UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

B.A., LL.B. (HONS.), ENERGY LAWS

SEMESTER – VI
ACADEMIC YEAR: 2017-2018 SESSION: JANUARY-MAY

CASE PRESENTATION

FOR

MINING LAW RELATING TO COAL

State Of West Bengal V. Union Of India [1962]

PRESENTED BY -

ABY T MANIMALA

B.A.LLB (Hons)

500047913

R450215006
State Of West Bengal V. Union Of India (21 December 1962)1

Legal Issue-

1. Whether Parliament has legislative competence to enact a law for compulsory acquisition
by the Union of land and other properties vested in or owned by the State as alleged in
para 8 of the plaint ?

2. Whether the State of West Bengal is a sovereign authority as alleged in para 8 of the
plaint ?

3. Whether assuming that the State of West Bengal is a sovereign authority, Parliament is
entitled to enact a law for compulsory acquisition of its lands and properties ?

4. Whether the Act or any of its provisions are ultra vires the legislative competence of
Parliament ?

5. Whether the plaintiff is entitled to any relief and if so, what relief ?

Headnote –

Under the Coal Bearing Areas (Acquisition and Develop. ment) Act, 1957, enacted by
Parliament, the Union of India proposed to acquire certain coal bearing areas in the State of
West Bengal. The State filed a suit contending that the Act did not apply to lands vested in or
owned by the State and that if it applied to such lands the Act was beyond the legislative
competence of Parliament.

Held, (per Sinha C. J., Imam, Shah, Ayyangar and Mudholkar,JJ.), that upon a proper
interpretation of the relevant 372 provisions of the Act it was clear that the Act applied also
to coal bearing areas vested in or owned by the State. The preamble of the Act did not
support the argument that the Act was intended to acquire only the rights of individuals and
not those of the States in coal bearing areas. Though the statement of Objects and Reasons
supported the contention of the State it could not be used to determine the true meaning and
effect of the substantive provisions of the Act.

Held, further, (per Sinha C. J., Iman, Shah, Ayyangar and Mudholkar JJ. Subba Rao J.,
contral, that the Coal Bearing Areas (Acquisition and Development) Act, 1957, is not ultra
vires the powers of Parliament and is valid. Under Entry 42 of List III of the Seventh

1 1963 AIR 1241 1964 SCR (1) 371

The Constitution of India is not truly Federal in character.

The basis of distribution of powers between the Union and States is that only those powers
which are concerned with the regulation of local problems are vested in the States and the
residue specially those which tend to maintain the economic industrial and commercial unity
of the country are left to the Union. It is not correct to say that fall sovereignty is vested in the
States. Parliament which is competent to destory a State cannot be held, on the theory of
absolute sovereignty of the States, to be incompetent to acquire by legislation the property
owned by the States.
Even if the Constitution were held to be a Federation and the States regarded qua the Union
as sovereign, the power of the Union to legislate in respect of the property situate in the
States would remain unrestricted. The power of Parliament conferred by Entry 42, List III, as
accessory to the effectuation of the power under Entries 52 and 54, List I, is not restricted by
any provision of the Constitution and is capable of being exercised in respect of the property
of the States also.

From the fact that Art. 294 vests the property in the States and that Art. 298 empowers the
States to transfer the property it does not follow that the property of the States cannot be
acquired without a constitutional amendment, Article 294 does not contain any prohibition
against the transfer of property of the States and if the property is capable of being transferred
by the State it is capable of being acquired.

Under s. 127 of the Government of India Act, 1933, the Central Government could require
the Province to acquire land 373 on behalf of the Federation if it was private land and to
transfer it to the Federation if it was land belonging to the Province, and the Provincial
Government had no option but to comply with the direction. It was not considered an
infraction of Provincial autonomy to vest such a power in the Central Government. Absence
of a similar provision in the present Constitution made no difference. Under the Government
of India Act the power to compulsorily acquire property was exclusively vested in the
Provinces but under the Constitution the Union also has that power.
If the other provisions of the Constitution in terms of sufficient amplitude confer power for
making laws for acquiring State property, the power cannot be defeated because the express
power to acquire property generally does not specifically and in terms refer to State property.
Power to acquire and requisition property can be exercised, concurrently by the Union and
the States but on that account there can be no conflict in the exercise of the power as such a
conflict is prevented by Arts. 31 (3) and 254. Under the Constitution fundamental rights can
be claimed not only by individuals and corporations but in some cases by the State also.
Property vested in the States may not be acquired under a law made under Entry 42, List III,
unless the law complies with the requirements of Art. 31.

The rule that the State is not bound, unless it is expressly named or by necessary implication
in a statute is one of interpretation. In interpreting a constitutional document provisions
conferring legislative power must normally be interpreted liberally and in their widest
amplitude. There is no indication in the Constitution that the word “property” in Entry 42 of
List III is to be understood in any restricted sense; it must accordingly be held to include
property belonging to the States also.

Per Subba Rao, J.-The impugned Act in so far as it confers a power on the Union to acquire
lands owned by the States, including coal mines and coal bearing lands is ultra vires.

