Holding

The legislature may retrospectively amend or repeal earlier amendments, and such amendment is valid unless it contravenes Article 14; therefore the 1978 Amendment Act validly nullified the 1974 amendment and compensation is payable at two times the net annual income.

Summary

The respondent, Arooran Sugars Ltd., owned over 3,400 acres of land that was declared surplus under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961. The original compensation rate was nine times the net annual income, but the 1972 Fourth Amendment reduced it to two times. A 1974 amendment (Act 7 of 1974) retrospectively antedated the vesting date to March 1, 1972, allowing the respondent to claim the higher rate. The High Court accepted this claim. Subsequently, the 1978 Amendment Act (Act 25 of 1978) nullified the 1974 amendment, restoring the original vesting rule (date of notification) and the reduced compensation rate. The State appealed, arguing that the legislature could validly amend the statute retrospectively and that the 1978 Act was constitutional. The Supreme Court held that the legislature may amend, delete or obliterate a statute retrospectively unless such amendment violates Article 14, and that the 1978 Act validly effaced the 1974 amendment. Consequently, compensation is payable at two times the net annual income, the High Court judgments are set aside, and the respondent's writ petitions are dismissed.

Issues considered

The legislature's power to amend a statute retrospectively and its limits under Article 14 of the Constitution.
Whether the non‑obstante clauses and deeming provisions in Sections 4, 5 and 6 of the 1978 Amendment Act are constitutionally valid.
Whether compensation for surplus land should be calculated on the basis of nine times or two times the net annual income.
The effect of a High Court execution order after its underlying judgment is set aside.

Legislation cited

Constitution of Indias. Article 14, s. Article 31-A, s. Article 31-B, s. Article 31-C
Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961s. 18(1), s. 18(3), s. 50(1)
Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Amendment Act, 1978 (Act 25 of 1978)s. Section 4 (re‑substitution of "with effect from the date of such publication"), s. Section 5 (non‑obstante clause effacing Act 7 of 1974), s. Section 6 (validation of vesting and compensation)
Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Fourth Amendment Act, 1972 (Act 39 of 1972)s. Schedule III (compensation multiple)
Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Sixth Amendment Act, 1974 (Act 7 of 1974)s. Section 3(2) (vesting date amendment), s. Section 3-A (new provision)

Subjects

Land reformSurplus landCompensationRetrospective legislationStatutory fictionArticle 14Tamil Nadu Land Reforms ActAmendment ActVesting of landInterpretation of statutes

Judgment

STATE OF TAMIL NADU A
v.
MIS. AROORAN SUGARS LTD.

OCTOBER 31, 1996

[KULDIP SINGH, M.M. PUNCHHI, N.P. SINGH, M.K. B
MUKHERJEE AND SAGHIR AHMAD, JJ.]

Tenancy and Land Laws :

Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, C
1961:

Section 18(3).

Acquisition of land and its vesting free from all encumbrances in
Government w.e.f date of publication of notification unde." S.18(1)- D
Amendment Act 39 of 1972 which came into force w.e.f 21-12-1972
amended Sch.III of Principal Act and reduced minimum multiples for
calculating compensation from 9 times to 2 times of not annual income-
Noiification under S.18(3) issued on 4-4-1973 declared an extent of land
of Company as surplus land and possession thereof taken over by
Government-Draft Compensation Assessment Roll published on 5-12- E
1973 determined amount payable at the rate of 2 times of net annual
income-Amendment Act 7 of 1974 vested surplus land in Government
w.e.f date of commencement of Act i.e. 1-3-1972, instead offrom date of
publication ofnotification-Company filed writ petition before High Court
challenging Draft Compensation Roll on ground that in view ofAmendment
Act 7 of 1974 antedating date of vesting from 4-4-1973 to 1-3-1972 it F
would be entitled to compensation by applying multiple o/9 times since on
1-3-1972 Amendment Act 39 of 1972 by which compensation amount was
reduced to multiple of 2 times did not come into force-Subsequently,
Amendment Act 25 of 1978 came into force on 1-3-1972-It effaced and
obliterated amendment introduced in S.18(3) as it stood prior to that G
amendment by reiterating that date of vesting of surplus land would be
date of publication notification under S.18(1 )-Held: Ss. 4, 5 and 6 of
Amendment Act 7 of 1974 in Principal Act because of which it would be
deemed that notification issued under S.18(1) of the Principal Act on 4-4-
1973 was valid because ofsaid notification-Lands declared surplus vested
in State under S.18(3) of Principal Act. H
193
194 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A Interpretation of Statutes:

Defect in Statute-Pointed out by High Court-Removal of-By
..
effacing and obliterating earlier amendment retrospectively-With aid of
legal fiction-Validity of-Held: Amending Act had taken away th.e
substratum and basis or judgment of Court-Hence, measurers adopted by
B Amending Act valid.

Legal Fiction-Mode of interpretation-Reiterated.

Constitution of India, 1950: Article 14.

c Retrospective Legislation-Held: Legislature had power to amend,
delete or obliterate a statute or provision retrospectively unless such
legislative exercise was in violation of Article 14.

Practice and Procedure :
D
High Court-Orders and directions of-High Court's order, which
was in nature ofexecution order, simply directed State Government to comply
with its earlier order and direc.tion given in connected writ petition-Such
earlier order set aside by Supreme Court-Held: when that earlier order
itself was set aside by Supreme Court, direction given in execution order
E would be of no consequence.

The respondent, a public limited company, was engaged in
composite and integrated activity of raising sugarcane on its land
and crushing it in its sugar factory. Section 18(3) of the Tamil Nadu
Reforms (Fixation of Ceiling on Land) Act, 1961 provided for
F acquisition of land and vesting thereof free from all encumbrances in
the Government w.e.f. date of publication of notification under Section
18(1) of the Principal Act. The minimum compensation for excess
land vesting in the Government was 9 times of the net annual income.
When the respondent filed its return on 6-4-1972 under Section 8 of
G the Principal Act it was entitled to compensation at the rate of 9
times of the net annual income. However, the Tamil Nadu Land
Reforms (Fixation of Ceiling on Land) Fourth Amendment Act, 1972
(Act 39 of 1972) which came into force w.e.f 21.12.1972 amended
Schedule III of the Principal Act reducing the minimum multiples
for calculating compensation from 9 times to 2 times of the net annual
H income. A notification under Section 18(1) of the Principal Act was
STATEOFT.N. v. AROORAN SUGARS LTD. 195

.... published on 4-4-1973 declaring an extent of land of respondent as A
" surplus land and possession thereaf taken over by Government. The
Draft Compensation Ass~ssment Roll was published on 5-12-1973
determining the amount payable to the respondent in respect of the
surplus lands at the rate of 2 times the net annual income.
Subsequently, the Tamil Nadu Land reforms (Fixation of Ceiling on
Land) Sixth Amendment Act, 1972 (Act 7 of 1974) amended Section B
18(3) of the Principal Act by which the surplus land was to vest in the
State Government w.e.f. from the date of commencement of that
Act. i.e.1-3-1972, instead of from the date of publication of the
notification.

The respondent filed a writ petition before the High Court C
challenging the Draft Compensation Assessment Roll on the ground
that in view of the Amendment Act 7 of 1974 antedating the date of
vesting from 4-4-1973 to 1-3-1972 the respondent was entitled to
compensation by applying the multiple of 9 times of the net annual
income instead of the multiple of 2 times since on 1-3-1972 the
Amendment Act 39 of 1972 by which the compensation amount was D
reduced to the multiple of 2 times had not come into force. The High
Court allowed the writ petition. Being aggrieved the appellant-State
preferred an appeal against this decision of the High Court.

Thereafter, the Tamil Nadu Land Reforms (Fixation of Ceiling E
on Land) Amendment Act, 1978 (Act 25 of 1978) came into force
w.e.f. 1-3-1972. It effaced and obliterated the amendment introduced
in Section 18(3) of the Principal Act by Act 7 of 1974 and restored
parts of Section 18(3) of the Principal Act as it stood prior to that
amendment by reiterating that the date of vesting of the surplus land
would be the date of publication of the notification under Section F
18(1) of the Principal Act.

The respondent filed a writ petition before the High Court
challenging the validity of Act 25 of 1978 which was allowed. Being
aggrieved the appellant-State preferred the present appeal.
G
On behalf of the appellant-State it was contended that since the
appellant had filed an appeal against the order of the High Court
directing payment of compensation to the respondent applying
provisions of Act 7 of 1974, after coming into force of Act 25 of 1978
the basis of the ~foresaid judgment had been taken away as such the H
196 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A respondent could not claim compensation by applying the multiple
of9 times; and that the provisions of Act 25 of1978 being constitutional
and valid, the High Court should have dismissed the writ petition
challenging the validity of Act 25 of 1978.

Allowing the appeal, this Court
B
HELD : I.I. The power of the legislature to amend, delete or
obliterate a statute or to enact a statute prospedively or retrospectively
cannot be questioned and challenged unless the court is of the view that
such exercise is in violation of Article 14 of the Constitution.1209-E-FI

c State of Gujarat and Anr. v. Raman Lal Keshav Lal Soni Ors., 11983)
2 SCR 287, T.R. Kapur v. State of Haryana, ll 986) Supp. SCC 584 and
Union of India v. Tushar Ranjan Mohanty, 11994) 5 SCC 450 relied on.

