State of Maharashtra & ANR Vs.
Basantibai Mohanlal Khetan & Ors [1986] INSC 39 (13 March 1986)
VENKATARAMIAH, E.S. (J) VENKATARAMIAH, E.S.
(J) THAKKAR, M.P. (J)
CITATION: 1986 AIR 1466 1986 SCR (1) 707 1986
SCC (2) 516 1986 SCALE (1)404
CITATOR INFO: R 1988 SC1989 (12) F 1990 SC
153 (11)
ACT:
Maharashtra Housing and Development Act, 1976
(Maharashtra Act XXVIII of 1977), sub-sections 3 & 4 of section 44,
Constitutional validity of - Whether infringes the provisions of Articles 14,
19, 21, 31 and 300A of the Constitution - Whether provisions of section 44(3)
and (4) are protected by Article 31(c) of the Constitution.
HEADNOTE:
One Mohanlal Fakirchand Khetan was the owner
of a piece of land measuring 3.98.60 hectares bearing Survey No. 28 at village
Bhushi in Maval Taluka of Pune District having purchased it under the sale deed
dated January 18, 1966. The said land is, however, situated within the
municipal limits of Lonavala town. Mohanlal Fakirchand Khetan died on May 18,
1976 leaving behind him his widow, respondent No. 1, and children respondents
Nos. 2 to 5, as his heirs. In order to provide housing accommodation to
economically weaker sections and to persons belonging to low income group and
middle income group residing within Lonavala municipal limits and at the
request of the Maharashtra Housing and Area Development Authority, a notice was
published by the State Government under the proviso to section 41(1) of the
Maharashtra Housing and Development Act, 1976 in Government Gazette dated
August 30, 1979 inviting objections to the proposed acquisition of lands
including the land which originally belonged to Mohanlal Fakirchand Khetan.
Pursuant to the said notice Chandrakant Mohanlal Khetan, respondent No. 3
herein lodged his protest on September 6, 1979. After considering the various
objections received from different people including the objections filed by
Chandrakant Mohanlal Khetan on behalf of himself and the other co- owners, the
State Government published the notification under sub-section (1) of section 41
in its Gazette dated July 3, 1980. On the publication of the said notificction
the land of Mohanlal Fakirchand Khetan vested in the State Government free from
all encumbrances. On December 12, 1980 a notice was 708 issued under section
42(1) of the Act, to the holders of the lands to surrender and deliver
possession of their lands to the Collector, Pune within a period of 30 days. In
January 1981, the legal representatives of Mohanlal Fakirchand Khetan objected
to the notice on the ground that Survey No. 28 of village Bhushi that is, the
land belonging to them had not actually been notified in the notification
published in the Gazette as it had been shown as lying in village Maval and not
in village Bhushi. On discovering the error which had crept into the
notification, on May 15, 1981 the State Government published a corrigendum
making the requisite correction and thereafter issued a fresh notice on
September 15, 1981 to the heirs of Mohanlal Fakirchand Khetan to deliver
possession of the land bearing Survey No. 28 of village Bhushi situated within
the Municipal limits of Lonavala. The widow and children of Mohanlal Fakirchand
Khetan, respondents herein filed a writ petition in the High Court of Bombay
questioning the validity of proceedings leading up to the issue of notification
under section 41(1) of the Act and also the notification. The High Court
negatived all the contentions raised by the respondents in the writ petition
except the constitutionality of sub- section (3) and (4) of section 44 of the
Act. It found that sub-section 3 and sub-section 4 of section 44 of the Act
were unreasonable and discriminatory and therefore ultra vires Article 14 of
the Constitution. It found that the said provisions were not protected by
Article 31C of the Constitution and further held that the impugned provisions
of the legislation were otherwise unfair, unjust and unreasonable. The High
Court also found that the deprivation of the property under sections 41 and 42
of the Act had not been done by authority of law. The High Court accordingly
allowed the writ petition. Aggrieved by the decision of the High Court the
State of Maharashtra and the Maharashtra Housing and Area Development Authority
have filed this appeal by special leave.
Allowing the appeal the Court, ^
HELD : 1. Sub-sections 3 and 4 of the
Maharashtra Housing and Development Act, 1976 are constitutionally valid. [730
F-G]
2.1 Every Act carries with it the presumption
of constitutionality and unless a party aggrieved in a writ petition is able to
discharge the said burden by placing adequate 709 material, the Court should
not strike down a legislative provision particularly by the application of
Article 14.
[726 A-C] In the instant case, sub-sections 3
and 4 of section 44 of the Act cannot be said to be discriminatory and
violative of Article 14 of the Constitution, merely because in the case of
lands in municipal area all the methods of valuation under the Land Acquisition
Act, are not made available. [726 B-C]
2.2 The Act is not introduced for the benefit
of areas like Bombay Corporation area and areas under the jurisdiction of other
corporations and municipalities only.
It is enacted for the whole State more than
90 per cent of which constitutes rural area. The potentialities of a land in a municipal
area are far higher than the potentialities of land in a rural area. There is
also no occasion under the Act for the State Government to treat one piece of
land in a municipal area in one way and another piece of land in that area
differently. All lands in a municipal area have to be valued in only one way
that is in accordance with section 44(3) and (4) of the Act and all lands in
rural areas have also to be valued only in one way and that is in accordance
with the provisions of the Land Acquisition Act, 1894. There could have been
two different Acts one for municipal areas and another for rural areas, each
providing for a different method of valuation of land. Such a classification
would have been un-exceptionable having regard to the object and purposes of
the two Acts and the difference in the potentialities of the two types of
lands. The method of capitalization is also one of the recognised methods which
is adopted for the purpose of valuation of properties acquired under the Land
Acquisition Act, 1894. All methods of valuation adopted under that Act are
intended to achieve the same purpose, namely, determination of the market value
of the land acquired. It is difficult to say whether any of them is superior to
the other in the context of Article 14 of the Constitution and to hold that
there will be discrimination, if any of them is not allowed to be availed of
for purposes of valuation. [723 G-H; 724 A-E] State of Gujarat v. Shri
Shantilal Mangaldas & Ors., [1969] 3 S.C.R. 341; Parkash Amichand Shah v.
