Bihar Cannot Take Over A Century-Old Library By Paying One Rupee As Compensation: Supreme Court Strikes Down 2015 Act

"Complete vesting of property, dissolution of century-old trust arrangements, absence of any finding of necessity or mismanagement, and provision for illusory compensation cumulatively render the Act manifestly arbitrary", In a significant ruling on the constitutional limits of legislative power, the Supreme Court of India on March 10, 2026, struck down the Srimati Radhika Sinha Institute and Sachchidanand Sinha Library (Requisition & Management) Act, 2015 as unconstitutional, holding that the Bihar Legislature's wholesale takeover of a century-old private trust — without any prior inquiry, finding of mismanagement, or meaningful compensation — constituted a textbook case of manifest arbitrariness violating Article 14 of the Constitution.

A bench of Justices Vikram Nath and Sandeep Mehta, in a judgment authored by Justice Vikram Nath, restored the Trust governing the Institute and Library to its pre-existing legal position and directed that management be returned to the Sinha family, from whom it had been forcibly wrested.

Background of the Case

The Smt. Radhika Sinha Institute and Sachchidanand Sinha Library is an institution with a history spanning nearly a century. It was established in 1924 by Shri Sachchidanand Sinha — a distinguished public figure, prominent son of Bihar, and the first interim President of the Constituent Assembly — in memory of his wife Smt. Radhika Sinha. Shri Sinha contributed Rs. 50,000 from the sale proceeds of ancestral property, donated approximately 10,000 volumes of books from his personal collection, and formally constituted a Trust by oral declaration and subsequently by a registered Deed of Trust executed on March 10, 1926. The Trust Deed provided that the eldest male member of the family would serve as Honorary Secretary and Chief Executive Officer, and that in the event of failure of the Trust, the entire property would revert to the family. In 1955, the State of Bihar entered into a formal agreement with the Trust according the Library the status of a State Central Library, while expressly preserving control and management with the Trustees and committing the State only to financial assistance. The appellant, Anurag Krishna Sinha, is the great-grandson of the Settlor and presently serves as Trustee, Honorary Secretary and Chief Executive Officer.

In 1983, the State had first attempted to acquire the Trust through an ordinance. That ordinance lapsed, and a second ordinance promulgated to save it also lapsed. When the Patna High Court upheld the State's acquisition despite the lapse, this Court in 1996 reversed that decision, holding that the lapsing of the ordinances rendered all actions thereunder non est. More than three decades later, without any intervening change in circumstances, the Bihar Legislature enacted the impugned Act of 2015. Section 3 vested all rights, title and interest of the Institute and Library in the State Government. Section 4(2) dissolved the Deed of Trust, the Agreement, the Lease of Land, and all committees thereunder. Section 7 authorised payment of compensation up to a maximum of one rupee. The appellant challenged the Act before the Patna High Court, which in February 2024 dismissed the writ petition, holding — on a ground neither pleaded nor argued by either party — that the Trust was a public trust. The present appeal followed.

Legal Issues

The two central questions before the Court were whether the impugned Act was manifestly arbitrary and violative of Article 14 of the Constitution, and whether it effected a compulsory acquisition and extinguishment of property rights in a confiscatory manner contrary to Article 300A read with Article 14.

Court's Observations and Judgment

On the High Court's Finding of Public Trust

The Court at the outset disapproved the High Court's approach of deciding the case on a ground — that the Trust was a public trust — which was neither pleaded nor argued by either party. Both sides had proceeded before the High Court on the common assumption that it was a private trust governed by the Indian Trusts Act. The Court held that "the fact that an institution is intended to serve a public purpose or is open to public use does not, by itself, conclusively determine that the trust is a public trust in law." The legal character of a trust depends on the manner of dedication, structure, nature of control and management, and the rights reserved by the Settlor. Relying on Bachhaj Nahar v. Nilima Mandal (2008), the Court reiterated that a court cannot suo motu make out a case not pleaded by either party. In any event, the Court held that whether the Trust was public or private was not determinative, since any legislative measure resulting in compulsory acquisition must independently satisfy Article 14.