1.2. It is open to the legislature to remove the defect pointed by
D the Court or to amend the definition or any other provisio11 of the
Act in question retrospectively. In this process it cannot be said that
there has been an encroachment by the legislature over the power of
the judiciary. A court's directive must always hind unless the conditions
on which it is based are so fundamentally altered that under altered
circumstances such decisions could not have been given. This will
E include removal of the defect in a statute pointed out in the judgment
in question, as well as alteration or substitution of provisions of the
enactment on which such judgment is based, with retrospective effect.
This is what has happened in the present case. 1213-C-D]

Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, 11969) 2
F SCC 283; West Ramnad Electric Distribution Co. Ltd. v. State ofMadras,
11963) 3 SCR 41; Tirath Ram Rajindra Nath v. State of U.P., 11973) 3
SCC 585; Krishna Chandra Gangopadyaya v. Union of India, 11975) 2
SCC 302; Hindustan Gum and Chemicals Ltd. v. State ofHaryana, 11985)
4 SCC 124; Utkal Contractors and Joinery (P) Ltd. v. State of Orissa,
G 11987) Supp SCC 751; D. Cawasji Co. v. State of Mysore, 11984) Supp
SCC 490; Bhubaneshwar Singh v. Union of India, 11994) 6 SCC 77;
Government of Andhra Pradesh and Anr. v. Hindustan Machine Tools
Ltd., 11975) 2 SCC 274 and Sunder Dass v. Ram Prakash, 11977) 3 SCR
60, relied on.

H 2.1. The provisions of the Tamil Nadu Land Reforms (Fixation
STATE OF T.N. v. AROORAN SUGARS LTD. 197

of Ceiling on Land) Amendment Act, 1978 (Act 25 of 1978) do not A
purport to effect any vested or acquired right. It only restores the
position which existed when the Tamil Nadu Land Reforms (Fixation
of Ceiling of Land) Act, 1961 was in force. It simply nullifies the Tamil
Nadu Land Reforms (Fixation of Ceiling on Land) Sixth Amendment
Act, 1972 (Act 7of1974) which had made amendments in the Principal
Act after notification had been issued under Section 18(1) and vesting B
had taken place under Section 18(3) of the Principal Act as it stood
prior to enactment Act 7of1974. By Act 7 of 1974 futile attempt had
been made by introducing different amendments. In this process not
only it created anomaly in the Principal Act, but nothing purposeful
was achieved. It is true that because of the amendments introduced by
that Act 7 of 1974, the respondent could urge before the High Court C
that as the vesting had taken place on 1-3-1972, in spite of amendment
Act 39of1972 which had reduced the multiple from 9 times to 2 times
of the net annual income with effect from 21-12-1972 the respondent
was entitled to compensation to be worked out on basis of 9 times of
the net annual income. But on this ground the provisions of Act 25 of
1978 cannot be held to be violative of Article 14 of the Constitution and D
as such ultra vires. Once the provisions are held to be legal and valid,
then the wish and desire of the legislature has to be given full effect and
to its logical end. (210-E-H, 211-A-BJ

2.2. This Court shall be justified in examining the judgment of E
the High Court on the writ petition of the respondent which treated
Act 7 of 1974 as never enacted or was it existence. As that judgment
was solely based on the amendments introduced by Act 7 of 1994,
once such amendments have been effaced retrospectively, there is no
escape from the conclusion that the substratum and basis of that
judgment has been taken away. If those amendments so introduced F
have been effaced by Act 25 of 1978 with retrospective effect saying
that it shall be deemed that no such amendments had ever been
introduced in the Principal Act, then full effect has to be given to the
provisions of the later Act unless they are held to be ultra vires or
unconstitutional. (213-E I
G
2.3. When a statute creates legal fiction saying that something
shall be deemed to have been done which in fact and truth has not
been done, the Court has to examine and ascertain as to for what
purpose and between what persons such a statutory fiction is to be
resorted to. Thereafte1· courts have to give full effect to such a statutory H
198 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

· A fiction and it has to be carried to its logical conclusion. (208-B,C]

State of Bombay v. Pandurang Vinayak, (1953] SCR 773; Chief
Inspector of Mines v. Karam Chand Thapar, ]1962] 1 SCR 9; JK Cotton
Spinning and Weaving Mills Ltd. v. Union of India, (1988] 1 SCR 700;
M Venugopal v. Divisional Manager, Life Insurance Corporation of India,
B (1994] 2 SCC 323 and Harish Tandon v. Additional District Megistrate
Allahabad, (1995] 1 SCC 537, relied on.

East End Dwellings Co. Ltd. v. Finsbury Borough Council, (1952]
AC 109, referred to.

c 3.1. In view of Sections 4, 5 and 6 of Act 25 of 1978 which cannot
be held to be unconstitutional, there is no escape from conclusion ,
that the provisions which had been introdu<:ed in the Principal Act
by Act 7 of 1974 have been effaced and courts have to proceed as if
they had never been introduced in the Principal Act. As a corollary it
D has to be held that un1er the amendment Act 39 of 1972 the
compensation amount payable for the surplus land under Schedule
III to the Act was reduced from 9 to 2 times of the net annual income
w.e.f. 21-12-1972. Notification under Section 18(1) of the Principal
Act declaring an extent of land of the respondent-company as surplus
was issued on 4-4-1973 after coming into for.ce of amended Act 39 of
E 1972 aforesaid and because of the notification dated 4-4-1973 the
surplus lands vested in the State Government in view of Section 18(3)
of the Principal Act as it stood on that date. Thereafter, the Draft
Assessment Roll had to he published applying the rate of 2 times of
the net annual income. (220-E-G]
F
Madan Mohan Pathak v. Union ofIndia, (1978] 2 SCC 50, Janapada
Sabha Chhidwara v, The Central Provinces Syndicate Ltd. and Anr., (1970)
l SCC 509 and The Municipal Corporation of the City of Ahmedabad
and Anr. v. The New Shrock Spg. and Wvg Co. Ltd, (1970] 2 SCC 280,
held inapplicable.
G
A. V. Nachane and Anr. v. Union of India, (1982] 2 SCR 246 and
D.J Bahadur, referred to.

United Provinces v. Atiqa Begum and State of Tamil Nadu v. M
H Rayappa Gounder, cited.
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 199

3.2. In view of the provisions of Sections 5(b) and 6(a) of the A
notification which was issued on 4-4-1973 under Section 18(1) of the
Principal Acts.hall be deemed to be valid and shall.have the effect of
vesting the lands in question in the State Government under Section
18(3) of the Principal Act w.e.f. 4-4-1973. 1221-D,EI

3.3. The High Court by its order which was in the nature of B
execution order simply directed the State Government to comply with
its earlier order and direction given in a connected writ petition. When
that earlier order itself was set aside by this court, the direction given
in the execution order shall be of no consequence. [222-E,FJ

3.4. It is, therefore, not possible to accept the stand that Sections C
4, 5 and 6 of Act 25 of 1978 shall not revive the notification dated 4-
4-1973 which stood exahuasted and a fresh notification dated 4-4-
1973 had to be issued, even ifthe different provisions of Act 7of1974
shall be deemed to have been obliterated. [220-H, 221-AJ

4. There is no necessity to decide as to whether Act 25 of 1978 D
has the protection of Articles 31-A, 31-B and 31-C of the Constitution.
1224-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 134 of
1980 Etc.
E
From the Judgment and Order dated 8.10.76 of the Madras High
Court in W.P. Nos. I464 and 346of1974.

K.K. Venugopal, A.K. Ganguly, V. Krishnamurthy, V.
Ramasubramaniam, P. Murugan, P.R. Seetharaman and A. Mariarputham F
for the Appellant.

F.S. Nariman, Subhash Sharma, N. Sriprakash, E.R. Kumar and
P.H. Parekh for the Respondent

G
The Judgment of the Court was delivered by

N.P. SINGH, J.

The State of Tamil Nadu is the appellant in these appeals. Civil
Appeal No.134 of 1980 has been filed against the judgment of the High H
200 SUPREME COURT REPORTS [ 1996] SUPP. 8 S.C.R.

A Court of Madras in Writ Petition 1464 of 1974, whereas Civil Appeal
Nos. 352-354 of 1980 have been filed against the judgment of the same
High Court in Writ Petition 2341-2343 of 1978. All the Writ Petitions
had been filed on behalf of the respondent which were allowed by the
High Court.