State of Gujarat & Ors., [1986] 1 S.C.C. 581; Raja Vyricherla Narayana
Gajapatiraju v. The Revenue Divisional Officer, [1939] 66 IA 104 = 710 A.I.R.
1939 PC 98; Rustam Cavasjee Cooper v. Union of India [1970] 3 S.C.R. 530; Union
of India & Anr. v. Smt. Shanti Devi & Ors., [1983] 4 S.C.C. 542;
Special Land Acquisition Officer, Davangere v. P. Veerabhadrappa & Ors.,
[1984] 2 S.C.C. 120; Oriental Gas Co. Ltd. & Ors., v. State of West Bengal
[1979] 1 S.C.R. 617 and Government of Bombay v. Morwanji Muncherji Cama, 10
Bom. LR 907 referred to.
2.3 Even granting for purposes of argument
that subsections 3 & 4 of section 44 are violative of Article 14 of the
Constitution, the said provisions receive the protection of Article 31C of the
Constitution. [726 C-D]
3.1 Article 31C does not say that an Act
there should be a declaration by the appropriate legislature to the effect that
it is being enacted to achieve the object contained in Article 39(b). In order
to ascertain whether it is protected by Article 31C, the Court has to satisfy
itself about the character of the legislation by studying all parts of it. The
question whether an Act is intended to secure the objects contained in Article
39(b) or not does not depend upon the declaration by the legislature but
depends on its contents. [727 B-D]
3.2 The Maharashtra Housing and Development
Act, 1976 makes provision for acquisition of private lands for providing sites
for building houses or housing accommodation to the community. The title to the
lands of the private holders which are acquired first vests in the State
Government. Later on the land is developed and then distributed amongst the
people as house sites. It also provides for reserving land for providing public
amenities without which people cannot live there. Community centres, shopping
complex, parks, roads, drains, play grounds, are all necessary for civic life
and these amenities are enjoyed by all. That is also a kind of distribution
within the meaning of Article 39(b) of the Constitution. The Act is brought
into force to implement the directive principle contained in Article 39(b) and
hence even if there is any infraction of Article 14 it is cured by Article 31C
which is clearly attracted to the case. [727 E-F; 729 A-B] Sanjeev Coke
Manufacturing Company v. Bharat Coking Coal Ltd. & Anr., [1983] 1 S.C.R.
1000; His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kerala,
[1973] Supp. S.C.R.
711 1; Minerva Mills Ltd. & Ors. v. Union
of India & Ors., [1981] 1 S.C.R. 206 and State of Karnataka & Anr. etc.
v. Shri Ranganatha Reddy & Anr. etc., [1978] 1 S.C.R. 641 referred to.
4. The Maharashtra Housing and Development
Act, 1976 does not infringe Article 300A of the Constitution. Article 300A was
not in force when the Act was enacted. Article 31 (1) of the Constitution which
was couched in the same language was however in force. Article 31C gave
protection to the Act even if it infringed Article 31. In this case,
sub-section 3 and 4 of section 44 of the Act cannot be struck down on the
ground that they are neither just nor fair or reasonable. Nothing contrary has
been done by the authorities. Certain vacant lands lying inside a municipal
area are being acquired for providing housing accommodation after paying an
amount which is computed in accordance with a method considered to be a fair
one by Courts. The purpose for which the lands are acquired is a public
purpose. The owners are given opportunity to make their representations before
the notification is issued. All the requirements of a valid exercise of the
power of eminent domain even in the sense in which it is understood in the
United States of America where property rights are given greater protection
than what is required to be done in our country are fulfilled by the Act. [729
B-F]
5. Land ceiling laws, laws providing for
acquisition of land for providing housing accommodation, laws imposing ceiling
on urban property etc. cannot be struck down by invoking Article 21 of the
Constitution. Article 21 essentially deals with personal liberty. It has little
to do with the right to own property as such. This is not a case where the
deprivation of property would lead to deprivation of life or liberty or
livelihood. On the other hand land is being acquired to improve the living
conditions of a larger number of people. To rely upon Article 21 of the
Constitution for striking down the provisions of the Act amounts to a clear
misapplication of the great doctrine enshrined in Article 21. [730 A-C]
6. Some problems presenting difficulty of
valuation in the application of clause 5 of First Schedule to section 44(1) of
the Act in regard to valuation of open lands situated in a city like Bombay or
lands with building potentialities situated within the limits of big towns, are
easily surmountable 712 problems of valuation in relation to individual lands
and do not reflect on the constitutionality of the impugned provision. The
concerned authorities entrusted with the function of making evaluation will
doubtless resolve such problems as are likely to arise appropriately in
accordance with law. [730 D-E] Basanti Bhai Mohanlal Khetan & Ors. v. State
of Maharashtra A.I.R. 1984 Bombay 366 reversed.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
1177 of 1984.
From the Judgment and order dated 8.11.1983
of the Bombay High Court in W.P. No. 4192 of 1981.
Ashok Desai, M. Ganesh, G.B. Sathe and A.S.
Bhasme for the Appellants.
