Anurag Krishna Sinha Vs State of Bihar & Anr. (Supreme Court of India)
Conclusion: Deprivation of property must be based on law which is “just, fair and reasonable”, the Supreme Court struck down the Bihar law that allowed the State to take over a historic library for a token compensation of just one rupee, holding that such a provision was “confiscatory” and failed constitutional scrutiny.
Held: The case was concerned with the Smt. Radhika Sinha Institute and Sachchidanand Sinha Library established in 1924. The institution was governed by a trust deed (1926), with management vested in trustees, including hereditary succession provisions. In 2015, the State of Bihar enacted legislation to take over, acquire, and manage the Institute & Library, dissolving the trust and vesting all rights in the State. The Act also provided nominal compensation. The Act was challenged before the Patna High Court, which had upheld the Act, prompting assessee to move to the Supreme Court. The issues arose for consideration was whether the 2015 Act was manifestly arbitrary and violative of Article 14; whether the Act was confiscatory and violated Article 300A (right to property) and whether classification of the Trust as public/private affects validity. It was held that arbitrariness was antithetical to equality (settled through cases like Shayara Bano v. Union of India, Maneka Gandhi v. Union of India). The impugned Act was manifestly arbitrary because it completely vested the institution in the State; it dissolved a century-old trust structure without inquiry; there was no evidence of mismanagement or failure; no prior notice, hearing, or corrective opportunity was given and less intrusive alternatives (funding, regulation, audit) were available but ignored. A law was unconstitutional if it was excessive, disproportionate, or lacks rational basis. The State justified takeover for “better management,” but there was objective material or inquiry supported this claim; the institution was functioning for nearly 100 years. The Court held that total takeover was the most extreme measure, unjustified in absence of necessity. Although Article 300A allowed deprivation of property by law, the law itself must satisfy constitutional standards of fairness and non-arbitrariness. A provision reducing compensation to a token amount, the Court said, lacked the basic attributes of fairness and reveals the confiscatory nature of the legislation. The absence of any principled or meaningful framework for compensation underscores the arbitrary character of the legislative measure. While Article 300A permitted deprivation of property by authority of law, such law must be fair, reasonable and non-confiscatory. The impugned Act failed to meet this standard.”. Accordingly, the appeal was allowed, the law was struck down, and managements and administration of the Trust governing the Institute & Library, together with its rights of management and administration, was restored to its pre-existing legal position prior to the enactment of the impugned Act.