B The respondent, a public limited Company which owned aR<I
possessed 3421.14 acres of land, was engaged in composite and integrated
activity of raising sugarcane on the aforesaid land and crushing it in its
sugar factory. The Tamil Nadu Reforms (Fixation of Ceiling on Land)
Act, 1961 (Act 58of1961), (hereinafter referred to as the Principal Act)
w?s published in the Tamil Nadu Government Gazette on 2.5.1962.
C According to the said Act, a ceiling of 30 standard acres of agricultural
land was fixed as the maximum holding. Under Section 18(1) of the
Principal Act, the surplus land has to be notified as required for public
purposes and on such publication in view of Section 18(3) of the Act land
specified in the notification shall be deemed to have been acquired for a
public purpose and shall vest in the Government free from all encumbrances
D with effect from the date of such publication and all right, title and interest
of all persons in such land shall be deemed to have been extinguished. The
relevant part of Section 18 of the Act is as foll.ows:-

18. Acquisition of surplus land. ( l) After the publication of
the final statement under section 12 or 14, the Government
E shall, subject to the provisions of sections 16 and 17, publish
a notification to the effect that the surplus land is required
for a public purpose.

~) ···································································
F
(3) On the publication of the notification under sub-section
( l ), the land specified in the notification together with the
trees standing on such land and buildings, machinery plant
or apparatus, constructed, erected or fixed OR such land and
used for agricultural purposes shall, subject to the provisions
G
of this Act, be deemed to have been acquired for a public
purpose and vested in the Government free from all
encumbrances with effect from the date of such publication
and all right, title and interest of all persons in such land
shall, with effect from the said date, be deemed to have been
H extinguished:
STATEOFT.N.v.AROORANSUGARSLTD. [N.P.SlNGH,J.] 201

A
.. Provided that where there is any crop standing on such land
on the date of such publication, the authorized officer may,
subject to such conditions as may be prescribed, permit the
harvest of such crop by the person who had raised such crop.

Section 50(1) of the Act provides for payment of amount at the rates
specified in Schedule lil thereto, to person whose right, title or interest in 8
any land is acquired by the Government.

Tamil Nadu Land Reforms (Reduction of Ceiling on Land) Act 17
of 1970, reduced the ceiling from 30 to 15 standard acres with effect from
15.2.1970. Under the Principal Act there was provision for grant of
exemption to the lands held by sugar factories in excess of the ceiling C
area. This provision was deleted by Tamil Nadu Amendment Act 41 of
1971, which came into force from 15.1.1972. Because of such amendment
even the sugar factories in general could not hold land in excess of 15
standard acres. The respondent filed its return under Section 8 of the
Principal Act on 6.4.1972. The Additional Authorised Officer (Land
Reforms), Tiruvarur, published the draft statement under Section 10(1) of D
the Principle Act on 19.4.1972. The minimum compensation payable for
excess lands vesting in the Government was 9 times of the net annual
. income. As such when the respondent filed its return on 6.4.1972, it was
entitled to compensation at the rate of 9 times of the net annual income.
However, the Tamil Nadu Land Reforms (Fixation of Ceiling on Land)
Fourth Amendment Act, 1972 (Act 39 of 1972) which came in force with E
effect from 21.12.1972 amended Schedule lil of the Principal Act reducing
the minimum multiples from 9 times to 2 times. The said Amending Act
39 of 1972 purported to reduce the multiple of compensation which was
payable in respect of lands which vested in the Government after
21.12.1972. A notification under Section 18( I) of the Principal Act was F
published on 4,4.1973 declaring as surplus an extent of 3414.87 acres of
land held by the respondent. Possession over such excess land were taken
over by the State Government between 6.4.1973 and 26.4.1973. The Draft
Compensation Assessment Roll was published by the State Government
on 5.12.1973 determining the amount payable to the respondent in respect
of the surplus lands applying the rate of 2 times the net annual income. G

On 15.2.1974, the Tamil Nadu Land Reforms (Fixation of Ceiling
on Land) Sixth Amendment Act 1972 (Act 7 of 1974) was published in
the Tamil Nadu Government Gazette. Sub-section (2) of Section 3 of Act
7 of 1974 amended sub-section (3) of Section 18 of the Principal Act on
and from 1.3.1972. The relevant part thereof is as follows:- H
202 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A "3(2) in section l 8 of the principal Act,-

(a) in sub-section (3), for the words "with effect from the
..
date of such publication'', the words "with effect from
the date of the commencement of this Act,'' had been
substituted;
B
(b)

~) ..................................................................... ·
The effect of substitution of sub-section (3) ofSection 18 of the
C Principal Act shall be that whereas under the original sub-section (3) of
Section 18 of the Principal Act only on publication of the notification
under sub-section (I) of Section 18, the land SJ"cified in the notification
together with the trees standing on such land mid buildings, machinery
plant etc., was deemed to have been acquired for a public purpose and
D vested in the Government free from all encumbrances 'with effect from
the date of such publication'; because of the substitution of sub-section
(3) of Section 18 of the Principal Act by Act 7 of 1974 the lands in
question shall deemed to have vested in the Gov1!rnment 'with effect from
the date of the commencement' of Act 7 of 1974, i.e. with effect from
1.3 .1972. It can be said that as sub-section (3) of Section 18 stood prior to
E amendment by Act 7 of 1974 on publication of the notification under
Section 18(1), the vesting of the respondent's sugarcane land in the State
Government had taken place with effect from 4.4.1973, but in view of the
substituted sub-section (3) of Section 18 by Act 7 of 1974, it shall be
deemed that the vesting of the excess lands took place with effect from
1.3.1972. In Section 3 of the Principal Act by Act 7 of 1974 a new sub-
F section (3-A) was also introduced which is as follows:-

"(3-A) (a) Every person who, after the date of the
commencement of this Act, was in possession of, or deriving
any benefit from the property vested in the Government under
sub-section (3) shall be liable to pay to the Government, for
G
the period, after such commencement, for which he was in
such possession or deriving such benefit, an amount as
compensation for the use, occupation or enjoyment of that
property as the authorised officer may fix in the prescribed
manner. Such officer shall take into consideration such facts
H as may be prescribed.
STATE OF T.N. v. AROORAN SUGARS LTD. (N.P. SINGH, J.] 203

(b) Any amount payable to the Government under clause (a) A
- shall be recoverable as arrears of land revenue."

According to the respondent, in view of the amendment introduced
by Act 7of1974, antedating the date of vesting from 4.4.1973 to 1.3.1972
the respondent was entitled to the payment applying the multiple of 9
times of the net annual income instead of multiple of 2 times which was B
introduced by aforesaid Act 39 of 1972 with effect from 21-12-1972.
Writ Petition No.1464 of 1974 was filed on behalf of the respondent
challenging the Draft Compensation Assessment Roll aforesaid, before
the High Court which was admitted by the High Court.

It may be pointed out that the learned counsel appearing for the C
appellant-State, could not explain as to what was the purpose of enacting
Act 7 of 1974 aforesaid and what object it purported to achieve. He simply
stated that letter the legislature itself restored the original position by
enacting Tamil Nadu Land Reforms (Fixation of Ceiling on Land)
Amendment Act 78 (Act 25 of 1978). Section 4 of that Act is as follows:
D
"4. Tamil Nadu Act 58 of 1961, as subsequently modified,
to have effect subject to modifications-The principal Act,
shall, on and from the !st day of March 1972, have effect as
if,-

(I) in section 18 of the principal Act,- E

(a) in sub-section (3), for the words "with effect from the
date of the commencement of this Act", the words "with
effect from the date of such publication" had been substituted;
F
(b)

(c) sub-section (3-A) had been omitted.

"
G
In view of the Section 4 aforesaid, in sub-section (3) of Section 18
of the Principal Act the words "with effect from the date of such
publication" was again substituted for the words "with effect from the
date of commencement of this Act" which had been introduced by Act 7
of 1974. Sub-section (3-A) which had been introduced by Act 7 of 1974 H
204 SUPREMECOURTREPORTS [1996] SUPP. 8 S.C.R.

A was also omitted. Sections 5 and 6 of Act 25 of 1978 which are relevant
provided:

"5. Certain provision of Tamil Nadu Act 7 of 1974 not to
have effect-

B (I) Not withstanding anything contained in the Tamil Nadu
Land Reforms (Fixation of Ceiling on Land) Sixth
Amendment Act, 1972 (Tamil Nadu Act 7 of 1974)
(hereinafter in this section referred to as the 1972 Act), or in
any judgment, decree or order of any court or other authority,
sub-section (2) of section 3 of the 1972 Act shall be omitted
c and shall be deemed always to have been omitted and
accordingly the modifications made to section 18 of the
principal Act by the said sub-section (2),-

(a) shall be deemed never to have been made and the provisions
of the said section 18 of the principal Act as they stood prior
D
to the said modifications shall continue in force and shall be
deemed always to have continued in force; and

(b) shall be deemed never to have had the effect of vesting in
the State Government the surplus lands specified in any
E notification published under sub-section (I) of the said section
18 of the principal Act on or after the 2nd May 1962 and
before the date of publication of this Act in the Tamil Nadu
Government Gazette, from a date earlier to the date of the
publication of the notification under the said sub-section
(I) and shall be deemed always to have had the effect of
F
vesting in the State Government such surplus lands, only
with effect from the date of the publication of such
notification. (2) Anything don<' or any action taken under
the principal Act in pursuance of the provisions of sub-section
(2) of section 3 of the 1972 Act, shall be re-opened and
G determined in accordance with provisions of the principal
Act, as modified by this Act.