S.B. Bhasme, Mrs. V.D. Khanna, A.M.
Khanwalkar and Anil Kumar Gupta for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. This appeal by special leave is filed against the judgment
dated November 8, 1983 in Writ Petition No. 4192 of 1981 by which the High
Court declared sub- section (3) and sub-section (4) of section 44 of the
Maharashtra Housing and Development Act, 1976 (Maharashtra Act No. XXVIII of
1977) (hereinafter referred to as `the Act') as void and gave certain ancillary
directions.
One Mohanlal Fakirchand Khetan was the owner
of a piece of land measuring 3.98.60 hectares bearing Survey No.28 at village
Bhushi in Maval taluka of Pune district having purchased it under the sale deed
dated January 18, 1966. The said land is, however, situated within the
municipal limits of Lonavala town. Mohanlal Fakirchand Khetan died on May 18,
1976 leaving behind him his widow, respondent No.1, and children, respondents
Nos. 2 to 5 as his heirs. On August 1, 1978 the Maharashtra Housing and Area
Development Authority (hereinafter referred to as `the authority' established
under section 3 of the Act wrote a letter to the Municipal Council, 713
Lonavala seeking information regarding its needs for providing housing
accommodation to economically weaker sections and to persons belonging to low
income group and middle income group residing within Lonavala municipal limits.
In order to ascertain the demand for tenements, the Municipal Council of
Lonavala issued two advertisements in local newspapers on August 3, 1978 and
February 10, 1979 inviting applications for housing accommodation from the
general public. After taking into consideration the representations made by the
people and assessing there requirements, the municipal council informed the
authority about the extent of land needed for providing housing accommodation
for the people. The authority in its turn informed the State Government by its
letter dated September 15, 1979 that an extent of 26 hectares of land was
needed initially for providing accommodation for people within the limits of
Lunavala Municipal Council and requested the State Government to issue a
notification under sub-section (1) or section 41 of the Act. The proposal was
processed by the Public Works Department and the Housing Department of the
State Government and a notice was publsied under the proviso to section 41 (1)
of the Act in Government Gazette dated August 30, 1979 inviting objections to
the proposed acquisition. In that notice it was mentioned that the Government
proposed to acquire the land which originally belonged to Mohanlal Fakirchand
Khetan refer to above also.
Pursuant to the said notice Chandrakant
Mohanlal Khetan, respondent No.3 herein lodged his protest on September 6,
1979. After considering the various objections received from different people
including the objections filed by Chandrakant Mohanlal Khetan on behalf of
himself and the other co-owners the State Government published the notification
under sub-section (1) of 41 in its Gazette dated July 3, 1980. On the
publication of the said notification the land mentioned in it including the
land of Mohanlal Fakirchand Khetan vested in the State Government free from all
incumbrances. On December 12, 1980 a notice was issued under section 42(1) of
the Act to the holders of the lands which had been notified under section 41(1)
of the Act to surrender and deliver possession to the Collector, Pune within a
period of 30 days. In January, 1981 the legal representatives of Mohanlal
Fakirchand Khetan objected to the notice on the ground that Survey No. 28 of
village Bhushi, that is, the land belonging to them had not actually been
notified in the notification published in the 714 Gazette as it had been shown
as lying in village Maval and not in village Bhushi. On discovering the error
which had crept into the notification, on May 15, 1981 the State Government
published a corrigendum making the requisite correction and thereafter issued a
fresh notice on September 15, 1981 to the heirs of Mohanlal Fakirchand Khetan
to deliver possession of the land bearing Survey No.28 of village Bhushi
situated within the municipal limits of Lonavala. The widow and children of
Mohanlal Fakirchand Khetan, respondents herein, thereafter filed the writ
petition out of which this appeal arises on December 17, 1981 on the file of
the High Court of Bombay questioning the validity of proceedings leading up to
the issue of the notification under section 41(1) of the Act and also the
notification.
The respondents contended in the writ
petition filed by them inter alia : (1) that there was no material with the
State Government to form an opinion about the need for issuing the notification
under section 41(1) of the Act;
(ii) that the respondents had not been heard
personally after they had filed the objections under the proviso to section
41(1) of the Act to the proposal of acquisition;
(iii) that the land of the respondents had actually
not been notified; and (iv) that the provisions of sub-sections (3) and (4) of
section 44 of the Act which contained the basis for the determination of
compensation payable in respect of the land were violative of Article 14,
Article 19 and Article 31 of the Constitution and therefore the said two
sub-sections and the notification were liable to be declared as void. They also
stated that the compensation payable to them was illusory in its quantum and
the procedure prescribed for the acquisition was not fair and reasonable.
The petition was contested by the State
Government and the Authority. The High Court negatived the contentions of the
respondents namely that there was no material before the State Government for
forming an opinion about the need for issuing the notification under section
41(1) of the Act, that the respondents had not been given adequate opportunity
to submit their objections to the notification under the proviso to section
41(1) of the Act, and that the land belonging to them had not been included in
the notification.
The High Court found that the correspondence
which had preceded the issue of the notification between the Government, the
Authority, 715 Municipal Council, Lonavala and the representations received by
the Municipal Council, Lonavala from the public and the proceedings of the
State Government constituted sufficient basis for the Gcvernment to form
opinion about the need for issuing the notification under section 41(1) of the
Act. The High Court found that although the names of the respondents had not
been shown in the record of rights after the death of Mohanlal Fakirchand
Khetan, respondent No.3 who was acting on behalf of all the heirs of Mohanlal
Fakirchand Khetan had lodged his objections under proviso to section 41(1) of
the Act and that he had also been personally heard by the Collector, Pune
before the publication of the notification under sub-section (1) of section 41.
