe Seventh  Schedule to  the Constitution;  (4) Entry 25 of
\nList IT also conferred sufficient authority and power on the
\nState Legislature  to make laws affecting gas and gas works;
\nand (5) even if the Act inci-\n<\/p>\n
623<\/span><\/p>\n
dentally trenched  upon any  production aspect, the pith and
\nsubstance of the legislation was gas and gas-work within the
\nmeaning of entry 25 of List II.\n<\/p>\n
     The Company  preferred an\tappeal to the Supreme Court.
\nThe question  relating to  fundamental rights was not raised
\nbefore the Supreme Court. The Supreme Court, while upholding
\nthe locus  standi of  the Company to file the Writ Petition,
\nrejected the  contention of  the  Company  relating  to\t the
\ncompetence of  the West Bengal State Legislature to pass the
\nimpugned Act. The decision of the Supreme Court was rendered
\non 5th\tFebruary, 1962,\t and is reported in The Calcutta Gas
\nCompany (Proprietary)  Ltd. v.\tThe State of West Bengal and
\nothers<\/a>(1).\n<\/p>\n
     As mentioned  by us  earlier, the\tundertaking  of\t the
\nCompany was  acquired on 22nd March, 1962, by a notification
\nof that date. By further notification issued under Section 8
\nof the\tAct a  Tribunal was  constituted for  the purpose of
\ndetermining the\t compensation  payable\tin  respect  of\t the
\nacquisition of the undertaking. In August 1965, the oriental
\nGas Company  Ltd. filed\t a petition under Article 226 of the
\nConstitution challenging  the provisions of the Act relating
\nto compensation.  The Writ  Petition was, however, dismissed
\nas withdrawn  in May  1969 as  the oriental Gas Company Act,
\n1960 was  amended in the meanwhile by the President’s Act is
\nof 1968,  the oriental Gas Company (Amendment) Act 1968. The
\nAmending Act  substituted a different provision for what was
\nthe original  Section 8 (1) (b) . Section 8(1)(b) as amended
\nby the President’s Act is of 1968 was as follows:\n<\/p>\n
\t  “8(1) (b)  In\t the  case  of\tacquisition  of\t the
\n     undertaking of the Company, the compensation payable by
\n     the State\tGovernment shall be determined in accordance
\n     with the principles specified in the Schedule”.<\/p><\/blockquote>\n
     The schedule referred to in the amended Section 8(1)(b)
\nwas as follows:\n<\/p>\n
\t\t       “THE SCHEDULE
\n\t\t  [See Section 8 (1) (b)]
\nPrinciples for\tdetermining compensation  for acquisition of
\nthe undertaking of the company.\n<\/p>\n
     Paragraph 1:- The compensation to! be paid by the State
\nGovernment to  the Company  in respect of acquisition of the
\nundertaking thereof  shall be  an amount  equal to  the\t sum
\ntotal of the value of the
\n     (1) [1962] Suppl. 3 SC.R. 1.\n<\/p>\n
6-549 SCI\/78
\n624<\/span>
\nproperties and\tassets of  the Company\tas on  the  date  of
\nacquisition of\tthe undertaking of the Company calculated in
\naccordance with\t the provisions of paragraph II less the sum
\ntotal of  the liabilities  and obligations of the Company as
\non that date calculated in accordance with the provisions of
\nparagraph III,\ttogether with  the interest  on such  amount
\ncalculated in  accordance with\tthe provisions\tof paragraph
\nIV.\n<\/p>\n
     Paragraph II:-(a)\tThe market  value  on  the  date  of
\nacquisition of the undertaking of the company;\n<\/p>\n
     (i) of any land or buildings;\n<\/p><\/blockquote>\n
     (ii) of any plant, machinery or other equipment;\n<\/p><\/blockquote>\n
     (iii)     of   any\t  shares,   securities,\t  or   other
\n     investments held by the Company;<\/p><\/blockquote>\n
     (b) the  total amount  of\tthe  premiums  paid  by\t the
\nCompany up  to the date of acquisition of the undertaking of
\nthe Company  in respect\t of all leasehold properties reduced
\nin the case of each such premium by an amount which bears to
\nsuch premium  the same proportion as the expired term of the
\nlease in  respect of which such premium shall have been paid
\nbears to the total term of the lease;\n<\/p>\n
     (c) the  amount of debts due to the Company on the date
\nof acquisition\tof the\tundertaking of\tthe Company, whether
\nsecured or  unsecured, to  the\textent\tto  which  they\t are
\nreasonably considered to be recoverable;\n<\/p>\n
     (d) the  amount of cash held by the Company on the date
\nof acquisition of the undertaking of the company, whether in
\ndeposit with a Bank or otherwise;\n<\/p>\n
     (e) the  market value on the date of acquisition of the
\nundertaking of\tthe  company  of  all  tangible\t assets\t and
\nproperties other  than\tthose  falling\twithin\tany  of\t the
\npreceding clauses.\n<\/p>\n
\t  Paragraph III:-  The total  amount of\t liabilities
\n     and obligations  incurred by  the Company in connection
\n     with the  formation. management  and administration  of
\n     the  under\t  taking  of   the  Company  and  subsisting
\n     immediately before\t the  date  of\tacquisition  of\t the
\n     undertaking of the company;\n<\/p>\n
\t  Provided  that  any  of  the\tproperties,  assets,
\n     liabilities or  obligations of  the Company  as on\t the
\n     date of  acquisition of  the undertaking of the Company
\n     shall not\tinclude such  properties or  assets as\twere
\n     added, invested  or acquired  and such  liabilities  or
\n     obligations as were incurred in connection with
\n625<\/span>
\n     such addition,  investment or  acquisition by the State
\n     Government during\tthe period of management and control
\n     of the undertaking of the company.\n<\/p>\n
\t  Paragraph  IV:-   The\t interest   referred  to  in
\n     Paragraph I  shall be  on the  amount mentioned  in the
\n     said paragraph  for the period commencing from the date
\n     of vesting\t of the\t under taking  of the  Company under
\n     sub-section (2)  of Section  7 and ending with the date
\n     immediately  before   the\tdate  of  enactment  of\t the
\n     oriental Gas  Company (Amendment) Act, 1968, calculated
\n     at the average bank rate during the said period”.