6. Vesting of certain surplus lands and validation-
Notwithstanding anything contained in any judgment, decree,
or order of any court or other authority,
H
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 205

(a) where before the date of publication of this Act in the A
Tamil Nadu Government Gazette, a notification under sub-
section (I) of section 18 of the principal Act has been
published, the surplus land specified in s~ch notification shall
be deemed to have vested in the State Government, with
effect from the date of such publication only, and accordingly
the provisions of the principal Act, as modified by section 4 B
of this Act, shall for all purposes apply and be deemed always
to have been applied in respect of such surplus lands so vested;
and

(b) all acts done and proceedings taken by any officer or
authority under the principal Act, on the basis that C
compensation in respect of surplus lands referred to in clause
(a) shall be payable only according to the rates specified in
Schedule III of the principal Act, as in force on the date of
publication of the said notification, shall, for all purposes be
deemed to be and to have always been validly done or taken
in accordance with law, as if section 4 of this Act had been D
in force at all material times when such acts or proceedings
were done or taken."

As already mentioned the respondent filed Writ Petition No. 1464
of 1974 claiming compensation applying the multiple of 9 times instead E
of2 times and for a direction to the authorised officer to prepare the Draft
Compensation Assessment Roll in respect of the lands which had vested
taking into account the provisions of aforesaid Act 7 of 1974. This stand
was taken on behalf of the respondent because the effect of Act 7 of 1974
was that vesting was to take effect with effect from 1.3.1972 as provided
in Section 3 of Act 7 of 1974. On 1.3.1972, admittedly aforesaid F
Amendment Act 39 of 1972 by which the compensation amount payable
for the surplus lands was red•1ced from 9 times to 2 times of the net annual
income had not come into force, it came into force with effect from
21.12.1972. As such if by virtue of Act 7of1974 ifthe vesting had taken
place with effect from 1.3.1972 the date of the commencement of Act 7 of G
1974, it shall be deemed that vesting had taken place prior to 21-12-1972
when admittedly Schedule III provided for payment by applying the
multiple of 9 times. The High Court by its order dated 8.10.1976 quashed
the Draft Compensation Assessment Roll published, treating the vesting
of the surplus lands with effect from l.3.1972 because of Act 7 of 1974.
Civil Appeal No. 134/80 is directed against aforesaid order of the High H
206 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A Court dated 8.10.1976. The respondent also tiled Writ Petition No. 624
of 1978 for issuance of mandamus to the authorised officer on basis of the
aforesaid judgment and order of the High Court dated 8.10.1976 in Writ
Petition No. 1464/74 to prepare the Draft Assessment Roll as per that
judgment. The High Court by its order dated 3.3.1978 directed the
authorised officer to prepare the Assessment Roll accordingly.
B
The aforesaid Act 25 of 1978 was published in the Tamil Nadu
Government Gazette on 18.5.1978 and took effect on and from 1.3.1972.
It restored parts of sub-section (3) of Section 18 as it stood prior to the
amendment in that sub-section by Act 7 of 1974. It reiterated that the date
of vesting of the surplus lands shall be date of the publication of the
C notification under sub-section (I) of Section 18 of the Act. So far the
respondent is concerned, such notification under sub-section (1) of Section
18 had been published on 4.4.1973, i.e. after 21.12.1972 from which date
because of Amendment Act 39 of 1972 the compensation amount payable
for the surplus lands had been reduced from 9 times to 2 times of the net
D annual income. Section 5 of Act 25 of 1978 also contained non-obstante
clause with a deeming. fiction saying that notwithstanding anything
contained in the Tamil Nadu Land Reforms (Fixation of Ceiling on Land)
Sixth Amendment Act 1972 (Act 7 of 1974) or any judgment, decree or
order of any court, sub-section (2) of Section 3 of the aforesaid 1972 Act
shall be omitted and shall be deemed always to have been omitted. Section
E 6 thereof said that notwithstanding anything contained in any judgment,
decree or order of any court where before the date of the publication of
the said Act in Tamil Nadu Government Gazette a notification under sub-
section (1) of Section 18 of the Principal Act had been published 'the
surplus lands specified in such notification 'shall be deemed to have vested
in the State Government with effect from the date of such publication
F only .. .' and the provisions of the principal Act as modified by Section 4 of
Act 25 of 1978 shall for all purposes apply and be deemed always to have
applied in respect such surplus lands so vested and compensation in respect
of surplus land shall be paid only according to the rates specified in
Schedule Ill of the principal Act as in force on the date of the publication
G of such notification. In other words, Sections 5 and 6 of Act 25 of 1978
purported to efface and obliterate the amendment which had been introduced
in sub-section (3) of Section 18 by Act 7of1974 and purported to.validate
the notification which had been issued on 4.4.1973 under sub-section (I)
of Section 18 of the principal Act declaring 3414.78 acres of the land
belonging to the respondent as surplus. It need not be pointed out that this
H was done because the multiple of9 times was reduced to 2 times by Act 39

....
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 207

of 1972 with effect from 21-I2-1972. Ifthe vesting had taken place by A
effect of amended sub-section (3) of Section 18 by Act 7 of 1974 with
effect from 1.3 .1972, the date of the commencement of the said Act, then
the respondent was entitled for compensation applying the multiple of 9
times.

Writ Petition Nos. 2341-2343 of 1978 were filed on behalf of the B
respondent questioning the validity of the aforesaid provision of Act 25 of
1978 and for a direction that such provisions which were introduced by
the said Act had no effect on the right of the respondent to receive
compensation applying the minimum multiple of 9 times of the net annual
income. Those Writ Petitions were allowed by a Division Bench of the
High Court on 20.7.1979. Civil Appeal Nos. 352-354/80 have been filed C
against the said judgment.

Mr. Venugopal, the learned counsel appearing for the appellant-State,
took a stand that as Civil Appeal No. 134/80 has been filed on behalf of
the State challenging the validity of the judgment and order of the High
Court dated 8.10.1976 in Writ Petition No. 1464/74 directing payment of D
compensation to the respondent applying the provisions of Act 7 of 1974,
after coming into force of the Act 25 of 1978 it shall be deemed that the
basis of the Judgment in Writ Petition No. 1464/74 has been taken away
as such the respondent cannot claim compensation by applying the multiple
of 9 times. It was also submitted on behalf of the appellant-State that the E
provisions of Act 25 of 1978 being constitutional and valid, High Court
should have dismissed the Writ Petition Nos. 2341-2343 of 1978 filed on
behalf of the respondent questioning the validity of Act 25 of 1978.

It may be mentioned at the outset that none of the two judgments of
the High Court dated 8.10.1976 and 20.7.1979 in Writ Petition No. 1464/ F
74 and Writ Petition Nos. 2341-2343/78 have become final. Civil Appeal

- No.134of1980 and Civil Appeal Nos. 352-354of1980 are directed against
the aforesaid judgments dated 8.10. I 976 and 20.7.1979. In this background,
it has to be examined whether Sections 4, 5 and 6 of Act 25 of 1978 with
non-obstinate clause and deeming provisions have taken away the effect G
of the aforesaid judgment of the High Court dated 8.10.1976 directing the
appellant-State to apply 9 times multiple in view of the amendments
introduced by Act 7 of 1974. The other aspect is as to whether in view of
the provisions aforesaid of Act 25 of 1978, this Court while considering
the appeal against aforesaid judgment dated 8.10.1976 in Writ Petition
No.1464/74 has now to proceed as ifthe amendments in the principal Act H
208 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A by Act 7 of 1974 had never been introduced. There is no dispute in respect
of legislative competence of the legislature to enact Act 25 of 1978. The
only dispute is whether provisions of that Act has achieved the desired
result.

Sections 5 and 6 of Act 25 of 1978 contain deeming fiction in its
B different clauses while purporting to omit and remove the amendments
which had been introduced by Act 7 of 1974 in the Principal Act. The role
of a provision in a statute creating legal fiction is by now well settled.
When a statute creates legal fiction saying that something shall be deemed
to have been done which in fact and truth has not been done, the Court has
no examine and ascertain as to for what purpose and between that persons
C such a statutory fiction is to be resorted to. Thereafter courts have to give
full effect to such a statutory fiction and it has to be carried to its logical
conclusion. In the well-known case of East End Dwellings Co. Ltd. v.
Fins/Jury Borough Council, (1952], AC 109 Lord Asquith while dealing
with the provisions of the Town and Country Planning Act, 1947, observed:

D "If you are bidden to treat an imaginary state of affairs as
real, you must surely, unless prohibited from doing so, also
imagine as real the consequences ao1d incidents which, if the
putative, state of affairs had in fact existed, must inevitably
have flowed from or accompanied it... The statute says that
you must imagine a certain state of affairs; it does not say
E
that having done so, you must cause or permit your
imagination to boggle when it comes to the inevitable
corollaries of that state of affairs."