The High Court, therefore, held that the respondents suffered no prejudice
whatsoever on that account. The High Court further found that the description
of the land of the respondents as the land bearing Survey No.28 of village
Maval had been duly corrected by the issue of the corrigendum and that there
was no doubt about the identity of the land of the respondents which was being
acquired. After rejecting the above contention, the High Court however
proceeded to uphold the contention of the respondents as regards the
constitutionality of sub-section (3) and sub-section (4) of section 44 of the
Act. It found that sub-section (3) and sub-section (4) of section 44 of the Act
were unreasonable and discriminatory and therefore ultra vires Article 14 of
the Constitution. It found that the said provisions were not protected by
Article 31C of the Constitution and further held that the impugned provisions
of the legislation were otherwise unfair, unjust and unreasonable. The High
Court found that the deprivation of the property under sections 41 and 42 of
the Act had not been done by authority of law. The High Court accordingly
allowed the writ petition. Aggrieved by the decision of the High Court the
State of Maharashtra and the Authority have filed this appeal by special leave.
In the course of this appeal the parties have
not questioned the correctness of the decision of the High Court as regards the
facts which had been found against the respondents. The arguments were confined
to the constitutional validity of sub-sections (3) and (4) of section 44 of the
Act.
Before the Act was enacted in the year 1976 by
the State H 716 Legislature there were in force in the State of Maharashtra,
the Bombay Housing Board Act, 1948, in the Bombay and Hyderabad areas of the
State, the Madhya Pradesh Housing Board Act, 1950 in the Vidarbha area of the
State, the Bombay Building Repairs and Reconstruction Board Act, 1969 and the
Maharashtra Slum Improvement Board Act, 1973. All these Acts were repealed by
section 188 of the Act and in their place, the Act was brought into force inter
alia with the object of unifying, consolidating and amending the laws relating
to housing, repairing and reconstructing dangerous buildings and carrying out
improvement works in slum areas.
The Preamble to the Act stated that before
the Act was passed there were in existence various corporate and statutory
bodies in the State for dealing with the problem of housing, accommodation, for
repairing and reconstructing buildings in a bad state of disrepair and
presenting a dangerous possibility of collapse, for carrying out improvemental
works in slum areas, and for advancing loans for construction of houses. It
took note of the fact that the programmes undertaken by these bodies were more
or less complementary and there was considerable over lapping in their working
or functioning and hence it was considered necessary and expedient to
co-ordinate the housing programmes for an orderly development of the urban
areas in the State. It was felt that it was necessary to provide for a more
comprehensive and co-ordinated approach to the entire problem of housing
development in a balanced manner, with sufficient attention to ecology,
pollution, over-crowding and amenities required for leading a wholesome civic
life, and that it was expedient to establish a single Corporate Authority for
the whole State and establish new Boards for certain areas of the State to
carry out the plans, programmes and other functions of the Authority. The Act
was passed by the State Legislature for the aforesaid purposes.
It received the assent of the President on
April 25, 1977.
Chapter II of the Act provides for the
establishment of the Authority and Boards. Section 3 of the Act authorises the
State Government to establish the Authority by a notification in the Official
Gazette for securing the objectives and purposes of the Act. The Authority is a
body corporate having perpetual succession and a common seal with the powers to
own property and to enter into contract.
Section 18 of the Act provides for the
establishment of Boards for implementing the 717 provisions of the Act. Four
Boards are constituted for the four areas of the State namely, Bombay area,
Nagpur area, Aurangabad area and the Pune area. The functions, duties and
powers of the Authority and the Boards are set out in Chapter III of the Act.
Section 28 which is in Chapter III of the Act provides that subject to the
provisions of the Town Planning Act and the provisions of clauses (b) and (h)
of sub-section (1) of section 12 and section 13 of the Metropolitan Act it is
the duty and function of the Authority among others to prepare or direct th
Boards to prepare and execute proposals, plans or projects for (i) housing
accommodation in the State or any part thereof, sale, including transactions in
the nature of hire-purchase of tenements in any building vested in, or belonging
to, the Authority, letting or exchange of property of the Authority (ii)
development including provisions for amenities in areas within the jurisdiction
of the Authority, (iii) clearance and re-development of slums in urban areas,
(iv) development of peripheral areas of existing urban areas to ensure an
orderly urban overspill, (v) development of commercial centres, (vi)
development of new towns in accordance with the provisions of the Town Planning
Act, (vii) development of lands vested in the Authority, etc. etc.. The
functions of the Authority as stated above naturally involve acquisition of
land and disposal of property of the Authority. Chapter V of the Act deals with
the acquisition of land and disposal of property of the Authority. Section 41
of the Act which deals with the power of the State Government to acquire land
reads thus :
"41. (1) Where, on any representation
from the Authority or any Board it appears to the State Government that, in
order to enable the Authority to discharge any of its functions or to exercise
any of its powers or to carry out any of its proposals, plans or projects, it
is necessary that any land should be acquired, the State Government may acquire
the land by publishing in the Official Gazette a notification to the effect that
the State Government has decided to acquire the land in pursuance of this
section :
Provided that, before publishing such
notification, the State Government shall, by notice published in 718 the
Official Gazette and served in the prescribed manner, call upon the owner of,
or any other person who, in the opinion of that Government, may be interested
in, such land to show cause, why it should not be acquired, and after
considering the cause, if any, shown by the owner or any other person
interested in the land, the State Government may pass such order as it thinks
fit.
(2) The acquisition of land for any purpose
mentioned in sub-section (1) shall be deemed to be a public purpose.