\nIt should  also be mentioned here that Section 9(2) was also
\namended and  it was  provided that  the Bonds  should  carry
\ninterest from  the date of enactment of the amending Act and
\nnot from  the date  of issue.  The main\t provisions  of\t the
\namending Act  relating to  the determination  and payment or
\ncompensation were,  however, short  lived. In  1970 the West
\nBengal\tLegislature   passed  the   Oriental   Gas   Company
\n(Amendment) Act, 1970 (West Bengal Act 6 of 1970) once again
\nsubstituting a\tnew Section  8(1) (b)  and Section 9(2). The
\nnew Section 8(1) (b) was as follows:\n<\/p>\n
\t  “8(1)(b)  In\t the  case  of\tacquisition  of\t the
\n     undertaking of the Company, the compensation payable by
\n     the State\tGovernment shall be a sum representing eight
\n     times the\taverage net income of the undertaking of the
\n     Company over  a period of five complete years preceding
\n     the year  in which\t the under taking of the Company has
\n     been transferred  to the  State Government under clause\n<\/p><\/blockquote>\n
     (a) of.  Section 4\t for the  purpose of  management and
\n     control.\n<\/p><\/blockquote>\n
\t  Explanation:-\t In  this  sub-section,\t “net-annual
\n     income of\tthe undertaking\t of the\t Company” means\t the
\n     difference between the amount of gross revenue receipts
\n     and  other\t  general  receipts   accountable   in\t the
\n     assessment\t of  Indian  income-tax\t arising  from,\t and
\n     ancillary or incidental to, the business of the Company
\n     and  the\tamount\tof  expenditure\t   incurred  on\t the
\n     following-\n<\/p><\/blockquote>\n
\t  (a) rents, rates and taxes,\n<\/p><\/blockquote>\n
\t  (b) interest on loans and security deposits,\n<\/p><\/blockquote>\n
\t  (c) maintenance and repair,\n<\/p><\/blockquote>\n
\t  (d) collection charges,\n<\/p><\/blockquote>\n
\t  (e)  cost    of    management,    including\t the
\n\t  remuneration of. Managing Agents, if any,\n<\/p><\/blockquote>\n
\t  (f)  other expenses  admissible under\t the law for
\n\t  the time
\n626<\/span>
\n\t  Being force in the assessment of Indian income-tax
\n\t  and arising  from, and ancillary or incidental to,
\n\t  the business of the Company”.\n<\/p><\/blockquote>\n
The amended  Section 9(2) provided for interest on the bonds
\nfrom the  date of  vesting of the Undertaking of the Company
\nunder Section 7.\n<\/p>\n
     It is thus seen that the provisions of the oriental Gas
\nCompany Act  as originally  enacted in 1960 provided for the
\ndetermination of  compensation by  the method  of cost\tless
\ndepreciation, or  the method  of capitalisation and directed
\nthe payment  of whichever  was less,  in the  shape of bonds
\ncarrying interest at 3% from the date of issue of the bonds.
\nThe Act as amended in 1968 provided for the determination of
\ncompensation on\t the basis  of the  full market value of the
\nundertaking and the payment of the compensation in the shape
\nof bonds carrying interest from the date of the enactment of
\nthe Amendment  Act of  1968 i.e.  7th May,  1968. The Act as
\nfinally amended\t in 1970  and as  it now stands provides for
\nthe determination  of the  compensation\t by  the  method  of
\ncapitalisation and  the payment of the compensation in bonds
\ncarrying interest  from the  date of  the  acquisition.\t The
\nappellant  Company   is\t  aggrieved   by   the\t method\t  of
\ndetermination of  compensation under  the Act  as amended in
\n1970 and  has filed  the present Writ Petition in this Court
\nquestioning the\t vires of  Sections 8(1)(b)  and 9(2) of the
\nAct.\n<\/p>\n
     The submissions  of Shri A. K. Sen, learned Counsel for
\nthe  appellant\t were  as  follows:  Article  31(2)  of\t the
\nConstitution as\t it stood  on the date of the acquisition of
\nthe undertaking\t required the  legislature  to\tspecify\t the
\nprinciples on  which compensation,  i.e. a ‘just equivalent’
\naf  what   the\towner  had  been  deprived  of,\t had  to  be
\ndetermined. The\t principles so\tspecified had necessarily to
\nbe relevant  to the  determination of such compensation. The
\nprinciple of  capitalising net\tprofit as  a sole factor was
\nnot a  relevant principle  in determining  the\tcompensation
\npayable for the acquisition of a public utility undertaking.
\nIt might  be a\trelevant principle to determine the value of
\nthe intangible\tassets of  a public  utility undertaking but
\nwas wholly irrelevant to determine the value of the tangible
\nassets of  a public  utility undertaking. Section 8(1)(b) of
\nthe oriental Gas Company Act, as amended in 1970, therefore,
\noffended article  31 (2)  of the Constitution. The choice of
\nthe period of five years immediately preceding the take over
\nfor the purpose of calculating the average annual net profit
\nwas inappropriate  as it  did not  reflect the\ttrue earning
\ncapacity of  the undertaking. There were special reasons why
\nthe profits were
\n627<\/span>
\nlow during  the two or three years immediately preceding the
\ntakeover. The choice of the multiplier of eight was also not
\nbased on  any relevant\tprinciple. The provision for payment
\nin bonds payable in twenty years and carrying interest at 3%
\nper  annum   at\t once\thad  the   effect  of  reducing\t the
\ncompensation in\t such a manner as not to approximate to what
\nwas determined.\t This too  was violative  of Article  31(2).