That statement of law aforesaid in respect of a statutory fiction is
F being consistently followed by this Court. Reforence in this connection
may be made to the cases of State of Bombay v. Pandurang. Vinayak,
(1953] SCR 773; Chief Inspector ofMines v. Karam Chand Thapar, (1962]
1 SCR 9; JK. Cotton Spinning and Weaving Mills Ltd. v. Union of India,
(1988] 1 SCR 700; M Venugopal v. Divisional Manager, Life Insurance
G Corporation of India, (1994] 2 SCC 323 and Barish Tandon v. Additional
District Magistrate, Allahabad, [1995] I SCC 537.

Section 5 of Act 25 of 1978 provides that notwithstanding anything
contained in Act 7 of 1974, or in any judgment, decree or order of any
court, or other authority, sub-section (2) of section 3 of the aforesaid Act
H 'shall be omitted and shall be deemed always to have been omitted and the
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH,J.] 209

modifications made to section 18 .of the principal Act' by the said sub- A
section (2)-

(a) 'shall be deemed never to have been made and the
provisions of the said section 18 of the principal Act as they
stood prior to the said modifications shall continue in force
and shall be deemed always to have continued in force', and B

(b) 'shall be deemed never to have had the effect of vesting
in the State Government the surplus lands specified in any
notification published under sub-section (I) of the said section
18 of the principal Act on or after the 2nd May 1962 and
before the date of publications of this Act in the Tamil Nadu C
Government Gazette, from a date earlier to the date of the
publication of the notification under the said sub-section (l)
and shall be deemed always to have had the effect of vesting
in the State Government such surplus lands, only with effect
from the date of the publication of such notification.'
D
The legislature by different deeming clauses and through statutory
fiction requires the Court to treat that amendments so introduced by Act 7
of 1974 had never been introduced in the Principal Act. The power of the
legislature to amend, delete or obliterate a statute or to enact a statute
prospectively or retrospectively cannot be questioned and challenged unless E
the court is of the view that such exercise is in violation of Article 14 of
the Constitution. It need not be impressed that whenever any Act or
amendment is brought in force retrospectively or any provision of the Act
is deleted retrospectively, in this process rights of some are bound to be
effected one way or the other. In every case, it cannot be urged that the
exercise by the legislature while introducing a new provision or deleting F
an existing provision with retrospective effect per se shall be violative of

- Article 14 of the Constitution. If that stand is accepted, then the necessary
corollary shall be that legislature has no power to legislate retrospectively,
because in that event a vested right in effected; of course, in special situation
this Court has held that such exercise was violative of Article 14 of the G
Constitution. Reference in this connection may be made to the cases of
State of Gujarat and Another v. Raman Lal Keshav Lal Soni and Others,
[1983] 2 SCR 287; T.R Kapur v. State of Haryana, [1986] Supp. SCC
584 and Union of India v. Tushar Ranjan Mohanty, [1994] 5 SCC 450. In
the case of State a/Gujarat v. Raman Lal, (supra) a Constitution Bench
on the facts and circumstances of that case observed : H
210 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A "The legislation is pure and simpl.e, self-deceptive, if we
may use such an expression with reference to a legislature
made law. The legislature is undoubtedly competent to legislate
with retrospective effect to take away or impair any vested
right acquired under existing laws but since the laws are made
under a written Constitution, and have to conform to the
B do's and don'ts of the Constitution neither prospective nor
retrospective laws can be made so as to contravene
Fundamental Rights. The law must satisfy the requirements
of the Constitution today taking into account the accrued of
required rights of the parties today. The law cannot say,
twenty years ago the parties had no rights, therefore, the
c requirements of the Constitution will be satisfied if the law
is dated back by twenty years. We are concerned with today's
rights and not yesterday's. A legislature cannot legislate today
with reference to a situation that obtained twenty years ago
and ignore the march of events and the constitutional rights
accrued in the course of the twenty years. That would be
D most arbitrary, unreasonable and a negation of history."

In same terms this Court expressed the opinion in the cases of T.R.
Kapur v. State of Haryana (supra) and Union of India v. Tushar Ranjan
Mohanty (supra) in respect of alterations in rules framed under Article
309 of th~ Constitution retrospectively regarding conditions of service.
E
So far the facts of the present case are concerned, the provisions of
Act 25 of 1978 do not purport to effect any vested or acquired right It only
restores the position which existed when the principal Act was in force. By
notification dated 4.4.1973 issued under section 18(1) of the Act as it stood
F prior to the amendment introduced by Act 7 of 1974, 3414.87 acres of land
had been declared as surplus which vested in the: State Government under·
Section 18(3) of the Principal Act as it stood on that date. It can be said that
Act 25of1978 simply nullifies Act 7of1974 which had made amendments
in the Principal Act after notification had been issued under Section 18( 1)
and vesting had taken place under section 18(3) of the Principal Act as it
G stood prior to enactment Act 7of1974. By Act 7of1974 futile attempt had
been made by introducing aifferent amendments. Jn this process not only
it created anomaly in the Principal Act, but nothing purposeful was achieved.
It is true that because of the amendments introduced by that Act 7of1974,
the respondent could urge before the High Court that as the vesting had
taken place on 1.3.1972, in spite of amendment Act 39 of 1972 which had
H
STATEOFT.N. v. AROORANSUGARSLTD. (N.P.SINGH,J.] 2! l

reduced the multiple from 9 times to 2 times of the net annual income with A
effect from 21.12.1972 the respondent was entitled to compensation to be
worked out on basis of9 times of the net annual income. But on this ground
the provisions of Act 25 of 1978 cannot be held to be violative of Article
14 of the Constitution and as such ultra vires. Once the provisions are held
to be legal and valid, then as pointed out above the wish and desire of the
legislature has to be given full effect and to its logical end. The courts have B
to proceed on the assumption that Act 7of1974 had never been enacted and
no amendment whatsoever had been introduced in the principal Act directing
the vesting to take place with effect from 1.3 .1972. This Court shall be fully
justified in examining the judgment of the High Court dated 8.10.1976 on
Writ Petition No 1464/74 filed by the respondent, treating that Act 7 of
1974 was never enacted or was in existence. As the aforesaid judgment C
dated 8.10.1976 is solely based on the amendments introduced by Act 7 of
1974, ooce sach amendments have been effaced retorspectively, there is no
escape from the conclnsion that the substratum and basis of the judgment
of the High Court dated 8.10.1976 has been taken away. The High Court
had proceeded on the assumption that because of amendment introduced by
Act 7 of 1974 the vesting shall be deemed to have taken place with effect D
from l.3.1972 and on that assumption direction was given to calculate the
compensation applying 9 times multiple which had been reduced to 2 times
with effect from 21.!2.1972 by amendment Act 39 of 1972. But ifthe
provision which directed vesting with effect from 1 .3 .1972 does not exist
in eyes of law, then there is no question of holding that vesting shall be
deemed to have taken place with effect from l.3.1972 when compensation E
was to be worked out by applying the 9 times multiple. Now this court has
to proceed that amendment Act 39 to 1972 reduced the compensation
amount payable from 9 times to 2 times of the net annual income with effect
from 21.!2.1972. Thereafter on 4.4.1973 notification under Section 18(1)
of the Principal Act was issued declaring 3414.87 acres of land of the F
respondent as surplus which vested in the Stated Government Under Section

- 18(3) of the Principal Act as it stood on that date. As such the compensation
has to be worked oat on basis of the amendment which had been introduced
in Schedule III of the Act by amendment Act 39 of 1972. This Court can
modify the judgment of the High Court dated 8.10.1976 taking into account
the provisions of Act 25 of 1978 because the Civil Appeal No.134 of 1980 G
is against aforesaid judgment of the High Court dated 8. !0.1976.

There is yet another aspect of the matter. Section 6 of the Act 25 of
1978 provides that notwithstanding anything contained in any judgment,
decree, or order of any court or other authority where before the date of
publication ofthis Act in the Tamil Nadu Government Gazette, a notification H
212 '·
SUPREMECOURTREPORTS [1996) SUPP.8 S.C.R. ·---
\
A under sub-section (l) of section 18 of the principal Act had been published;
the surplus lands specified in such notification shall be deemed to have
vested in the State Government, with effect from the date of such publication ·
and
.• only, accordingly the provisions of the principal Act, as modified by·
~ection 4 of this Act, shall for all purposes apply and be deemed always to
have been applied in respect of such surplus lands so vested. .~
B
The scope of a oon-obstante clause and ef validating Act has been
examined by this Court from time to time. Rererence in this connection be
made to the judgment in the case of Prithvi Cotton Mills Ltd. v. Broach
Borough Municipality, [1969] 2 SCC.283 where Hidayatullah, C.J.
speaking for ~he Constitution Bench said:
c
"When a legislature sets out to validate a tax declared by a
court to be illegally collected under an ineffective or an invalid
law, the cause for ineffectiveness or invalidity must be removed
·- before validation can be said to take place effectively. The
most important condition, of course, is that the legislature
D must possess the power to impose the tax, for if it does not,
the action must ever remain ineffective and illegal. Granted
legislative competence, it is not sufficient to declare merely
that the decision of the court shall not bind for that is
tantamount to reversing the decision in exercise of judicial
E power which the legislature does not possess or exercise. A
court's decision must always bind unless the conditions on
which it is based are so fundamentally altered that the decision ,
could not have been given in the altered circumstances.
Ordinarily, a court holds a tax to be invalidly imposed because
the power to tax is wanting or the statute or the rules or both
F are invalid or do not sufficiently create the jurisdiction. ·.
Validation of a tax so· declared illegal may be done only if
the grounds of Illegality or invalidity are capable of being
· removed and are in fact removed and the tax thiis made legal.
Sometimes this is done by providing for jurisdiction where
jurisdiction had not been properly invested before. Sometimes __
G this is done by re-enacting retrospectively a valid and legal-
taxing provision and then by fiction making the tax already
collected to stand under the re-enacted law. Sometimes the
legislature gives its own meaning and interpretation of the
law undei:. which the tax was collected and by legislative fiat
H makes the new meaning binding upon courts. The legislature

•
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 213

may follow any one method or all of them and while it does A
so it may neutralise the effect of the earlier decision of the
court which becomes ineffective after the change of the law."