(3) Where a notification as aforesaid is
published in the Official Gazette, the land shall, on and from the date on
which the notification is so published, vest absolutely in the State Government
free from all encumbrances." Section 42 of the Act confers power on the
State Government to require the person in possession of land which is vested
under sub-section (3) of section 41 of the Act to surrender or deliver
possession thereof to the State Government. Section 43 of the Act provides that
every person having any interest in any land acquired under Chapter V of the
Act would be entitled to receive from the State Government an amount as
provided by the provisions contained in Chapter V, Sections 44 to 49 of the Act
deal with acquisition of lands in municipal areas and section 50 deal with
acquisition of lands in rural areas. The land situated in any area within the
jurisdiction of any Municipal Corporation or Municipal Council is considered as
land lying in a municipal area for purposes of determination of compensation
and the land outside the jurisdiction of a Municipal Corporation or a Municipal
Council is treated as land in a rural area for the said purpose. Section 44
which is material for purposes of this case which lays down the basis for
determination of the amount for acquisition of lands in municipal areas read
thus :
"44. (1) Where any land including any
building.
hereon is acquired and vested in the State
Government under this Chapter and such land is situated in any area within the
jurisdiction of any 719 Municipal Corporation or Municipal Council, the A State
such acquisition an amount which shall be determined in accordance with the
provisions of this section.
(2) Where the amount has been determined with
concurrence of the Authority by agreement between the State Government and the
person to whom it is payable, it shall be determined and paid in accordance
with such agreement.
(3) Where no such agreement can be reached,
the amount payable in respect of any land acquired shall be an amount equal to
one hundred times the net average monthly income actually derived from such
land, during the period of five consecutive years immediately preceding the
date of publication of the notification referred to in section 41 as may be
determined by the Land Acquisition Officer.
(4) The net average monthly income referred
to in sub-section (3) shall be calculated in the manner and in accordance with
the principles set out in the First Schedule.
(5) The Land Acquisition Officer shall, after
holding an inquiry in the prescribed manner, determine in accordance with the
provisions of sub-section (4) the net average monthly income actually derived
from the land. The Land Acquisition Officer shall then publish a notice in a
conspicuous place on the land and serve it in the prescribed manner calling
upon the owner of the land and every person interested therein to intimate to
him, before a date specified in the notice, whether such owner or person agrees
to the net average monthly income actually derived from the land as determined
by the Land Acquisition Officer. If such owner or person does not agree, he may
intimate to the Land Acquisition Officer before the specified date what amount
he claims to be such net average monthly income.
720 (6) Any person, who does not agree to the
net average monthly income as determined by the Land Acquisition Officer under
sub-section (5) and the amount for acquisition to be paid on that basis and
claims a sum in excess of that amount may prefer an appeal to the Tribunal,
within thirty days from the date specified in the notice referred to in
sub-section (5).
(7) On appeal, the Tribunal shall, after
hearing the appellant, determine the net average monthly income and the amount
to be paid on that basis and its determination shall be final and shall not be
questioned in any court.
Section 45 of the Act provides for
apportionment of amount payable on acquisition amongst different persons
claiming interest in the amount of compensation. Section 46 of the Act lays
down the procedure for payment of amount for acquisition or for depositing of
same in the Court. Section 47 - of the Act lays down the powers of the Land
Acquisition Officer in relation to determination of the amount for acquisition
and section 48 of the Act provides for payment of interest on that amount at
the rates specified therein, by the State Government. The Land Acquisition
Officer is appointed by the State Government under the powers conferred by
section 49 of the Act. Section 50 of the Act which contains the provisions
relating to the basis for determination of amount for acquisition of lands in
rural areas and the procedure to be followed in that case reads thus :
"50. (1) Where any land (including any
building thereon) is acquired and vested in the State Government under this
Chapter and such land is situated in any area outside the jurisdiction of any
Municipal Corporation or Municipal Council (in this Chapter referred to as 'a
rural area'), the State Government shall pay for such acquisition an amount,
which shall be determined in accordance with the provisions of this section.
(2) Where the amount has been determined,
with the concurrence of the Authority, by agreement between 721 the State
Government and the person to whom it is payable it shall be determined and paid
in accordance with such agreement.
(3) Where no such agreement can be reached,
the State Government shall refer the case to the Collector, who shall determine
the amount for acquisition in accordance with the principles for determining
compensation laid down in the Land Acquisition Act, 1894, and the provisions of
that Act (including provisions for reference to Court and appeal) shall apply
thereto mutatis mutandis as if the land has been acquired and compensation had
to be determined, apportioned and paid under the provisions of that Act,
subject to the modifications that reference in section 23 and 24 of that Act to
the date of publication of the notification under section 4, sub-section (1)
were reference to the date on which the notice under the proviso to sub-section
(1) of section 41 of this Act is published, and the references to the time or
date of the publication of the declaration under section 6 of that Act were
references to the date of publication of the notification refer to in
sub-section (3) of section 41 of this Act in the Official Gazette.
Explanation - In this section,
"Collector" means the Collector of a District and includes any
officer specially appointed by the State Government or by the Commissioner to
perform the functions of a Collector under the Land Acquisition Act,
1894".