\nShri Sen  relied upon  the decision  of this Court in Rustom
\nCavasjee Cooper\t v. Union  of  India<\/a>(1)\t and  passages\tfrom
\nAlfred\tJahr’s\tEminent\t Domain,  Valuation  and  Procedure,
\nAmerican Jurisprudence\tVol. 27 and American Law Reports 2nd
\nseries, Vol. 68.\n<\/p>\n
     A resume of Constitutional history and the story of the
\nding-dong legal\t battles that  were fought may not be out of
\nplace here.  It may  help us to understand and, perhaps even
\nto solve  the problem  before  us.  It\twill  enable  us  to
\nappreciate the\trelevance or  irrelevance of  the  principle
\nspecified for  determining compensation. Clauses (1) and (2)
\nof Article 31 of the Constitution, as they stood originally,
\nwere as follows:\n<\/p>\n
\t  “31. Compulsory acquisition of property.-
\n     (1) No person shall be deprived of his property save by
\n     authority of law.\n<\/p><\/blockquote>\n
     (2) No  property, movable\tor immovable,  including any
\n     interest in,  or in  any company owning, any commercial
\n     or industrial undertaking, shall be taken possession of
\n     or\t acquired   for\t public\t  purposes  under   any\t law
\n     authorising the  taking  of  such\tpossession  or\tsuch
\n     acquisition, unless  the law  provides for compensation
\n     for the  property taken  possession of  or acquired and
\n     either  fixes   the  amount  of  the  compensation,  or
\n     specifies the  principles on  which, and  the manner in
\n     which, the compensation is to be determined and given”.\n<\/p><\/blockquote>\n
The word  ‘compensation’ occurring  in Article 31(2) was not
\nqualified by  any adjective  such as ‘just’ or ‘fair’ unlike
\nSection Sl of the Commonwealth of Australia Constitution Act
\nand the\t 5th Amendment\tto the\tConstitution of\t America, in
\nboth of\t which provisions,  the qualifying adjective just is
\nused. Even, so, in Bela Banerjee’s case(2) the Supreme Court
\nintroduced the\tconcept of a ‘just equivalent’ and held that
\ncompensation meant  ‘a just equivalent of what the owner had
\nH
\n     (1) [1970] 3 S.C.R. 530.\n<\/p>\n
     (2) [1954] S.C.R. 558.\n<\/p>\n
628<\/span><\/p>\n
been deprived of. It was said that the principles to be laid
\ndown by\t the legislature  to determine the compensation were
\nto  be\t subject  to   the  ‘basic   requirement   of\tfull
\nindemnification\t of   the  expropriated\t  owner’.   If\t the
\nprinciples did not take into account ‘all the elements which
\nmake up\t the true  value of  the property  appropriated’ the
\nlegislation was\t liable to  be struck  down. In\t other words
\nwhat was  to be\t given was full compensation on the basis of
\nthe market  value of the property acquired. The decision was
\ncapable\t of  creating  great  difficulty  in  the  sense  of
\ndiscomfiting legislation  for the taking over of big estates
\nand the nationalisation of large industrial undertakings. In
\nthe words of Shah, J., in State of Gujarat v. Shri Shantilal
\nMangaldas &  ors.<\/a>(l), the  decisions in Bela Banerjee’s case
\nand Subodh Gopal Bose’s(2) case
\n\t  ”  ..\t were  therefore  likely  to  give  rise  to
\n     formidable problems,  when the  principles specified by
\n     the Legislature  as well  as the  amounts determined by
\n     the application  of  those\t principles,  were  declared
\n     justiciable.  By\tqualifying   ‘equivalent’   by\t the
\n     adjective\t ‘just’,   the\t enquiry   was\t made\tmore
\n     `controversial;   and    apart   from   the   practical
\n     difficulties, the\tlaw  declared  by  this\t Court\talso
\n     placed  serious  obstacles\t in  giving  effect  to\t the
\n     directive principles  of State  policy incorporated  in
\n     Art. 39″.\n<\/p>\n
So it  was that\t Article 31  was amended by the Constitution
\n4th Amendment  Act in 1955. `The second clause of Article 31
\nas amended  by the  Constitution 4th  Amendment Act  was  as
\nfollows:\n<\/p>\n
\t  “No property\tshall be  compulsorily\tacquired  or
\n     requisitioned save\t for a\tpublic purpose\tand save  by
\n     authority of  a law which provides for compensation for
\n     the property  so acquired\tor requisitioned  and either
\n     fixes the\tamount of  the compensation or specifies the
\n     principles on  which, and\tthe  manner  in\t which,\t the
\n     compensation is to be determined and given; and no such
\n     law shall\tbe called  in question\tin any\tcourt on the
\n     ground that  the compensation  provided by\t that law is
\n     not adequate.”<\/p><\/blockquote>\n
     The true  effect of the amendment was that the adequacy
\nof the\tcompensation provided  by ‘the\tlaw  was  made\tnon-
\njusticiable. Again  in the  words of Shah, J., in Shantilals
\ncase,  “A   challenge  to  a  statute  that  the  principles
\nspecified by  it do  not award\ta just equivalent will be in
\nclear violation\t of the\t Constitutional declaration that the
\ninadequacy of the compensation provided is not justiciable”.
\nThe intended effect
\n     (1) [1969] 3 S.C.R. 341.\n<\/p>\n
     (2) [1954] S.C.R, 587.\n<\/p>\n
629<\/span><\/p>\n
of the amendment had, however been previously nullified to a
\nlarge extent  by the  decisions in  P. Vajravelu Mudaliar v.
\nSpecial Deputy\tCollector, Madras & Anr.<\/a>(1) (p. 614) and the
\nUnion of  India v.  The Metal  Corporation of  India Ltd.  &
\nAnr.<\/a>(2) where it was reiterated that the word ‘compensation’
\nsignified a,  ‘just equivalent’\t of what  the owner has been
\ndeprived of.\n<\/p>\n
     In Vajravelu’s case it was observed (at p. 626):
\n\t  “The\tfact   that   Parliament   used\t  the\tsame
\n     expressions namely,  “compensation” and “principles” as
\n     were found\t in Art.  31 before the Amendment is a clear
\n     indication that  it accepted  the meaning given by this
\n     Court to  those expressions  in  Mrs.  Bela  Banerjee’s
\n     case. It  follows that a Legislature in making a law of
\n     acquisition or  requisition shall\tprovide for  a\tjust
\n     equivalent of  what the  owner has\t been deprived of or
\n     specify the  principles for the purpose of ascertaining
\n     the ‘just\tequivalent’  of\t what  the  owner  has\tbeen
\n     deprived  of.   If\t Parliament  intended  to  enable  a
\n     Legislature to  make such a law.. without providing for
\n     compensation so  defined,\tit  would  have\t used  other
\n     expressions like ‘price’ ‘consideration’ etc.”
\n     Having said  that, Subba  Rao, J.,\t however, went on to
\nsay that  the argument\tthat because  the word\tcompensation
\nmeant  ‘just   equivalent’  for\t  the\tproperty   acquired,
\ntherefore, this Court could ascertain whether it was a ‘just
\nequivalent’ would  render the  amendment of the Constitution
\nnugatory.  He\tobserved   that\t  neither   the\t  principles
\nprescribing the\t ‘just equivalent’ nor the ‘just equivalent’
\ncould be  questioned by\t the Court  on\tthe  ground  of\t the
\ninadequacy of  the compensation\t fixed or  arrived at by the
\nworking of the principles. The matter was illustrated by the
\nstatement that\tthe value  of a’  house which  was  acquired
\ncould be  fixed in many ways: estimate by an Engineer, value
\nrejected by  comparable sales,\tcapitalisation of  rent etc.
\nThe application\t of  (different\t principles  might  lead  to
\ndifferent results.  No\tone  could  insist  that  only\tthat
\nprinciple  which   yielded  the\t highest  result  should  be
\nadopted. On  the other\thand the  value of  land acquired in
\n1950 could not be fixed on the basis of its value in 1930 or
\nthough 100  acres were\tacquired compensation would be given
\nonly for  50 acres.  Principles so  fixing the\tcompensation
\nwould be  irrelevant. Subba Rao, J., summarised the position
\nthus (at p. 629):\n<\/p>\n
\t  “If the  Legislature makes  a law  for acquiring a
\n     property by  providing for\t an illusory compensation or
\n     by\t indicating  the  principles  for  ascertaining\t the
\n     compensation which do not
\n     (1) [1965] 1 S. C. R. 614.\n<\/p><\/blockquote>\n
     (2) [1967] 1 S. C. R. 255.\n<\/p><\/blockquote>\n
630<\/span><\/p>\n
     relate to the property acquired or to the value of such
\n     property at  or within  a reasonable  proximity of\t the
\n     date of  acquisition or  the principles are so designed
\n     and  so   arbitrary  that\t they  do  not\tprovide\t for
\n     compensation at  all, one\tcan  easily  hold  that\t the
\n     Legislature made  the  law\t in  fraud  of\tits  powers.