The same view was reiterated in the cases of West Ramnad Electric
Distribution Co. Ltd. v. State of Madras, [1963) 2 SCR 747; Udai Ram
Sharma v. Union a/India, [1968] 3 SCR 41; Tirath Ram Rajindra Nath v. J3
State of U.P., [1973] 3 SCC 585; Krishna Chandra Gangopadhyaya v.
Union of India, [1975) 2 SCC 302; Hindustan Gum and Chemical Ltd. v.
State of Haryana, [1985) 4 SCC 124; Utkal Contractors and Joinery (P)
Ltd. v. State ofOrissa, 1987 Supp. SCC 751; and D. Cawasji and Co. v.
State of Mysore, [1984) Supp. SCC 490 and Bhubaneshwar Singh v. Union
of India, [1994) 6 SCC 77. It is open to the legislature to remove the C
defect pointed out by the court or to amend the definition or any other
provision of the Act in question retrospectively. In this process it cannot
be said that there has been an encroachment by the legislature over the
power of the judiciary. A court's directive must always bind unless the
conditions on which it is based are so fundamentally altered that under
altered circumstances such decisions could not have been given. This will D
include removal of the defect in a statute pointed out in the judgment in
question, as well as alteration or substitution of provisions of the enactment
on which such judgment i.s based, with retrospective effect. This is what
has happened in the present case. The judgment of the High Court in Writ
Petition No. 1464/74, dated 8.10.1976 was solely based on the amendments
which had been introduced by Act 7 of 1974. If those amendments so E
introduced have been effaced by Act 25 of 1978 with retrospective effect
saying that it shall be deemed that no such amendments had ever been
introduced in the Principal Act, then full effect has to be given to the
provisions of later Act unless they are held to be ultra vires or
unconstitutional.
F
On behalf of the respondent, it was pointed out that the High Court
in its judgment dared 8.10.l<J?b in Writ Petition No. 1464174 has not
declared any provision to be invalid because of which a validating Act was
required. The said judgment had also not pointed out any defect in any
Act which had to be rectified by a validating Act. It had simply proceeded G
on the provisions of Act 7 of 1974 and had issued direction to the State
Government to proceed in accordance with those provisions. This Court
has examined the power of the legislature to amend the provisions of the
Act in question after a court verdict. Reference in this connection may be
made to the case of Government ofAndhra Pradesh and Anr. v. Hindustan
Machine Tools Ltd., [1975] 2 sec 274, where it was observed: H
214 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A "We see no substance in the respondent's contention that by
re-defining the term 'house' with retrospective effect and by
validating the levies imposed under the unamended Act as if
notwithstanding anything contained in any judgment, decree
or order of any court, that Act as amended was in force on
the date when the tax was levied, the Legislature has
B encroached upon a judicial function. The power of the
Legislature to pass a Jaw postulates the power to pass it
prospectively as well as retropsectively the one no less than •
the other. Within the scope of its legislative competence and
subject to other constitutional limitations, the power of the
Legislature to enact laws is plenary. ln United Provinces v.
Atiga Begum, Gwyer, CJ. while repelling the argument that
c Indian Legislatures had no power to alter the existing laws
retrospectively observed that within the limits of their powers
the Indian Legislatures were as supreme and sovereign as the
British Parliament itself and that those powers were not
subject to the "strange and unusual prohibition against
D retrospective legislation". The power to validate a law
retrospectively is, subject to. the limitations aforesaid, an
ancillary power to legislate on the particular subject.

The State Legislature, it is significanl, has not overruled or
set aside the judgment of the High Court. It has amended the
E definition of 'house' by the substitution of a new Section
2(15) for the old section and it has provided that the new
definition shall have retrospective effect, notwithstanding
anything contained in any judgment, decree or order of any
court or other authority. In other words, it has removed the
basis of the decision rendered by the High Court so that the
F decision could not have been given to the altered
.circumstances. If the old Section 2 (15) were to define 'house'
in the manner that the amended section 2( I 5) does, there is
no doubt that the decision of the High Court would have
been otherwise. In fact, it was not disputed before us that the
buildings constructed by the respondent meet fully the
G requirements of Section 2(15) as amended by the Act of 1974.

In Tirath Ram Rajindra Nath v. State of UP., the Legislature
amended the law retrospectively and thereby removed the
basis of the decision rendered by the High Court of Allahabad.
H It was held by this Court that this was within the permissible
STA TE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 215

limits and validation of the old Act by amending it A
retrospectively did not constitute an encroachment on the'
functions of the Judiciary."

Again in the case of Sunder Dass v. Ram Prakash, [1977] 3 SCR 60
it was said:
8
"The appellant, however, urged that the introduction of the
proviso in section 3 should not be given greater retrospective
operation than necessary and it should not be so construed as
to affect decrees for eviction which had already become final
between the parties. Now, it is true, and that is a settled
principle of construc<ion, that the court ought not to give a C
larger retrospective operation to a statutory provision than
what can plainly be seen to have been meant by the legislature.
This rule of interpretation is hallowed by time an sanctified
by decisions, though we are not at all sure whether it should
have validity in the context of changed social norms and
values. But even so, we do not see how the retrospective D
introduction of the proviso in section 3 can be construed so
as to leave unimpaired a decree for eviction already passed,
when the question arises in execution whether it is a nullity ..
The logical and inevitable consequence of the introduction
of the proviso in section 3 with retrospective effect would be
to read the proviso as if it were part or the section at the date E
when the Delhi Rent Control Act, 1958 was enacted and the
legal fiction created by the retrospective operation must be
carried to its logical extent and all the consequences and
incidents must be worked out as if the proviso formed part
of the section right from the beginning. This would clearly
render the decree for eviction a nullity and since in execution F
proceeding, an objection as to nullity of a decree can always
be raised and the executing court can examine whether the
decree is a nullity, the principle of finality of the decree
cannot be invoked by the appellant to avoid the consequences
and incidents flowing from the retrospective introduction of G
the proviso in section 3. Moreover, the words
"notwithstanding any judgment, decree or order of any court
or other authority" in the proviso make it clear and leave no
doubt that the legislature intended that the finality of
"judgment, decree or order of any court or other authority"
should not stand in the way of giving full effect to the H
216 SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.

A retrospective introduction of the proviso in section 3 and
applying the provisions of the Delhi Rent Control Act, 1958
in cases falling \Vithin the proviso:'
....
Same was the situation in the case of Bh11baneshwar Singh v. Union
of India (supra) where taking note of the subsequent amendments in the
B concerned Act the Court ca1ne to the conclusion:-

"Jn the present case as already pointed out above, if sub-
section (2) as introduced by the Coal Mines Nationalisation
Laws (Amendment) Act 1986 in Section I0 had existed since
the very inception, there was no occasion for the High Court
c or this Court to issue a direction for taking into account the
price which was payable for the stock of coke lying on the
date before the appointed day. The authority to introduce
sub-section (2) in Section I 0 of the aforesaid Act with
retrospective effect cannot be questioned. Once the
amendment has been introduced retrospectively courts have
D to act on the basis that such provision was there since the
beginning. The role of the deeming provision need not be
emphasised in view of series of judgments of this court

E
In the present case, the lacuna or defect has been removed by
the introduction of sub-section (2) in Section I 0 of the Act
with retrospective effect Sub-section (2) of Section I 0 as
well as Section I 9, both have specified that the amount which
is to be paid as compensation mentioned in the schedule shall
F be deemed to include and deemed always to have included,
the amount required to be paid to such owner in respect of
all coal in stock in the date immediately before ihe appointed
day. As such the earlier judgment of this Court is of no help
to the petitioner."