Wherever the amount payable on acquisition is
settled by agreement there is no distinction between a land in a municipal area
or a land in a rural area. The point of distinction which is alleged to be
discriminatory between the two types of land lies in the method of computation
of the amount payable on acquisition where there is no agreement. Whereas in
the case of the land situated in a rural areas section 50 of the Act provides
that the valuation of the land shall be made in accordance with the provisions
contained in section 23 and section 24 of the Land Acquisition Act, 1894 in 722
the case of the land situated in a municipal area the amount payable has to be
calculated according to sub-section (3) of section 44 of the Act. Section 44(3)
of the Act provides that the said amount shall be equal to one hundred times
the net average monthly income actually derived from such land during the
period of five consecutive years immediately preceding the date of publication
of the notification referred to in section 41 of the Act as may be determined
by the Land Acquisition Officer. Under sub-section (4) of section 44 of the Act
the net average monthly income referred to in sub-section (3) of section 44 is
required to be calculated in the manner and in accordance with the principles
set out in the First Schedule to the Act. The First Schedule to the Act reads
thus:
FIRST SCHEDULE (See sub-section (1) of
section 44) Principles for determination of the net average monthly income :-
1. The land Acquisition Officer shall first
determine the gross rent actually derived by the owner of land acquired,
including any building on such land, during the period of five consecutive
years referred to in sub-section (3) of section 44.
2. For such determination, the Land
Acquisition Officer may hold any local inquiry and obtain, if necessary,
certified copies of extracts from the property tax assessment books of the
local authority concerned showing the rental value of such land.
3. The net average monthly income referred to
in sub-section (3) of section 44 shall be sixty per cent, of the average
monthly gross rent which shall be one-sixtieth of the gross rent during the
five consecutive years as determined by the Land Acquisition Officer under
paragraph 1.
4. Forty per cent, of the gross monthly
rental referred to above shall not be taken into 723 consideration in
determining the net average monthly income but shall be deducted in lieu of the
expenditure which the owner of the land would normally incur for payment of any
property tax to the local authority, for collection charges, income tax or bad
debts as well as for works of repair and maintenance of the building, if any,
on the land.
5. Where the land or any portion thereof has
been unoccupied, or the owner has not been in receipt of any rent for the
occupation of the land during the whole or any part of the said period of five
years, the gross rent shall be taken to be the income which the owner would in
fact have derived if the land had been leased out for rent during the said
period, and for this purpose the rent actually derived from the land during a
period prior or subsequent to the period during which it remained vacant or
from similar land in the vicinity shall be taken into account." The High
Court does not say that the amount payable under sub-sections (3) and (4) of
section 44 of the Act for the land situated in municipal area is illusory. It
however says that the method of capitalization set out in section 44(3) and (4)
of the Act being the only method out of the several methods of valuing the land
under the Land Acquisition Act, 1894 the owner of land in a municipal area is
placed in a less advantageous position and is denied equality of treatment. In
order to appreciate this ground of objection, it is necessary to examine
whether the classification of the land under the Act into the land in municipal
area and the land in rural area for purposes of determining the amount payable
on acquisition is bad. It is not denied that the land in municipal area
commands various advantages which are not available in the case of land in
rural areas. The Act is not introduced for the benefit of areas like Bombay
Corporation Area and area under the jurisdiction of other Corporations and
municipalities only.
It is enacted for the whole State more than
90 per cent of which constitutes rural area. The potentialities of a land in a
municipal area are far higher than the potentialities of land in a rural area.
There is also no occasion under the Act for the State Government to treat one
piece of land in a 724 municipal area in one way and another piece of land in
that area differently. All lands in a Municipal area have to be valued in only
one way that is in accordance with section 44(3) and (4) of the Act and all
lands in rural areas have also to be valued only in one way and that is in
accordance with the provisions of the Land Acquisition, 1894. There could have
been two different Acts one for municipal areas and another for rural areas,
each providing for a different method of valuation of land. Such a classification
would have been unexceptionable having regard to the object and purposes of the
two Acts and the difference in the potentialities of the two types of lands. It
may be noticed that in State of Gujarat v. Shri Shantilal Mangaldas & Ors.,
[19691 3 S.C.R. 341 this Court has upheld the classification of land under the
same Act for purposes of valuation at different stages of town planning. This
view is adopted and followed in Prakash Amichand Shah v. State of Gujarat 6
Ors., [1986] 1 S.C.C. 581, recently. The method of capitalization is also one
of the recognised methods which is adopted for the purpose of valuation of
properties acquired under the Land Acquisition Act, 1894. All methods of
valuation adopted under the Act are intended to achieve the same purpose,
namely, determination of the market value of the land acquired. It is difficult
to say whether any of them is superior to the other in the context of Article
14 of the Constitution and to hold that there will be descrimination, if any of
them is not allowed to be availed of for purposes of valuation. In the case of
agricultural lands, the method of capitalization is followed by our Courts for
several years (See Raja Vyricherla Narayana Gajapatirai v. The Revenue
Divisional Officer. [1939] 66 I.A. 104, A.I.R.
1939 P.C. 98, Rustom Cavasjee Cooper v. Union
of India, [1970] 3 S.C.R. 530, Union of India & Anr. v. Smt. Shanti Devi
& Ors., [1983] 4 S.C.C. 542, Special Land Acquisition Officer, Davangere v.
P. Veerabhadrappa & Ors., [1984] 2 S.C.C. 120 and Oriental Gas Co. Ltd.
& Ors. v. State of West Bengal, [1979] 1 S.C.R. 617). No doubt, such
calculation has been made by adopting varying methods, that is, from 33-1/3
times to 8 times the annual net return as explained in Shantidevi's case (supra).
Such variation has taken place on account of the variation of the rate of
interest on gilt- edge securities as pointed out in that case. The higher the
rate of interest, the lower would be the number of years' purchase adopted by
courts to determine the market value of the property acquired.