\n     Briefly stated the legal position is as follows: If the
\n     question pertains\tto the\tadequacy of compensation, it
\n     is not  justiciable; if  the compensation\tfixed or the
\n     principles evolved\t for fixing  it\t disclose  that\t the
\n     legislature made  the law\tin fraud  of powers  in\t the
\n     sense we  have explained,\tthe question  is within\t the
\n     jurisdiction of the Court”.<\/p><\/blockquote>\n
     In Vajravelu’s case the compensation to be paid was the
\nvalue of  the land  at the  date of  the publication  of the
\nnotification under  the Land  Acquisition Act  or an  amount
\nequal to  the average  market value  cf the  land during the
\nfive years  immediately preceding  such date,  whichever was
\nless. It  was also  provided that  compensation. was  to  be
\ndetermine on  the basis\t on the\t use to\t which the  land was
\nactually put  on the date of publication of the notification
\nand not\t on the basis of any potential value of the acquired
\nland. This Court held that in the context of continuous rise
\nof land\t prices owing to abnormal circumstances it could not
\nbe said\t that the  fixation  of\t average  price\t during\t the
\npreceding five\tyears  was  not\t a  relevant  principle\t for
\nascertaining the  value of  the land on or about the date of
\nacquisition. It\t was also  held that  though  the  potential
\nvalue of  the acquired\tland was  generally an element to be
\nconsidered in valuing land? the exclusion of such an element
\nfrom consideration  merely related  to the inadequacy of the
\ncompensation and  did not  constitute a fraud on power so as
\nto invalidate  the provision.  The decision amounted to this
\nthat while  the\t principles  specified\tshould\taim  at\t the
\nascertainment of  a just equivalent, the principles so aimed
\ncould not  be said  to\tbe  irrelevant\tmerely\tbecause\t the
\napplication of\tsome other  principles\tmight  have  yielded
\nresults\t more\tfavorable  to  the  owner  of  the  acquired
\nproperty.\n<\/p>\n
     In the case of Metal Corporation of India & Anr., Subba
\nRao, C.\t J., observed:\t“The law  to justify  itself has  to
\nprovide for  the payment  of a ‘just equivalent’ to the land
\nacquired or  lay down  principles which\t will lead  to\tthat
\nresult. If  the principles  laid down  are relevant  to\t the
\nfixation of compensation and are not arbitrary, the adequacy
\nof the\tresultant product  cannot be called in question in a
\nCourt of  law. The validity of the principles, judged by the
\nabove tests,  falls within  judicial scrutiny,\tand if\tthey
\nstand the  tests, the adequacy of the pro duct falls outside
\nits jurisdiction”. Judging by those tests, the two
\n631<\/span>
\nprinciples specified for the ward of compensation in the Act
\nimpugned in  that case\tnamely “(i)  compensation equated to
\nthe cost  price in  the case  of unused\t machinery  in\tgood
\ncondition, and\t(ii) written down value as understood in the
\nIncometax law  as the  value of used machinery” were held to
\nbe irrelevant  to the fixation of the value of the machinery
\non the date of acquisition.\n<\/p>\n
     The case  of Vajravelu and Metal Corporation of India &
\nAnr.. were  both considered  in great  detail in Shantilal’s
\ncase. The decision in the case of Metal Corporation of India
\nwas expressly  overruled and  the two  principles which were
\nfound to  be irrelevant in Metal Corporation of India’s case
\nwere held  to be  relevant principles  for determination  of
\ncompensation.\tThe   observations   in\t  Vajravelu’s\tcase
\nsuggesting that\t compensation meant  a ‘just equivalent’ and
\nthat  the   principles\tto   be\t specified  must  relate  to
\nascertainment of a ‘just equivalent’ were held to be obiter.
\nThe effect  of the  amendments of  Article 31(2) made by the
\nConstitution 4th  Amendment Act\t 1955 was  stated to  be  as
\nfollows: D
\n\t  “it clearly  follows from  the terms of Art. 31(2)
\n     as amended\t that the amount of compensation payable, if
\n     fixed by  the Legislature, is not justiciable,, because
\n     the challenge  in such  a case,  apart from  a plea  of
\n     abuse of  legislative power,  would be only a challenge
\n     to the  adequacy of compensation. If compensation fixed
\n     by the  Legislature-and by\t the use  of the  expression
\n     ‘compensation’ we\tmean  what  the\t Legislature  justly
\n     regards as\t proper and  fair recompense  for compulsory
\n     expropriation of  property and  not something  which by
\n     abuse of  legislative power  though called compensation
\n     is not  a recompense at all or is something illusory is
\n     not justiciable,  an the  plea that  it is\t not a\tjust
\n     equivalent of the property compulsorily acquired, is it
\n     open to the Courts to enter upon an enquiry whether the
\n     principles which  are specified  by the Legislature for
\n     determining  compensation\t do   not   award   to\t the
\n     expropriated owner\t a just\t equivalent ?  In our  view,
\n     such an  enquiry is  not open  to the  Courts under the
\n     statutes enacted  after  the  amendments  made  in\t the
\n     Constitution by  the  Constitution\t (Fourth  Amendment)
\n     Act. If  the quantum  of compensation  fixed by  the  I
\n     legislature is  not liable\t to be\tcanvassed before the
\n     Court on  the ground  that it is not a just equivalent,
\n     the   principles\tspecified   for\t  determination\t  of
\n     compensation will\talso not be open to challenge on the
\n     plea that the compensation determined by
\n632<\/span>
\n     the application  of those\tprinciples  is\tnot  a\tjust
\n     equivalent. The  right  declared  by  the\tConstitution
\n     guarantees that  com compensation shall be given before
\n     a person  is compulsorily\tcompulsorily of his property
\n     for a  public purpose. What is fixed as compensation by
\n     statute, or  by the application of principles specified
\n     for determination\tof compensation\t is  guaranteed:  it
\n     does  not\t mean  however\tthat  some  thing  fixed  or
\n     determined by  the application  of specified principles
\n     which is  illusory or  can in  no sense  be regarded as
\n     compensation must\tbe upheld  by the Courts, for, to do
\n     so, would\tbe to  grant a charter of arbitrariness, and
\n     permit a device to defeat the constitutional guarantee.
