BHAGAT RAM & ORS. vs STATE OF PUNJAB & ORS.

The Supreme Court examined the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948, and held that a scheme reserving land for the income of the Panchayat is contrary to the second proviso of Article 31A(1) of the Constitution, as the beneficiary is the Panchayat, which qualifies as 'State' under Article 12. The Court clarified that the repartition under Section 21 does not constitute 'acquisition' as defined by the second proviso, since management and control do not vest in the Panchayat until possession changes. Consequently, the scheme must be modified to comply with constitutional provisions, and compensation must be paid at market value for land reduced below the legal ceiling.