725 A reading of the rules contained in the
First Schedule to the Act shows that they lay down fairly appropriate
principles to be followed in determining the net average monthly income. The
net average monthly income referred to in sub-section (3) of section 44 of the
Act is required to be determined in accordance with paragraph 3 of the First
Schedule to the Act at sixty per cent of the average monthly gross rent which
shall be one sixtieth of the gross rent during the five consticutive years as
determined by the Land Acquisition Officer under paragraph 1 of the First
Schedule.
In paragraph 7 of its judgment the High Court
observes that the Act does not give any indication as to why the amount of
forty per cent out of the gross rental is required to be deducted. This is an
incorrect statement. Paragraph 4 of the First Schedule gives the reason for
such deduction. It says that forty per cent of the gross monthly rental shall
not be taken into consideration in determining the net average monthly income
but shall be deducted in lieu of the expenditure which the owner of the land
would normally incur for payment of any property tax to the local authority,
for collection charges, income tax or bad debts as well as for works of repair
and maintenance of the building if any on the land. In the case of agricultural
lands many times one- half of the annual yield is deducted towards cultivation
charges, land revenue, cost of personal labour etc. before determining the net
annual yield for purposes of capitalization. In the instant case the Act
directs payment of 100 times the net monthly income, that is, 8 1/3 times the
net annual income from the property as the amount payable on its acquisition
which cannot be considered to be too low having regard to the rate of interest
on safe investments which is prevailing from 1976-77 onwards. In Oriental Gas
Co's (supra) eight times the net annual income was considered to be adequate
compensation by this Court.
The High Court erred in relying upon the
decision in Government of Bombay v. Morwanji Muncherji Cama, 10 Bom.
L.R. 907, a decision rendered at the
commencement of this century to say that 16 2/3 years purchase of unsecured
annual ground rent as the basis for determination of market value by
capitalization method in recent years. It may incidentally be mentioned that
even that decision does not lay down that the valuation of vacant land by the
application of the rule of capitalization is not a reasonable method. Paragraph
5 of the First Schedule to the 726 Act provides that method of valuation of
unoccupied lands or lands where the owner is not in receipt of rents. The High
Court while deciding the case before it has overlooked the principle that every
Act carries with it the presumption of constitutionality and unless the
petitioner is able to discharge the said burden by placing adequate material,
the Court should not strike down a legislative provision particularly by the
application of Article 14. We fail to see any hostile discrimination in the
instant case which will make sub-section (3) and sub-section (4) of section 44
of the Act violative of Article 14 of the Constitution merely because in the
case of lands in municipal area all the methods of valuation under the Land
Acquisition Act are not made available.
Even granting for purposes of argument that
sub- sections (3) and (4) of section 44 are violative of Articlel 14 of the
Constitution, we are of the view that the said provisions receive the
protection of Article 31C of the Constitution. We shall proceed to test the
validity of the argument keeping aside for the time being the observations in
Sanjeev Coke Manufacturing Company. v. Bharat Coking Coal Ltd. & Anr.
[1983] 1 S.C.R. 1000. Let us proceed on the basis that after His Holiness
Kesavananda Bharati Sripadagalavaru v. State of Kerala [1973] Supp. S.C.R. 1.
and Minerva Mills Ltd & Ors. v. Union of
India & Ors. [1981] 1 S.C.R. 206, Article 31C reads as
"notwithstanding anything contained in Article 13, no law giving effect to
the policy of the State towards securing the principles specified in clause (b)
or clause (c) of Article 39 shall be deemed to be void on the ground that it is
inconsistent with or takes away or abridges any of the rights conferred by
Article 14 or Article 19. Clause (b) of Article 39 of the Constitution which is
relevant for our purpose states that the State shall, in particularly direct
its policy towards securing that the ownership and control of material
resources of the community are so distributed as best to subserve common good.
The High Court rightly observed at the end of paragraph 14 of its judgment
following Sanjeev Coke Manufacturing Company's case (supra) that the expression
'material resources' of the community' would cover the lands held by private
owners also. But it however erred thereafter in reaching the conclusion that
Article 31C was not applicable to the case for the reason that (i) the Act did
not contain a declaration that it was 727 enacted to give effect to Article
39(b), (ii) by undertaking development of commercial centres while providing
housing accommodation, the Authority was expected to make profits and hence
following that the power to acquire was not conferred with a view to achieving
the directive principles in Article 39(b), and (iii) the object of enacting the
legislation was obviously to provide wholesome civic life to the citizens and
not distribution of material resources. We are of the view that each one of
these reasons is invalid and erroneous. First Article 31C does not say that in
an Act there should be a declaration by the appropriate legislature to the
effect that it is being enacted to achieve the object contained in Article
39(b). In order to ascertain whether it is protected by Article 31C, the Court
has to satisfy itself about the character of the legislation by studying all
parts of it. The question whether an Act is intended to secure the objects
contained in Article 39(b) or not does not depend upon the declaration by the
legislature but depends on its contents. We have already dealt with the objects
of the Act with which we are concerned in this case. It inter alia makes
provision for acquisition of private lands for providing sites for building
houses or housing accomodation to the community. The title to the lands of the
private holders which are acquired first vests in the State Government. Later
on the land is developed and then destributed amongst the people as house
sites. It also provides for reserving land for providing public amenities
without which people cannot live there. Community centres, shopping complexes,
parks, roads, drains, play grounds, are all necessary for civic life and there
amenities are enjoyed by all. That is also a kind of distribution. In State of
Karnataka & Anr. etc. v. Shri Ranganatha Reddy & Anr.Etc.