\n     But compensation  fixed  or  determined  on  principles
\n     specified by  the Legislature cannot be permitted to he
\n     challenged on  the somewhat  indefinite plea that it is
\n     not a  just  or  fair  equivalent.\t Principles  may  be
\n     challenged on  the ground\tthat they  are irrelevant to
\n     the determination\tof compensation\t but not on the plea
\n     that what\tis awarded as a result of the application of
\n     those principles  is not  just or\tfair compensation. A
\n     challenge to a statute that the principles specified by
\n     it do  not award  a just  equivalent will\tbe in  clear
\n     violation\tof   the  constitutional   declaration\tthat
\n     inadequacy\t  of\tcompensation   provided\t   is\t not
\n     justiciable”.\n<\/p>\n
     After Shantilal’s\tcase, the effect of the amendment of
\nArticle 31(2)  by the  Constitution 4th\t Amendment Act again
\nfell to be considered by this Court in R. C. Cooper v. Union
\nof India<\/a>(l)  a decision\t of  the  Full\tCourt.\tThere  is  a
\ncontroversy  whether  this  case  was  a  retreat  from\t the
\nposition taken\tin Shantilal’s\tcase. Later  in Keshavananda
\nBharti’s(2) case Shelat, Hegde, Grover, Jaganmohan Reddy and
\nMukherjee JJ., expressed the view that Cooper’s case did not
\nover rule  Shantilal’s case  while Dwivedi  and Chandrachud,
\nJJ.  expressed\t the  view  that  Shantilal’s  case  was  in
\nsubstance overruled by Cooper’s case. This uncertainty which
\nis said\t to have  resulted from\t the decision  e in Cooper’s
\ncase led  to the  25th Amendment  of the Constitution.. As a
\nresult of  the 25th  Amendment Article 31(2) came to read as
\nfollows :\n<\/p>\n
\t  “31(2) No  property shall be compulsorily acquired
\n     or requisitioned  save for a public purpose and save by
\n     authority of a law which provides for requisitioning or
\n     requisitioning of
\n(1) [1970] 3 S.C.R. 530
\n(2) [1973] Suppl. S.C.R. 1.\n<\/p><\/blockquote>\n
633<\/span><\/p>\n
     the property  for an  amount which may be fixed by such
\n     law or  which may be determined in accordance with such
\n     principles and given in such manner as may be specified
\n     in such  law; and\tno  such  law  shall  be  called  in
\n     question in  any court on the ground that the amount so
\n     fixed or  deter mined is not adequate or that the whole
\n     or any  part of  such amount  is to  be given otherwise
\n     than in cash:\n<\/p><\/blockquote>\n
\t  Provided that\t in making any law providing for the
\n     compulsory\t acquisition   of   any\t  property   of\t  an
\n     educational institution established and administered by
\n     a minority referred to in clause (1) of article 30, the
\n     State shall  ensure that the amount fixed or determined
\n     under such\t law for the acquisition of such property is
\n     such as  would  not  restrict  or\tabrogate  the  right
\n     guaranteed under that clause”.<\/p><\/blockquote>\n
     So\t much\tfor  Constitutional   history.\tWe  are\t not
\nconcerned in  this case.  with the  25th Amendment.  We\t are
\nconcerned with\tArticle 31(2)  as it  stood  after  the\t 4th
\nAmendment and  before the  25th Amendment.  On a question of
\ninterpretation or  Article 31(2)  the decision\tin  Cooper’s
\ncase, therefore,  has the final word. In Cooper’s case Shah,
\nJ., who\t spoke\tfor  the  Court\t recognised  the  apparently
\nconflicting views  expressed in\t Vajravelu’s case and E case
\nbut held,  that both  the lines\t of thought converged in the
\nultimate result that the principles specified by the law for
\ndetermination  of  compensation\t were  beyond  the  pale  of
\nchallenge, if  they were  relevant to  the determination  of
\ncompensation and  were recognised  principles applicable  in
\nthe determination  of compensation for properly compulsorily
\nacquired  and\tif  the\t  principles  were   appropriate  in
\ndetermining the\t value of the class of property sought to be
\nacquired.  The\t provisions   of   the\t Banking   Companies
\n(Acquisition and  Transfer of  Undertaking) Act\t 22 of\t1969
\nwere struck down on the ground that relevant principles were
\nnot specified for the determination of compensation. Instead
\nof providing  for valuing  the entire undertaking as a unit,
\nthe Act\t provided for  determining the value, reduced by the
\nliabilities,  of   only\t some\tof  the\t  components   which
\nconstituted the\t undertaking. It also provided for different
\nmethods of  determining compensation in respect of different
\ncomponents. Since  the undertaking was sought to be acquired
\nas a  going concern  the  goodwill  and\t the  value  of\t the
\nun..expired long  term leases had also to be included in the
\nassets of  the banks.  These  important\t components  of\t the
\nUndertakings were excluded. It was, therefore, held that the
\nprinciples specified  were irrelevant  for the determination
\nof compensation\t of Banking  Companies. The  Court, however,
\nobserved  that\t the  science\tof  valuation\tof  property
\nrecognised
\n634<\/span>
\nseveral principles  or methods\tfor determining the value to
\nbe paid\t as compensation  to  the  owner  for  loss  of\t his
\nproperty and  that if an appropriate method or principle for
\ndetermination of  compensation was applied, the fact that by
\nthe  application   of  another\t principle  which  was\talso
\nappropriate,  a\t different  value  was\tleached,  would\t not
\njustify the Court in entertaining the contention that out of
\nthe two\t appropriate methods, one more generous to the owner
\nshould have been applied by the Legislature. It was observed
\nthat if\t several principles  were appropriate  and  one\t was
\nselected for  determination of\tthe value of the property to
\nbe acquired, selection of that principle to the exclusion of
\nother  principles  was\tnot  open  to  challenge  since\t the
\nselection had  to be  left to  the wisdom of the Parliament.
\nThe Court  then went  on to  refer to some of tile important
\nmethods of  determination of  compensation, and observed (at
\np. 600 and 601):\n<\/p>\n
     “The important methods of determination of compensation
\n     are-(i)  market   value  determined   from\t  sales\t  of
\n     comparable properties, proximate in time to the date of
\n     acquisition, similarly situate, and possessing the same
\n     or similar\t advantages  and  subject  to  the  same  or
\n     similar disadvantages.  Market value  is the  price the
\n     property may  fetch in  the open  market if  sold by  a
\n     willing seller  unaffected by  the special\t needs of  a
\n     particular purchase;  (ii) capitalization\tof  the\t net
\n     annual profit  out of  the property  at a rate equal in
\n     normal cases  to the return from gilt-edged securities.