On the Doctrine of Manifest Arbitrariness

The Court traced the evolution of the doctrine of manifest arbitrariness as a ground to strike down legislation under Article 14 through a long line of constitutional authority — from S.G. Jaisinghani v. Union of India (1967), E.P. Royappa v. State of Tamil Nadu (1974), and Maneka Gandhi v. Union of India (1978), through Ajay Hasia v. Khalid Mujib Sehravardi (1981), down to the Constitution Bench decision in Shayara Bano v. Union of India (2017) which had put to rest all controversy on the subject. Quoting Shayara Bano, the Court reiterated: "Manifest arbitrariness must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary." The Court confirmed that Shayara Bano had specifically held State of Andhra Pradesh v. McDowell & Co. (1996) — which had denied arbitrariness as a ground to invalidate plenary legislation — to be per incuriam, as it had failed to consider binding Constitution Bench precedents.

On No Inquiry, No Mismanagement, No Justification

"There is not a single communication from the State Government to the Trust bringing to their notice any allegation of mismanagement, financial irregularity, neglect, or failure to discharge the objects of the Trust"

The Court took the unusual step of summoning the original records pertaining to the impugned Act, and their examination proved devastating to the State's case. The records revealed that before enacting the legislation, the State had never once written to the Trust or its Trustees alleging mismanagement, financial irregularity, neglect, or failure to fulfil the Trust's objects. No inquiry preceded the enactment. No opportunity was ever afforded to the Trustees to respond or take corrective action. The Court held that "a measure of such sweeping consequence — complete divestiture of an institution that has functioned for nearly a century — cannot rest on assumptions that were never put to the very persons sought to be displaced."

The Court further noted a damning inconsistency in the State's position: the State Librarian, a government-appointed functionary, served as ex-officio Chief Librarian and bore day-to-day supervisory responsibility over the Library's administration. If there was indeed mismanagement, it fell squarely within this official's supervisory domain. Yet the record showed that no notice was ever issued to him, no inquiry was ever initiated against him, and no action of any kind was taken regarding his discharge of duties. "The State, therefore, is not in a position to rely on mismanagement as the basis for the acquisition when it failed to act against its own appointee, who was charged with the general administration of the very institution whose management it now seeks to impugn."

On Post-Takeover Investment as Evidence of Disproportionality

The Court noted that following the takeover, the State had sanctioned Rs. 72.89 crores for construction, renovation and infrastructure enhancement of the Institute and Library, of which Rs. 16.24 crores had already been released. The Court did not doubt the State's commitment to the institution's preservation. However, it asked the critical constitutional question: was complete legislative acquisition — dissolving the Trust, extinguishing all rights, and displacing a century-old framework — a necessary precondition for such investment? The answer was emphatically no. "Grant-in-aid, conditional funding, statutory audit, and supervisory oversight are all established mechanisms that serve this purpose without displacing existing management." The Court held that the scale of post-takeover investment did not validate the takeover — it demonstrated that the State's objective could have been achieved through far less drastic means. "That the legislature chose the most extreme measure available, when less invasive alternatives were plainly at hand, is itself a manifestation of the arbitrariness that the impugned Act discloses."

On the One-Rupee Compensation: Confiscatory and Unconstitutional

Section 7 of the impugned Act authorised the State Government to pay compensation up to a maximum of one rupee, without prescribing any principles, criteria or procedural safeguards. The Court held that while Article 300A of the Constitution permits deprivation of property by authority of law, such law must be just, fair and reasonable, and not arbitrary or confiscatory in effect. "A statutory provision that enables acquisition of property while reducing compensation to a token amount lacks the basic attributes of fairness." The confiscatory nature of the vesting provision was held to further reinforce the conclusion of manifest arbitrariness.

On Legislative History as a Relevant Factor

The Court held that the legislative history of the 1983 ordinances — which this Court had set aside in 1996 — was a relevant consideration. The impugned Act of 2015 sought to achieve substantially the same outcome as the failed ordinances of 1983, without any intervening change in circumstances and without any fresh material justifying acquisition. "When a legislature re-enacts substantially the same measure that has previously failed, without placing any new or cogent material before the Court to justify the same, the legislative history becomes a relevant consideration" reinforcing findings of manifest arbitrariness.

Allowing the appeal and setting aside the Patna High Court's judgment of February 29, 2024, the Supreme Court declared the Srimati Radhika Sinha Institute and Sachchidanand Sinha Library (Requisition & Management) Act, 2015 unconstitutional and struck it down in its entirety. The Trust governing the Institute and Library, together with its rights of management and administration, was ordered restored to its pre-existing legal position prior to the enactment of the impugned Act. The Court clarified that this would not preclude the State from providing financial assistance, administrative support or regulatory oversight in accordance with law — but the management of the century-old institution would return to those who had founded and faithfully administered it for a hundred years.

Date of Decision: March 10, 2026