G
On behalf of the respondent reference was made to the well-known
judgment of this Court in the case of Madan Mohan Pathak v. Union of
India, [ 1978] 2 SCC 50 and it was pointed out from the judgment of
Chief Justice Beg who observed:

H "[ may, however, observe that even though the real object of
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. SINGH, J.] 217

the Act may be to set aside the result of the mandamus issued A
by the Calcutta High Court, yet, the section does not mention
this object at all. Probably this was so because the jurisdiction
of the High Court and the effectiveness of its orders derived
their force from A11icle 226 of the Constitution itself. These
could not be touched by an ordinary Act of Parliament. Even
if section 3 of the Act seeks to take away the basis of the B
judgment of the Calcutta High Court, without mentioning it,
by enacting what may appear to be a law yet, 1 think that,
where the rights of the citizen against the State are concerned,
we should adopt an interpretation which upholds those rights.
Therefore, according to the interpretation 1 prefer to adopt
the rights which had passed into those embodied in a judgment c
and became the basis of a mandamus from the High Court
could not be taken away in this indirect fashion."

The facts of that case were entirely different. In the Act which was
being challenged, there was no non-obstante clause purporting to take
away the effect of the judgment of the Calcutta High Court. Letters Patent D
Appeal filed against the judgment whose effect was being taken away by
the provisions in question had been withdrawn. Bhagwati, J (as he then
was) made a special mention of the aforesaid facts for purpose of holding
that the effect of the Calcutta High Court had not been nullified by the
provisions in question:·
E
"It is significant to note that there was no reference to the
judgment of the Calcutta High Court in the Statement of
Objects and Reasons, nor any non-abstains clause referring
to a judgment of a Court in Section 3 of the impugned Act.
The attention of Parliament does not appear to have been F
drawn to the fact that the Calcutta High Court has already
issued a writ of Mandamus commanding the Life Insurance
Corporation to pay the amount of bonus for the year April I,
1975 to March 31, 1976. It appears that unfortunately the
judgment of the Calcutta High Court remained almost
unnoticed and the impugned Act was passed in ignorance of G
that judgment. Section 3 of the impugned Act provided that
the provisions of the Settlement in so far as they relate to
payment of annual cash bonus to Class Ill and Class IV
employees shall not have any force or effect and shall not be
deemed to have had any force or effect from April I, 1975
to March 3 I, 1976 remained untouched by the impugned H
218 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A Act. So far as the right of Class Ill and Class IV employees
to annual cash bonus for the year April 1, 1975 to March
31, 1976 was concerned, it became crystallised in the
judgment and thereafter they became entitled to enforce the
writ of mandamus granted by the judgment and not any right
to annual cash bonus under the Settlement. This right under
B the judgment was not sought to be taken away by the
impugned Act. The judgment continued to subsist and the
Life Insurance Corporation was bound to pay annual cash
bonus to Class lII and Class IV employees for the year April
I, 1975 to March 31, 1976 in obedience to the writ of
mandamus. The error committed by the Life Insurance
c Co1poration was that it withdrew the Letters Patent Appeal
and allowed the judgment of the learned single Judge to
become final. By the time the Letters Patent Appeal came up
for hearing, the impugned Act had already come into force
and the Life Insurance Corporation could, therefore, have
successfully contended in the Letters Patent Appeal that, since
D the Settlement, in so far as it provided for payment of annual
cash bonus, was annihilated by the impugned Act with effect
from April l, 1975, Class III and Class IV employees were
not entitled to annual cash bonus for the year April I, 1975
to March 31, 1976 and hence to writ of mandamus could
issue directing the Life Insurance Corporation to make
E payment of such bonus. If such contention had been raised,
there is little doubt, subject of course to any constitutional
challenge to the validity of the impugned Act, that the
judgment of the learned single Judge would have been
upturned and the Writ petition dismissed. But on account of
some inexplicable reason, which is difficult to appreciate,
F the Life Insurance Corporation did not press the Letters Parent
Appeal and the result was that the judgment of the learned
single Judge granting writ of mandamus became final and
binding on the parties. It is difficult to see how in these
c1rcumstances the Life Insurance Corporation could claim to
be absolved from the obligation imposed by the judgment to
G carry out the writ of mandamus by relying on the impugned
Act."

(emphasis supplied)

H Because of the aforesaid factual position of that case the view
STATE OF T.N. v. AROORAN SUGARS LTD. [N.P. S!NGH,J.] 219

expressed by the Constitution Bench in the Prithvi Cotton Mills Ltd. v. A
Broach Borough Municipality (supra) was held to be of no help to the Life
Insurance Corporation.

Reference was also made on behalfof the respondent to the judgment
of this Court in the case of A. V. Nachane and Another v. Union of India
and Another, [I 982) 2 SCR 246 where it was observed in respect of the B
Amendment Act, which was the subject matter of controversy in that case,
that it could not nullify the effect of the writ issued by this Court in D.J
Bhadur 's case, relying on aforesaid judgment in the Madan Mohan Pathak
(supra). From a bare reference to page 267 of the report, it appears that
the learned Judges placed reliance on the defect pointed out in the case of
Madan Mohan Pathak by Bhagwati, J quoted above. In other words, on C
peculiar facts and circumstances of the case it was held that the effect of
the judgment in the case of D.J Bahadur had not been taken away by the
Amending.Act. On behalf of the respondent, reliance was also placed on
the cases of Janapada Sabha Chhindwara v. The Central Provinces
Syndicate Ltd. and Another, [I 970) I SCC 509"; The Municipal Corporation
of the city of Ahmedabad and Another, etc. etc. v. The New Shrock Spg, D
and Wvg Co. Ltd. A'tc. Etc., (1970] 2 SCC 280. In the case of Government
of Andhra Pradesh v. Hindustan Machine Tools Ltd.. [1975] 2 SCC 274,
the aforesaid judgments in the cases of Janapada Sabha Chhindwara v.
The Central Provinces Syndicate Ltd. and Another (supra) and The
Municipal Corporation of the city of Ahmedabad and Another, Etc. Etc. v. E
The New Shrock Spg, and Wvg. Co. Ltd. Etc. Etc. (supra) were
distinguished by pointing out:

"The decisions on which the respondent relies are clearly
distinguishable. In the Municipal Corporation of the City of
Ahmedabad v. New Shrock Spg. and Wvg Co. Ltd., the F
impugned provision commanded the Corporation to refuse
to refund the amount illegally collected by it despite the orders
of the Supreme Court and the High Court. As the basis of
these decisions remained unchanged even after the
amendment, it was held by this Court that the Legislature G
had made a direct inroad into the judicial powers. In Janapada
Sabha, Chhindwara v. Central Provinces Syndicate Ltd. The
Madhya Pradesh Legislature passed a Validation Act in order
or rectify the defect pointed out by this Court in the imposition
of a case. But the Act did not set out the nature of the
amendment nor did it provide that the notifications issued H

/
220 SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.

A without the sanction of the State Government would be
deemed to have been issued validly. It was held by this Court
that this was tantamount to saying that the judgment of a
coUJ1 rendered in the exercise of its legitimate jurisdiction
was to be deemed to be ineffective. The position in State of
Tamil Nadu v. M Ravappa Gounder, was similar. In that
B case the reassess1nents 1nade under an Act which did not
provide for reassessments were attempted to be validated
without changing the law retrospectively. This was considered
to be an encroachment on the judicial functions.

In the instant case, the Amending Act of 1974 cures the
c definition contained in Section 2 (15) of the vice from which
it suffered. The amendment has been given retrospective
effect and as stated earlier the Legislature has the power to
make the laws passed by it retroactive. As the Amending Act
does not ask the instrumentalities of the State of disobey or
disregard the decision given by the High Court but removes
D the basis ofits decision, the challenge made by the respondent
to the Amending Act must fail. The levy of the house-tax
therefore be upheld."

In view of Sections 4, 5 and 6 of Act 25 of 1978 which cannot be
E held to be unconstitutional, there is no escape from conclusion that the
provisions which had been introduced in the Principal Act by Act 7 of
1974 have been effaced and courts have to proceed as if they had never
been introduced in the Principal Act. If this is the effect of Sections 4, 5
and 6 of Act 25 of 1978 then as a corollary it has to be hefd that under the
amendment Act 39 of 1972 the compensation amount payable for the
F surplus land under Schedule Ill to the Act Wa!; reduced from 9 times to 2
times of the net annual incmm: w.e.f. 21-12-1972. Notification under
Section 18(1) of the Act declaring 3414.78 arn:s of land of the respondent-
company as surplus was issued on 4.4.1973 after coming into force of
amended Act 39 to 1972 aforesaid and because of the notification dated
G 4.4.1973 the surplus lands vested in the State Government in view of
Section 18(3) of the Act as it stood on that date. Thereafter, the Draft
Assessment Roll had to be published applying the rate of2 times of the net
annual income.