\n     Ordinarily value  of the  property may be determined by
\n     capitalizing the  net annual  value obtainable  in\t the
\n     market at\tthe date of the notice of acquisition; (iii)
\n     where the property is a house, expenditure likely to be
\n     incurred for  constructing a similar house? and reduced
\n     by the  depreciation for  the number  of years since it
\n     was constructed;  (iv) principle of reinstatement where
\n     it is  satisfactorily established that reinstatement in
\n     some other\t place is bona fide intended, there being no
\n     general market  for the  property for  the purpose\t for
\n     which  it\tis  devoted  (the  purpose  being  a  public
\n     purpose) and  would have  continued to  be devoted, but
\n     for compulsory  acquisition. Here\tcompensation will be
\n     assessed  on   the\t basis\t of   reasonable   cost\t  of
\n     reinstatement; (v)\t when the  property has outgrown its
\n     utility and it is reasonably incapable of economic use,
\n     it may be valued as land plus the break-up value of the
\n     structure. But  the fact  that the\t acquirer  does\t not
\n     intend to\tuse the property for which it is used at the
\n     time of  acquisition and  desires to demolish it or use
\n     it for  other purposes  is\t irrelevant;  and  (vi)\t the
\n     property to be acquired has ordinarily to be
\n635<\/span>
\n     valued as a unit. Normally an aggregate of the value of
\n     A different  components will  not be  the value  of the
\n     unit.\n<\/p><\/blockquote>\n
\t  These are,  however, not  the\t only  methods.\t The
\n     method or\tdetermining the\t value of  property  by\t the
\n     application of  an appropriate  multiplier to  the\t net
\n     annual income  or profit  is a  satisfactory method  of
\n     valuation of  lands with buildings, only if the land is
\n     fully developed,  i.e., it\t has been  put to  full\t use
\n     legally permissible  and economically  justifiable, and
\n     the income out of the property is the normal commercial
\n     and not a controlled return, or a return dcpreciated on
\n     account of\t special circumstances.\t It the\t property is
\n     not fully\tdeveloped, or  the return  is not commercial
\n     the method may yield a misleading result.\n<\/p><\/blockquote>\n
\t\t   xxx\t\t     xxx
\n\t  But when  an undertaking is acquired as a unit the
\n     principles for  determination of  compensation must  be
\n     relevant and also appropriate to the acquisition of the
\n     entire under  taking. In  determining  the\t appropriate
\n     rate of  the net  pro fits\t the return  from gilt-edged
\n     securities\t may,\tunless\t it   is   otherwise   found
\n     unsuitable, be adopted”.<\/p><\/blockquote>\n
     It is  worthy of  notice that Shall, J., very carefully
\nrefrained,  throughout\t the  discussion,   from  using\t the
\nexpression ‘just  compensation’ or ‘just equivalent’ nor did
\nhe draw\t inspiration from  any American or Australian cases.
\nRealising the  implication of  the use\tof  adjectives\tlike
\n‘just’ or  ‘fair’, he  was content  to\tuse  the  expression
\n‘compensation’ and  to say that the principle specified must
\nbe relevant for determination of compensation. F
\n     Dealing with the question whether compensation might be
\nprovided in  the form  of bonds,  the Court said (at p. 608-\n<\/p>\n
609):\n<\/p>\n
\t  “Compensation may  be provided  under\t a  statute,
\n     other .  than in the form of money . it may be given as
\n     equivalent of  money, i.e.,  a  bond.  But\t in  judging
\n     whether the  law provides\tfor compensation,  the money
\n     value at  the date of expropriation of what is given as
\n     compensation,  must  be  considered.  If  the  rate  of
\n     interest compared\twith the  ruling commercial  rate is
\n     low, it  will reduce the present value of the bond. The
\n     Constitution  guarantees  a  right\t to  compensation-an
\n     equivalent of  the property  expropriated and the right
\n     to compensation  cannot be\t converted into\t a  loan  on
\n     terms which  do not  fairly compare with the prevailing
\n     com-\n<\/p><\/blockquote>\n
636<\/span><\/p>\n
     mercial  terms.   If  the\t statute  in  providing\t for
\n     compensation  devises   a\t scheme\t  for\tpayment\t  of
\n     compensation by giving it in the form of bonds, and the
\n     present value  of what  is deter  mined to\t be given is
\n     thereby substantially  reduced, the statute impairs the
\n     guarantee of compensation.\n<\/p><\/blockquote>\n
\t  A scheme for payment of compensation may take many
\n     forms. If the present value of what is given reasonably
\n     approximates to  what  is\tdetermined  as\tcompensation
\n     according to the principles provided by the statute, no
\n     fault may be found. But if the law seeks to convert the
\n     compensation determined  into a forced loan, or to give
\n     compensation in  the form of a bond of which the market
\n     value at the date of expropriation does not approximate
\n     the amount\t determined as\tcompensation, the Court must
\n     consider whether what is given is in truth compensation
\n     which is  inadequate, or that it is not compensation at
\n     all. Since\t we are\t of the view that the scheme in Sch.
\n     II of  the Act  suffers from  the vice that it does not
\n     award  compensation   according   to   any\t  recognized
\n     principles,  we   need  not  dilate  upon\tthis  matter
\n     further”.<\/p><\/blockquote>\n
     We may now examine the submissions of Shri A. K. Sen in
\nthe light  of the  principles enunciated  in  Cooper’s\tcase
\nwithout confusing ourselves with imported expression
\n like  ‘just compensation’  or ‘just equivalent’. Shri A. K.
\nSen’s  primary\t submission  was   that\t the   principle  of
\ncapitalising net  profit as  the sole factor for determining
\nthe compensation  payable for  the acquisition\tof a  public
\nutility Under taking was not a relevant principle. According
\nto him a Public. Utility Undertaking was under an obligation
\nto provide services to the community irrespective of whether
\nits activities\tresulted in profit or loss It was subject to
\na rigid price control. It did not have the freedom to extend
\nor curtail  its activities based on consideration of profit.
\nAn Undertaking\tlike the  appellant’s, he said, was bound to
\nrender services\t even in  unprofitable lines  of supply\t and
\nareas. Therefore,  the method of capitalising income was no.
\nrelevant to  determine the  compensation payable to a Public
\nUtility undertaking.  It might\tbe relevant  to\t assess\t the
\nvalue of  the intangible  assets of the Public Utility Under
\ntaking but  it was  not relevant  for valuing  its  tangible
\nassets. Shri  Sen invited  our attention to certain passages
\nfrom Alfred  Jahr’s Eminent  Domain-Valuation and Procedure,
\nValuation by Bright, American Jurisprudence 2nd Edn.-Vol. 27
\nand American  Law Reports-2nd  series, Vol. 68. It is hardly
\nnecessary tc  point out that American authorities are not of
\nany avail on the question before us since the
\n637<\/span>
\nbasic assumption of the American authorities is that what is
\npayable\t is   a\t ‘just\t compensation’\tand  every  and\t all
\nprinciples necessary to arrive at a ‘just compensation’ have
\nto be applied. That, as we have seen, is not the position in
\nIndia. What  we\t have  to  see\tis  whether  the  particular
\nprinciple specified  by the statute is a relevant principle.
\nEven so\t we will refer to the authorities cited by Shri Sen.