Under the Constitution of India the political sovereignty is divided between the constitutional
entities, that is, the Union and the States, who are juristic personalities possessing properties
and functioning through the instrumentalities created by the Constitution. The Indian
Constitution accepts the federal concept and distributes the sovereign powers between the
coordinate constitutional entities, namely, the Union and the 374 states. This concept implies
that one cannot encroach upon the governmental functions or instrumentalities of the other
unless the Constitution provides for such interference. The legislative fields allotted to the
units cover subjects for legislation and they do not deal with the relationship between the
coordinate units functioning in their allotted fields. This is regulated by other provisions of
the Constitution and their is no provision Which enables one unit to take away the property of
another except by agreement.

The power to acquire the property of a citizen for a public Purpose is one of the implied
powers of the sovereign.
Under the Indian Constitution that Sovereign power is divided between the Union and the
States. It is -implicit in the power of acquisition by a sovereign that it must relate only to
property of the governed, for a sovereign cannot acquire its own property.

SINHA, C. J.-This is a suit by the State of West Bengal against the Union of India for a
declaration that Parliament is not competent to make a law authorising the Union
Government to acquire land and rights in or over land, which are vested in a State, and that
the Coal Bearing Areas (Acquisition and Development) Act (XX of 1957)-which hereinafter
will be referred to as the Act-enacted by the Parliament, and particularly ss. 4 and 7 thereof,
were ultra vires the legislative competance of Parliament, as also for an injunction restraining
the defendant from proceeding under the provisions of these sections of the Act in respect of
the coal bearing lands vested in the plaintiff. As will presently appear, the suit raises
questions of great public importance, bearing on the interpretation of quite a large number of
the Articles of the Constitution. In view of the importance of the questions raised in this
litigation, notices were issued by this Court to all the Advocates General of the States of
India. In pursuance of that notice, the States of Assam, Bihar, Gujarat, Madras, Orissa,
Punjab, Rajasthan and Uttar Pradesh have appeared, either through their respective
Advocates General or through other Counsel. The National Coal Development Corporation
Ltd., with its head 377 office at Ranchi in Bihar, has also intervened in view of a pending
litigation between it as one of the defendants and the State of West Bengal as the plaintiff.
We have heard counsel for the parties at great length.

The Plaint is founded on the following allegations. The plaintiff is a State, specified in the
First Schedule of the Constitution,, as forming part of India' which is a Union of States. By
virtue of Art. 294 of the Constitution, all property and assets in West Bengal, which were
vested in His Majesty for the purposes of the Government of the Province of Bengal became
vested in the State of West Bengal for the purpose of the State. The State of West Bengal, in
exercise of its exclusive legislative powers, enacted the West Bengal Estates Acquisition Act,
1954 (W. B. 1 of 1954). By notification issued under the Act, as amended, all estates and
rights of intermediaries and Riots vested in the State for the purposes of Government, free
from encumbrances, together with rights in the sub-soil, including mines and minerals. The
Parliament enacted the impugned Act authorising the Union of India to acquire any land or
any right in or over land, in any part of India. In exercise of its powers under the Act, the
Union of India, by two notifications dated September 21, 1959 and January 8, 1960, has
expressed its intention to prospect for coal lying within the lands which are vested in the
plaintiff, as aforesaid. Disputes and differences have arisen between the plaintiff and the
defendant as to the competence of Parliament to enact the Act and its power to acquire the
property of the plaintiff, which is a sovereign authority.

In paragraph 9 of the Plaint, a controversy had been raised as to whether or not the proposed
acquisition was for a public purpose, but at the actual hearing of the case, the learned
Advocate General of Bengal withdrew that contention, and, therefore, that issue is no more a
live one. Notice 378 under s. 80 of the Code of Civil Procedure is said to have been duly
served.

The Written Statement of the defendant does not deny the allegations of fact made in the
Plaint, but denies the correctness of each and all the submissions or legal contentions as to the
legislative competence of Parliament to enact the Act and as to the power of the defendant to
acquire any property of a State. It is also denied that the State of West Bengal is a sovereign
authority. The following statement in paragraph 12 of the Written Statement brings out the
policy underlying the enactment in question:
“The defendant states that it is in the public interest that there should be a planned and rapid
industrialization of the country. For such rapid and planned industrialization, it is essential
that the production of coal should be greatly increased as coal is the basic essential for
industries. Regulation of mines and mineral development under the control of the Union has
been declared by Parliament by law to be expedient in the public interest. It is submitted that
in the circumstances, the acquisition of coal bearing areas by the Union is necessary for the
regulation of mines and mineral development and for increased production of coal in the
public interest. The defendant will rely on documents a list whereof is hereto annexed.” On
those pleadings, the following issues were raised :