On behalf of the respondent, a stand was taken that Sections 4, 5 and
I H 6 of Act 25 of 1978 shall not revive the notification dated 4.4.1973 which
STATEOFT.N. v AROORANSUGARSLTD. [N.P.SINGI-!,J.] 22I

stood exhausted and a fresh notification had to be issued, even ifthe different A
provisions of Act 7 of I 974 shall be deemed to have been obliterated. In
this connection, it may be pointed out that Section 5 (b) of Act 25of1978
provided unclear and unambiguous terms that modification made to Section
I 8 of the Principal Act by Act 7 of 1974 "shall be deemed never to have
had the effect of vesting in the State Government the surplus lands specified
in any notification published under sub-section (I) of the said section I 8 B
of the principal Act on or after the 2nd May 1962 and before the date of
publication of this Act in the Tamil Nadu Government Gazette, from a
date earlier to the date of the publication of the notification under the said
sub-section (1) and shall be deemed always to have had the effect of vesting
in the State Government such surplus lands, only with effect from the date
of the publication of such notification." Again Section 6(a) provides that C
notwithstanding anything contained in any judgment, decree or order of
any Court "where before the date of publication of this Act in the Tamil
Nadu Government Gazette, a notification under sub-section (I) of section
18 of the principal Act has been published, the surplus land specified in
such notification shall be deemed to have vested in the State Government,
with effect from the date of such publication only, and accordingly the D
provisions of the principal Act, as modified by section 4 of this Act, shall
for all purposes apply and be deemed always to have been applied in
respect of such surplus lands so vested". In view of the aforesaid deeming
provisions, the notification which was issued on 4.4.1973 under sub-section
(1) of Section 18 of the Principal Act shall be deemed to be valid and shall
have the effect of vesting the lands in question in the State Government E
under sub-section (3) of Section 18 of the Principal Act w.e.f. 4.4.1973.

An objection was taken on behalf of the respondent that on 3.3.1978
the High Court had allowed the Writ Petition No. 624 of 1978 filed on
behalf of the said respondent and issued a writ of mandamus directing the F
State to comply with the judgment dated 8.10. I 976 of the High Court in
Writ Petition No. I 464 of 1978 and as no appeal has been filed on behalf
of the State before this Court against the aforesaid order dated 3.3.1978,
the said order has attained finality and ifthe appeals filed on behalfofthe
State are allowed, it shall lead to an anomalous position. It appears that
the respondent had filed the aforesaid Writ Petition No. 624 of 1978 for a G
direction by the High Court to comply with the aforesaid order dated
8.10.1976 in Writ Petition No. 1464 of 1974. In that Writ Petition a
grievance had been made that respondents of that Writ Petition were delaying
the preparation of the Draft Compensation Roll on the plea that the Special
Leave Petition to Appeal to the Supreme Court along with an application
for stay had been filed on behalf of the State. In that Writ Petition, a H
222 SUPREME COURT REPORTS (1996] SUPP. 8 S.C.R.

A learned Judge of the High Court directed to consider the determination of
the compensation and the preparation of the Draft Compensation Assessment
Roll, under Section 50(3)(a) of the Act 58 of 1961 in respect of the excess
lands of the respondent. A copy of the writ of mandamus issued by the
High Court in the said Writ Petition is on the record and the operative part
thereof is as fol lows:-
8
"The Respondents herein, are heneby directed to consider
the determination of the compensation and the preparation
of the Draft Compensation Assessment Roll under section
50(3)(a) of the Act 58 of 1961, in respect of the excess lands
of the petitioner, acquired by you, in due compliance, fully
c and properly of the judgment of this Court dated 8.10.76
and passed i°n W.P. Nos. 346 and 1464 of 1974 on or before
30.6.1978 and you, the second respondent herein, are hereby
directed to call upon the petitioner to furnish watever
information is required on or before 30.3.1978 (which
information will be supplied to you by the petitioner within
D 15 days from the date of receipt of the said notice) and
thereupon to proceed forthwith to comply with the aforesaid
directions of this Court dated 8.10.76 and passed in W.P.
Nos. 346 and 1464 of 1974."

E It cannot be disputed that by the aforesaid order dated 3 .3 .1978 the
High Court had not determined any right or liability inter se between the
parties. rt simply directed the State Government to comply with the direction
given by order dated 8.10.1976 in Writ Petition No. 1464of1974 against
which Civil Appeal No. 134 of 1980 has been filed. If an order dated
8.10.1976 is set aside by this Court, any direction given on 3.3.1978 in
F Writ Petition No. 624 of 1978 shall be of no conse·quence. It can be said
that the direction which was given on 3.3.1978 was in the nature of
execution. order.

It was then pointed out on behalfofthe respondent that on 15.6.1978
G Writ Misc. Petition No. 3153 in Writ Petition No. 624 of 1978 was filed
on behalf of the State for recall of the aforesaid order dated 3.3.1978
which was dismissed on 23.6.1978. It was stated that in the said petition
on behalf of the State, attention of the learned Judge was drawn to the fact
that in the meantime Act 25 of 1978 had come in force and as such there
was no question of payment of compensation to the respondent in terms of
H the order dated 8.10.1976 as directed in Writ Petition No. 1464 of 1974.
. STATEOFT.N.v.AROORANSUGARSLTD. [N.P.SINGH,J.] 223

It was urged that as no appeal has 'been filed against the order dated A
23.6.1978 on behalf of the State, the said order shall be deemed to have
'
become final in respect of the scope and. ;effect of Sections 4, 5 and 6 of
Act 25 and 1978. The relevant part of ordir dated 23.6.1978 is as follows:-

"Even otherwise, the respondent herein has challenged the
validity of Tamil Nadu Act 25of1978 and till the validity is B
upheld, it is not open to the State of Tamil Nadu to maintain
an application of this character ....

Whatever may be said about the validity of the Act, which
question need not concern me at this stage, I find great force
in what Mr. N.R. Narayanaswamy submits. In my Judgment C
rendered in W.P. 624 of 1978, l merely directed the State of
Tamil Nadu to give effect to the judgment of the Division
Bench of this Court in W.P. Nos. 346 and 1464 of 1974. l
directed full compliance of that judgment on or before 30th
of June, 1978."

- From a bare reference to the aforesaid order it appears that the learned
Judge having clearly said that he was not considering the effect of provisions
D

of Aci 25 of 1978, he dismissed the said writ Misc. Petition in view of'the
order passed on 3.3.1978. When the learned Judge refused to consider the
effect of the provi3ions of Act 25 of 1978, there is no question of the order E
dated 23.6.1978 having any effect, on the Special Leave Petitions which
had been filed on behalfof the State giving rise to Civil Appeal No. 134
of 1980 and Civil Appeal Nos. 352-354 of 1980.

It may be mentioned that a plea was taken on behalf of the appellant-
State that as Act 25 of 1978 provides for the vesting of the land on a F
particular date, it shall be deemed to be a law relating to agrarian reform
and as such protected by Article 31-A of the Constitution. As such no
challenge based on Article 14 is available to tl1e respondent. It was stated
that the said Act had been reserved for the consideration of the President
and has received his assent and as such it shall not be deemed to be void on G
the ground that it is inconsistent with or takes away or abridges any of the
rights conferred by Article 14 of the Constitution. Help was also sought
from Article 31-C which says that notwithstanding anything contained in
Article 13, no law giving effect to the policy of the State towards securing
all or any of the principles laid down in Part IV shall be deemed to be void
on the ground that it is inconsistent with or takes away or abridges any of H
224 SUPREME COURT REPORTS [I 996] SUPP. 8 S.C.R.

A the rights conferred by Article 14. In this connection, our attention was
drawn to the fact that in Section 2 of Act 25 of 1978 it has been specifically
declared that the said Act was being enacted for giving effect to the policy
of the State towards securing the principles laid down in particular clauses
(b) and (c) of Article 39 which is in Chapter IV of the Constitution i.e.
ownership and control of the material resources of the community are so
B distributed as best to subserve the common good and that the operation of
the economic system does not result in the concentration of wealth and
means of production to the common detriment. A stand was also taken on
behalf of the appellant-State that Act 25 of 1978 has been included in the
Ninth Schedule of the Constitution and as such it has the protection of
Article 31-B of the Constitution and its validity cannot be questioned on
C basis of Article 14 of the Constitution. Jn view of the findings recorded
above that Sections 4, 5 and 6 of Act 25 of 1978 are constitutionally valid
and it has effaced the amendments which had been introduced by Act 7 of
1974 in the Principal Act because of which it ,;hall be deemed that
notification issued under Section 18(1) of the Principal Act on 4.4.1973
was legal and valid and because of the said notification the lands declared
D as surplus vested in the State under Section 18(3) of the Principal Act,
there is no necessity of decide as to whether Act 25 of 1978 has the protection
of Articles 31-A, 31-B and 31-C of the Constitution.

Once it is held that vesting of the surplus land had taken place on
E 4.4.1973, then the respondent shall be entitled to the compensation amount
which is to be worked out at 2 times of the net annual income because of
Act 39of1972 which had reduced the multiple of the compensation from
9 times to 2 times of the net annual income w.e.f. 21-12-1972. Accordingly,
Civil Appeal No.134 of 1980 and Civil Appeal Nos. 352-354 of 1980 are
allowed. The judgment dated 8.10.1976 in Writ Petition No. 1464 of
F 1974 and judgment dated 20.7.1979 in Writ Petition No. 2341-2343 of
1978 of the High Court are set aside and the writ petitions filed on behalf
of the respondent are dismissed. There shall be no order ·as to costs.

V.S.S. Appeals allowed.