\nThese  authorities   themselves\t show  that  the  method  of
\ncapitalisation of  net profit  is an unquestionably relevant
\nprinciple  in  assessing  compensation.\t In  fact  the\tvery
\nargument of Shri Sen that the principle of capitalisation of
\nnet profit as a sole factor to determine compensation is not
\nrelevant, appears  to us  to imply  that it  is a  relevant,
\nprinciple alongwith others. C
\n     Alfred  Johr   in\this  Eminent  Domain  Valuation\t and
\nProcedure, states  in Section  66: “At\tthe outset,  we must
\nbear in\t mind that  when private  property is  acquired\t for
\npublic\tuse   under  the   power  of  eminent  domain,\tjust
\ncompensation must  be paid  to the  owner. How\tis the\tjust
\ncompensation determined\t ? That is the problem which we will
\ndiscuss at  some  length”.  Dealing  particularly  with\t the
\nquestion  of  valuation\t of  Public  Utilities,\t the  author
\nmentions the  reasons why the principles of valuation in the
\ncase  of  acquisition  of  Public  Utilities  are  sometimes
\ndifferent from\tthose pertaining  to the usual acquisitions.
\nThen  he   proceeds  to\t say  that  in\testimating  a  ‘just
\ncompensation’ of  Utility  property  consideration  must  be
\ngiven to  two types  of properties,  the tangible properties
\nand the\t intangible properties.\t Tangible property  such  as
\nland may  be valued  at the market value while property like
\nplant etc.  may have  to be  valued on the basis of original
\ncost, cost  of permutation,  allowance for depreciation etc.
\nIn the\tcase of\t intangible property  the author states that
\nthe Courts  do not  indicate the method used in reaching the
\nintangible item\t of ‘going  concern value’  . and  confesses
\nthat  “there   probably\t is   none”.  After  remarking\tthat
\nvaluation of  a going concern based on capitalisation of net
\nearnings assumes  too many  contingencies, the author refers
\nto the\tcase of\t Appleton Water\t Co. v.\t Railroad Commission
\n[154 Wis.  121, 148,  142, N.W.\t 476, 47 L.R.A. (N.S.) 770],
\nwhere the Court said that the fundamental difficulty with an
\nattempt to  set a definite sum as representing going concern
\nvalue is  “that it  is an attempt to divide a thing which is
\nin its\tnature practically  indivisible. The  value  of\t the
\nplant and business is an indivisible gross amount. It is not
\nobtained by  adding up\ta number  of separate  items, but by
\ntaking a  comprehensive view of each and all of the elements
\nof property,  tangible and  intangible,\t including  property
\nrights, and  considering them  all, not\t as separate things,
\nhut as inseparable parts of one harmonious entity”.\n<\/p>\n
638<\/span><\/p>\n
     Bright in\this ‘Valuation’,  deals\t with  the  question
\nunder the  heading ‘Capitalized\t Earning  Power\t Versus\t So-
\nCalled Physical\t value as  a measure  of just compensation’.
\nAfter referring to various difficulties ` in arriving at the
\njust  compensation   on\t the   basis  of   the\t method\t  of
\ncapitalisation, the author ends the statement:\n<\/p>\n
\t  “No doubt  the practical  objections urged  by the
\n     courts .  against capitalized  earnings as\t a basis  of
\n     valuation are  well founded.  But valuations  based  on
\n     replacement cost  are indefensible\t if  judged  by\t the
\n     assumed objective\tof an award t in condemnation, which
\n     is to  indemnify the  owners of  the property  for\t the
\n     loss. Difficult  as it is to determine fairly the value
\n     of a  business  enterprise\t by  estimating\t its  future
\n     earnings,\tno   alternative  method   of  valuation  is
\n     acceptable, unless\t one is\t content to  use the  market
\n     prices of outstanding stocks and bonds”.<\/p><\/blockquote>\n
     In\t American  Jurisprudence,  2nd\tEdn.  Vol.  27,\t the
\ndiscussion of  the question  of\t ‘Measure  and\telements  of
\ncompensation’ starts in paragraph 266 with the sentence “the
\nright of  Eminent Domain  cannot be  exercised\texcept\tupon
\ncondition that\tjust compensation  be made to the owner”. In
\nparagraph 339  the valuation of Public Utility properties is
\nconsidered and\tthe unique problems presented are mentioned.
\nIt is  then said  : no\trigid measures can be prescribed for
\nthe  determination   of\t ‘just\t compensation’\t under\t all
\ncircumstances and  in all  cases……… The  amount of net
\nincome actually received by a public utility company may and
\nshould\tbe   considered\t as  a\tfactor\tin  determining\t the
\nvaluation,  although   such  earnings  are  not\t conclusive,
\nespecially if  a large\tsum would  be necessary\t to put\t the
\nplant in  good condition. Capitalization of earnings, or the
\n“economic” value,  is a\t method of appraisal in condemnation
\ncases which  has met  with approval  in some  jurisdictions,
\nalthough usually  rejected as a sole test. This test has its
\nlimitations (primarily\tbecause of  the speculative  factors
\ninvolved). but is unquestionably relevant, particularly when
\nattempting to measure the intangibles of a public utility”.\n<\/p>\n
     In American  Law Reports-2nd  series-Vol 68,  at  pages
\n398- 399  it is\t stated that  in  valuing  utility  property
\nvarious tests  have been  applied, alone and in combination,
\nthe usual method being the ascertainment of market value. It
\nis  then   pointed  out\t  that\tthere  is  a  difference  in
\nascertaining  the   market  value   for\t the  purpose`sc  of
\ncondemnation proceedings and for the purpose of rate-making.