1. Whether Parliament has legislative competence to enact a law for compulsory acquisition
by the Union of land and other properties vested in or owned by the State as alleged in para 8
of the plaint ? 379
2. Whether the State of West Bengal is a sovereign authority as alleged in para 8 of the
plaint?
3. Whether assuming that the State of West Bengal is a sovereign authority, Parliament is
entitled to enact a law for compulsory acquisition of its lands and properties ?
4. Whether the Act or any of its provisions are ultra vires the legislative competence of
Parliament ?
5. Whether the plaintiff is entitled to any relief and if so, what relief ? After the arguments on
behalf of the plaintiff, and of the States in support of the plaintiff, had been finished,
application was made for amendment of the plaint praying that the following paragraph may
be added as paragraph 9A, which is as follows : “Alternatively the plaintiff submits that the
Coal Bearing Areas (Acquisition and Develop ment) Act (Act XX of -1957) on its true cons
truction does not apply to the lands vested in or owned by the Plaintiff the State of West
Bengal. Further the notifications purported to have been issued under the said Act are void
and of no effect.” At the request of the learned Attorney-General a short adjournment was
granted to consider the position as to whether or not the amendment sought should be
opposed on behalf of the defendant. As the amendment sought was not opposed, it was
granted and an additional issue was raised in these terms :

“Whether Act XX of 1957 on its true construction applies to lands vested in or owned by the
Plaintiff State? 380 It will thus appear that the parties are not at issue on any question of fact,
and the determination of the controversy depends entirely upon the interpretation of the
relevant provisions of the Constitution, and the scope and effect of the Act.

The issues joined between the parties are mainly two, (1) whether on a true construction of
the provisions of the Act, they apply to lands vested in or owned by the plaintiff; and (2) If
this is answered in the affirmative whether there was legislative competence in Parliament to
enact the impunged statute. The scope and effect of the Act is the most important question for
determination, in the first instance, because the determination of that question will affect the
ambit of the discussion on the second question. As already indicated, when the case was
opened for the first time by the learned Advocate-General of Bengal, he proceeded on the
basis that the Act purported to acquire the interests of the State, and made his further
submission to the effect that Parliament had no competence to pass an Act which had the
effect of affecting or acquiring the interest of the State.

But later he also took up the alternative position that the Act, on its true construction, did not
affect the interests or property of the State. The other States which have entered appearance,
through their respective counsel, have supported this stand of the plaintiff and have laid
particular emphasis on those provisions of the Act which, they contend, support their
contention that the Act did not intend to acquire or in any way affect the interests of the
States. In this connection, the arguments began by making pointed reference to the following
paragraphs in the Statement of Objects and Reasons, set out at pages 16-17 of the Paper
Book:

“According to the Industrial Policy Resolution of 1956 the future development of coal is the
responsibility of the State. All new units in 381 the coal industry will be set up only by the
State save in exceptional circumstances as laid down in the Resolution.

Observation-

The Coal Bearing Areas (Acquisition and Development) Act, 1957, is not ultra vires the
powers of Parliament and is valid. Under Entry 42 of List III of the Seventh Schedule to the
Constitution, Parliament is competent to make a law for the acquisition for the property of a
State.

The Constitution of India is not truly Federal in character. The basis of distribution of powers
between the Union and States is that only those powers which are concerned with the
regulation of local problems are vested in the States and the residue specially those which
tend to maintain the economic industrial and commercial unity of the country are left to the
Union. It is not correct to say that all sovereignty is vested in the States. Parliament which is
competent to destroy a State cannot be held, on the theory of absolute sovereignty of the
States, to be incompetent to acquire by legislation the property owned by the States.

From the fact that Art.294 vests the property in the States and that Art.298 empowers the
States to transfer the property it does not follow that the property of the States cannot be
acquired without a constitutional amendment, Article294 does not contain any prohibition
against the transfer of property of the States and if the property is capable of being transferred
by the State it is capable of being acquired.
Issue -1 in the affirmative.

Issue-2 not such as to disentitle the Union Parliament to exercise its legislative power
under Entry 42 List III.

Issue-3 answer covered by answer on issue 2.

Issue-4in the negative.

Issue-5in the negative.

Conclusion-

The Indian Constitution accepts the federal concept and distributes the sovereign powers
between the co- ordinate constitutional entitles, namely, the Union and the States. This
concept implies that one cannot encroach upon the governmental functions or
instrumentalities of the other, unless the Constitution expressly provides for such
interference. The legislative fields allotted to the units cover subjects for legislation and they
do not deal with the relationship between the two co-ordinate units functioning in their
allotted fields this is regulated by other provisions of the Constitution and there is no
provision which enables one unit to take away the property of another except by agreement.
The future stability of our vast country with its unity in diversity depends upon the strict
adherence of the federal principle, which the fathers of our Constitution have so wisely and
foresightedly incorporated therein. This Court has the constitutional power and the correlative
duty-a difficult and delicate one to prevent encroachment, either overtly or covertly, by the
Union of State field or vice-versa, and thus maintain the balance of federation. The present is
a typical case where the Court should stop the Union from overstepping its boundary and
trespassing into the State field. I would, therefore, hold that the impugned Act, in so far as it
confers a power on the Union to acquire the lands owned by the State, including coal mines
and coal bearing lands, is ultra vires.

Decision-
By the above mentioned directions the appeal is dismissed, In view of the judgment of the
majority, the suit stands dismissed with costs.