[1978] 1 S.C.R. 641 at pages 69 dealing with
the question whether nationalisation of bus transport was covered by Article
39(b), Justice Krishna Iyer has observed thus :
"The next question is whether
nationalisation can have nexus with distribution. Should we assign a narrow or
spacious sense to this concept? Doubtless, the latter, for reasons so apparent
and eloquent. To 'distribute'even in its simple dictionary meaning, is to
'allot, to divide into classes or into groups and distribution' embraces
'arrangement, classification, placement, disposition, 728 apportionment, the
way in which items, a quantity, or the like, is divided or apportioned; the
system of dispersing goods throughout a community' (See Random House
Dictionary). To classify and allocate certain industries or services or
utilities or articles between the private and the public sectors of the
national economy is to distribute those resources. Socially conscious
economists will find little difficulty in treating nationalisation of transport
as a distributive process for the goods of the community. You cannot condemn
the concept of nationalisation in our Plan on the score that Article 39(b) does
not envelope it. It is a matter of public policy left to legislative wisdom whether
a particular scheme of takeover should be undertaken.
Two conclusions strike as quintessential.
Part IV, especially Article 39(b) and (c), is a furturistic mandate to the
state with a message of transformation of the economic and social order.
Firstly, such change calls for collaborative
effort from all the legal institutions of the system: the legislature, the
judiciary and the administrative machinery. Secondly and consequentially,
loyalty to the high purpose of the Constitution, viz. social and economic
justice in the context of material went and utter inequalities on a massive
scale, compass the court to ascribe expansive meaning to the pregnant words
used with hopeful foresight, not to circumscribe their connotation into
contradiction of the objectives inspiring the provision. To be Pharisaic
towards the Constitution through ritualistic construction is to weaken the
social spiritual thrust of the founding fathers' dynamic faith." These
observations are noted with approval by another Constitution Bench in Sanjeev
Coke Manufacturing Company's case (supra). It is true that when public money is
invested on the development of land, the Authority is expected to reimburse
itself to some extent. The Authority, however, is expected to conduct its
operations as a public utility concern 729 and not as a private land
development agency. The High Court erred in taking a very narrow view of the
objects of the Act and the functions of the Authority under it. We are
satisfied that the Act is brought into force to implement the directive
principle contained in Article 39(b) and hence even if there is any infraction
of Article 14 it is cured by Article 31C which is clearly attracted to the
case.
We next proceed to consider a contention
lacking in merit which has unfortunately been accepted by the High Court namely
that the Act infringes Article 300A of the Constitution. Article 300A was not
in force when the Act was enacted Article 31(1) of the Constitution which was
couched in the same language was however in force. Article 31C gave protection
to the Act even if it infringed Article 31. Let us assume that the action of
acquiring private properties should satisfy now Article 300A also because the
proceedings to acquire the land started in the instant case after Article 300A
came into force. Let us also assume that a law should be fair and reasonable
and not arbitrary and that a law should also satisfy the principle of fairness
in order to be effective and let us also assume that the said principle of
fairness lies outside Article 14. We are assuming all these, without deciding
these questions, since the action can be upheld even if all these assumptions
are well-founded. What is it that is being done now in the instant case?
Certain vacant lands lying inside a municipal area are being acquired for
providing housing accommodation after paying an account which is computed in
accordance with a method considered to be a fair one by courts. The purpose for
which the lands are acquired to be is a public purpose.
The owners are given opportunity to make
their representations before the notification is issued. All the requirements
of a valid exercise of the power of eminent domain even in the sense in which
it is understood in the United States of America where property rights are given
greater protection than what is required to be done in our country are
fulfilled by the Act. Yet the High Court, with respect, grievously erred in
holding that even assuming that the provisions of Chapter V of the Act are
protected from challenge under Articles 14, 19 and 31 of the Constitution due
to the applicability of Article 31C of the Constitution still the impugned
provisions of the Act are required to be struck down as the said provisions are
neither just nor fair or reasonable.
730 Then in the end we have to consider the
argument based on Article 21 of the Constitution which is urged on behalf of
the respondents. Article 21 essentially deals with personal liberty. It has
little to do with the right to own property as such. Here we are not concerned
with a case where the deprivation of property would lead to deprivation of life
or liberty or livelihood. On the other hand land is being acquired to improve
the living conditions of a large number of people. To rely upon Article 21 of
the Constitution for striking down the provisions of the Act amounts to a clear
misapplication of the great doctrine enshrined in Article 21. We have no
hesitation in rejecting the argument. Land ceiling laws, law providing for
acquisition of land for providing housing accommodation, laws imposing ceiling
on urban property etc. cannot struck down by invoking Article 21 of the
Constitution.
Before concluding we may refer to one other
point. Our attention has been called to the fact that some problems presenting
difficulty or valuation will have to be faced in the application of clause 5 of
First Schedule (See Section 44 (1) in regard to valuation of open lands
situated in a city like Bombay or lands with building potentialities situated
within the limits of big towns. These are easily surmountable problems of
valuation in relation to individual lands and do not reflect on the
constitutionality of the impugned provisions. The concerned authorities
entrusted with the function of making evaluation will doubtless resolve such problems
as are likely to arise appropriately in accordance with law. Be that as it may
the constitutionality of the impugned provisions remains unimpaired.
In the result we hold that the judgment of
the High Court is liable to be set aside to the extent that sub- sections (3)
and (4) of Section 44 of the Act have been held unconstitutional and struck
down. We wish to make it clear that the findings recorded against the writ
petitioners on other points remain unaffected by this judgment. We accordingly
allow this appeal, uphold the provisions contained in sub-sections (3) and (4)
of section 44 of the Act and dismiss the writ petition filed by the
respondents.
There shall, however, be no order as to
costs.
S.R. Appeals allowed.
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