\nIt is  said: “In  condemnation proceedings just compensation
\nis the\tmarket value  of the  property taken. In rate-making
\ncases, the standard or market value of the investment cannot
\nbe applied  in determining just compensation, for the simple
\nreason that marker value is dependent upon
\n639<\/span>
\nearning\t capacity   and\t fluctuates   with  that   capacity;
\nconsequently in\t determining what  earning capacity is just,
\nthe market  value of  the investment  which is\ta result  of
\nearning capacity  cannot be  utilised as  a  basis  for\t the
\ndetermination of  what constitutes  the reasonable  or\tjust
\nearning capacity of the plant”.\n<\/p>\n
     We may  also refer to Principles and Practice of Rating
\nValuation by Roger Emeny and Hector M, Wilks. At page 197 of
\nthe 3rd edn., public utility undertakings are considered and
\nit is said:\n<\/p>\n
\t  ‘Public Utility  Undertakings were  prior to\t1950
\n     valued by\tthe profits  method. This  method  was\tused
\n     because public  utility undertakings were not generally
\n     speaking let,  added to which they enjoyed some element
\n     of monopoly….insofar  that there\t are public  utility
\n     undertakings or quasi public utility undertakings which
\n     are not  covered by  a formula,  and in  the absence of
\n     rental evidence, it is probable that the profits method
\n     of valuation  would be applicable. There is no shortage
\n     of case  law to  help the valuer when using the profits
\n     method for public utility undertaking”.<\/p><\/blockquote>\n
     It is  thus clear\tfrom the  very authorities  cited by
\nShri Sen.  that tangible and intangible property of a public
\nutility\t undertaking,\tmay  not   necessarily\t be   valued
\nseparately and\tit is  a sound\tprinciple to  treat them  as
\nindivisible and\t value\tthe  undertaking  as  an  integrated
\nwhole. The  authorities also treat the capitalisation of net
\nprofit as  one of  the recognised principles of valuation of
\nPublic Utility Undertaking, though it may not be the best in
\nthe sense  that it  may not  yield that result which is most
\nadvantageous to the owner of the undertaking. But we are not
\nconcerned with\tthe question  which principle will yield the
\nresult most advantageous to the owner of the undertaking but
\nwith the  question whether  the particular  principle  is  a
\nrelevant principle at all. In the language used in ‘American
\nJurisprudence’ the principle of capitalisation of net income
\nis “unquestionably  relevant” even  in the  case  of  Public
\nUtility Undertakings.  Tn our view, it requires no authority
\nto  say\t that  capitalisation  of  net\tincome\tis  a  sound
\nprinciple of  valuation. Any  purchaser will immediately put
\nhimself the  question what  profit does the undertaking make
\nand how much should I invest to get the return’ ? He may pay
\nmore if\t the prospects\tof better  income in  the future are
\nbright and  if the  plant, machinery  and buildings  are  in
\nexcellent condition. He may pay less if the future is not so
\nbright and  if the  plant, machinery  and buildings are in a
\npoor state  and require immediate replacement and repair. He
\nmay  pay   more\t ll  if\t the  undertaking  is  possessed  of
\nsubstantial, unencumbered properties. He may pay less if the
\nlease of the land on which the factory
\n640<\/span>
\nis located  is about  to expire.  Thus the  price  may\tvary
\ndepending –  on various\t factors but the basic consideration
\nis  bound   to\tbe  the\t profit\t yielding  capacity  of\t the
\nundertaking. Shri  Sen asserted\t that the lands belonging to
\nthe company  which were\t purchased by way of investment, can
\nfetch a\t price of  Rupees six  to  seven  crores.  There  is
\nnothing in  the petition  to indicate  that any\t lands\twere
\npurchased by  way of  investments and not for the purpose of
\ngas works  or that  the lands  are  capable  of\t being\tsold
\nindependently of  the undertaking. Perhaps, no one will come
\nforward to  purchase land next to a gas works. Perhaps there
\nare other  factors which  make the land unsale able or which
\ndepreciate the value of the land. We do not know. Suffice it
\nto say\tthat the  assertion of\tShri Sen is not borne out by
\nany statement to that effect in the Writ Petition. Shri Sell
\nsuggested that\tthe petitioner might be given an opportunity
\nto amend  the Writ Petition. We do not think we can do that.
\nThe acquisition\t was made  in 1962.  The  impugned  Act\t was
\npassed in  1970. The Writ Petition was filed in 1971 and has
\nbeen pending in this Court for sever years. If there was any
\nsubstance in  the present  assertion, the  petitioner  would
\nsurely have  mentioned it  prominently in the Writ Petition.
\nIt would  not have  taken the  petitioner so  many years  to
\ndiscover a circumstance claimed by his Counsel to be so very
\nvital. We  do not  think we  will be justified in permitting
\nany amendment  at this\tstage. The  case of  the  petitioner
\nright through  has been that the principle of capitalisation
\nof  income   was  irrelevant.\tWith  that   submission\t  we
\nemphatically do not agree.\n<\/p>\n
     Shri Sen’s\t next submission  was that the choice of the
\nperiod of  five years immediately preceding the take over of
\nthe management and control of the Company for the purpose of
\ncalculating the average annual income was arbitrary as those
\nfive years  were particularly  lean years  for\tthe  Company
\nbecause\t of   some  special  circumstances.  The  charge  of
\narbitrariness  is   baseless.  The  five  years\t immediately
\npreceding the take over of the control and management of the
\nCompany were  the years\t 1955-56, 1956-57,  1957-58, 1958-59
\nand 1959-60  during which years the profits according to the
\nbalance sheets\tof the\tCompany,  were\tRs.  15,86,789,\t Rs.
\n13,81,177, Rs.\t7,50,582, Rs.  1,64,158 and  Rs.  1,82,123\/-
\nrespectively. Now, if the Legislature wanted to be unfair to
\nthe Company, the last year’s profit could have been taken as
\nthe criterion on the ground that the value to be ascertained
\nwas the\t value on  the\tdate  of  take\tover  and  not\tsome
\nhypothetical  anterior\tdate.  Or,  instead  of\t taking\t the
\nadvantage of  the period  of the  preceding five  years, the
\nLegislature  could  well  have\ttaken  the  average  of\t the
\npreceding three years. If
\n643<\/span>
\nthat. We  should not however be understood as having decided
\nthat  A\t Section  9  (2)  offends  Article  31\t(2)  of\t the
\nConstitution. Shri Chatterjee, learned Counsel for the State
\nof West\t Bengal, argued\t that the  earlier decision  of\t the
\nCalcutta High Court in the petition under Article 226 of the
\nConstitution operated  as res  judicata. In the view that we
\nhave taken  on\tthe  main  question  it\t is  unnecessary  to
\nconsider this  argument except\tto say\tthat there  does not
\nappear to  be any  substance in\t it. In\t the result the Writ
\nPetition is dismissed with costs.\n<\/p>\n
P.B.R.\t\t\t\t\t Petition dismissed.\n644<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 Equivalent citations: 1979 AIR 248, 1979 SCR (1) 617 Author: O C Reddy Bench: Chandrachud, Y.V. (Cj), Sarkaria, Ranjit Singh, Untwalia, N.L., Reddy, O. Chinnappa (J), Sen, A.P. (J) PETITIONER: ORIENTAL GAS CO. LTD. & ORS. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-202208","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nOriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"1978-09-11T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2017-07-31T12:26:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"52 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978\",\"datePublished\":\"1978-09-11T18:30:00+00:00\",\"dateModified\":\"2017-07-31T12:26:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\"},\"wordCount\":8854,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Supreme Court of India\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\",\"name\":\"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\"},\"datePublished\":\"1978-09-11T18:30:00+00:00\",\"dateModified\":\"2017-07-31T12:26:39+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"contentUrl\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/LegalindiaCom\\\/\",\"https:\\\/\\\/x.com\\\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\\\/\\\/www.legalindia.com\",\"https:\\\/\\\/x.com\\\/legaliadmin\"],\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/author\\\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","og_locale":"en_US","og_type":"article","og_title":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"1978-09-11T18:30:00+00:00","article_modified_time":"2017-07-31T12:26:39+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"52 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978","datePublished":"1978-09-11T18:30:00+00:00","dateModified":"2017-07-31T12:26:39+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978"},"wordCount":8854,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Supreme Court of India"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","url":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978","name":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"1978-09-11T18:30:00+00:00","dateModified":"2017-07-31T12:26:39+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/oriental-gas-co-ltd-ors-vs-state-of-west-bengal-on-12-september-1978#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"Oriental Gas Co. Ltd. & Ors vs State Of West Bengal on 12 September, 1978"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/202208","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=202208"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/202208\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=202208"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=202208"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=202208"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}