ACHUTANANDA PUROHIT AND ORS. versus THE STATE OF ORISSA

Citation: [1976] 3 S.C.R. 919 · Decided: 26-03-1976 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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ACHUTANANDA PUROHIT AND ORS. 
V. 
THE STATE OF ORISSA 
March 26, 1976 
919 
[Y. V. CH,ANDRACHUD, V. R. KRISHNA !YER AND N. L. UNTWALIA, JJ.] 
Orissa Estates Abolition Act, 1951-Secs. 26-27-Constitution 
of 
India 
Articles 
31A-31B-3l (2 )-31 (3 )-Agrarian 
ref arm-Whether 
ii1terr:st 
at 
n1arket rate or statutory rate-Calculation of cotnpensation. 
The appellant was the intern1ediary in respect of vast forest and other land<; 
in the State of Orissa. The estates vested in the State i11 April 1960 by force 
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of the Orissa Estates Abolition Act, 1951. 
The appellant submitted necessary 
return for compensation as provided by the Act. 
The Compensation Officer 
passed an order adverse to the appellant whereupon the-appellant filed ah appeal to 
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the Col1ector which was rejei;ted. A second appeal filed before the Board of Reven-
ue was dismissed. 
Later on, Revision Petitions were filed in the High Court. The 
High Court set aside the order and directed remand to the Compensation Officer. 
Thereafter, the District Forest Officer made his appraisal of the annual income 
and submitted to the Chief Conservator of Forests who altered the actual yield 
an<l reduced it substAntially. 
Both the State and the appellant filed appeals to 
the Collector which were disn1issed. 
A second appeal was filed by the appel-
- lant before the Board of Revenue without success. In the Revision Applications 
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filed before the High Court which led to the re.mand now challenged in the pre-
sent appeals the appellant contended before this Court : 
(l) The interest ought to have been awarded at 12 per cent as against 
the statutory rate of 2t per cent from the date of the vesting till 
payment. 
(2) Compensation money should be so calculated that the purchasing 
power of the amount of con1pensation to be paid .on the date of 
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actual payment will not be less than the purchasing pO\\'er on the 
date of vesting. 
(3) The slab-system of calculation of compensation in the Act providing 
smaller multiples for estates yielding larger income is unconstitutional. 
( 4) Unlike in case of fisheries etc., where the actual income is to be 
included in the gross ass~ts, in the case of forests, the assumed income 
and not the actual income is to be included. During the agricultural 
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year immediately preceding the abolition, the petitioners had not 
actually derived any income from the forests and as such they ~'ere 
under no obligation to pay any income tax on such income. 
There· 
fore. deduction of income tax from the gross assets is illegal and 
unwarranted. 
(5) The compensation has not been computed in accordance with the 
scheme of the Act. 
(6J The date of vesting is the last date by which the calculation of 
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compensation should have been made and since that had not been 
done the Compensation Officer had become functus officio in awarding 
compensation. 
Dismissing the appeals, 
HELD : 1. The policy of the law of agrarian reforms postulates the ext!n-
guishment of ancient privileges and c9rnering of land r~sources and the socio-
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econon1ic yardstick is different from what applies to ordinary purchases of real 
estate and this is manifest in the special provisions contained in Article 31A 
and 31B of the Constitution. A similar principle applies to the a~'ard of interest 
which may sometimes be notional when feudal interests are puffed out. The 
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B 
c 
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G 
H 
920 
SUPREME COURT REPORTS 
(1976) 3 S.C.R, 
dynamic rule of Jaw with a social mission makes a meaningful distinction between 
rights steeped in the old system and compensation for deprivation of those 
interests on the one hand and the ordinary commercial traru;actions on the 
other. [923F-GJ 
2. It is more or less a world phenomenon that the erosion in value of the 
unit of currency has been taking place. 
But this invisible devaluation owing 
to the inflationary spiral does not affect the quantum of monetary compensation 
prescribed by statute. For the purposes of the law, the rupee of long ago is 
the same as the rupee of today although for the purposes of the, market place 
and cost of living, the housewife's answer may be different. 
[924B-CJ 
3. Article 31(3) read with Article 31(2) bars any challenge to the amount 
of compensation on acquisition by the State subject to the compliance with 
the prescriptions in the said sub articles on the ground that the amount so fixed 
or determined is not adequate. 
Presidential assent has been accorded to this 
Sta

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