Municiapl
Corpn. of Greater Bombay Vs. C.B.I [1994] INSC 276 (2 May 1994)
Venkatachala
N. (J) Venkatachala N. (J) Ramaswamy, K.
CITATION:
1994 AIR 2385 1994 SCC (4) 690 JT 1994 (3) 535 1994 SCALE (2)813
ACT:
HEAD NOTE:
The
Judgment of the Court was delivered by VENKATACHALA, J.- These appeals by
special leave, directed against the common judgment dated 5th, 6th and 7th
August, 1974 rendered in First Appeal Nos. 386-395 of 1968 by the High Court of
Judicature at Bombay, are required to be decided by us by considering and
answering three important questions:
(i)Does
the provision in sub-section (1) of Section 301 of the Bombay Municipal
Corporation Act, 1888 - "the BMC Act" specify a principle of
determination of compensation payable to the owners of the buildings or lands
acquired for a public street under Sections 298 and 299 thereof?
(ii)Does
the principle specified in sub- section (1) of Section 301 of the BMC Act, for
determination of compensation payable to the owners for their buildings or
lands acquired under Sections 298 and 299 thereof, warrant determination of
such compensation according to the market value of such acquired buildings or
lands?
(iii)What
method could be adopted for determining the amount of compensation payable
under sub-section (1) of Section 301 of the BMC Act? 2.The salient facts which
have led to the filing of the present appeals lie in a narrow compass: Gowalia
Tank Road and Bhulabhal Desai Road lying within the area of the Bombay
Municipal Corporation - "the BMC" are public streets envisaged under
the BMC Act. In the year 1962, the BMC which resolved to improve the said
public streets by widening them, acquired out of the lands of respondent/s in
these appeals, certain portions which fell within the regular line of the public
streets and took their possession as provided for in sub-section (2) of Section
298 and sub- section (1) of Section 299 of the BMC Act. The Commissioner who
was liable under sub-section (1) of Section 301 of the BMC Act, to pay
compensation to the respondent/s in these appeals for their acquired portions
of lands, offered to pay them compensation at an uniform rate of Rs 80 per
square yard of land. But, the respondent/s, who disputed the adequacy of the
said compensation offered to be paid to them, filed applications before the
Chief Judge of the Court of Small Causes, Bombay, praying for grant of higher compensation for their acquired portions
of lands, by taking recourse to the provision in Section 504 of the BMC Act.
The
Chief Judge, who entertained those applications, with the consent of parties,
clubbed all the said applications, recorded common evidence thereon and decided
them by his common judgment dated 14-3-1968. Under that common judgment, the
compensation made payable to the respondent/s in these appeals - the owners,
for their acquired portions of lands, was their market value worked out at a
rate ranging from Rs 450 per sq. yard to Rs 640 per sq. yard.
The
BMC assailed that common judgment of the learned Chief Judge, as granting excessive
694 compensation, by film- appeals in the High Court of Judicature at Bombay. A Division Bench of the High
Court, which heard those appeals, by its common judgment dated the 5th, the 6th
and the 7th August,
1974, while allowing
one of them partly by reducing the compensation in some measure, dismissed the
rest. According to the Chief Judge of the Court of Small Causes and the
Division Bench of the High Court, what was payable by way of compensation under
sub- section (1) of Section 301 of the BMC Act to the owners, for the portions
of their lands acquired under either Section 298 or Section 299 thereof, was
the market value of such portions and, therefore, the market value obtainable
by the owners for their respective entire lands had to be apportioned between
the unacquired portion of the land and the acquired portion of the land and it
was that much of the market value apportionable to acquired land, which was
liable to be paid to the owner as compensation for his acquired land.
Consequently, both the Chief Judge of Court of Small Causes and the Division
Bench of the High Court determined the market value of the entire land of
respondent/s concerned in each appeal, of which his/their acquired portion of
land formed part and apportioned to such acquired portion of land out of the
market value of the entire land so determined, according to the ratio of the
area worked Out on square yard basis. The market value of the acquired portion
of land so determined was, in fact, treated as the loss sustained by the respondent-owner
concerned and tile Commissioner was directed to pay the same to him/them as
compensation required to be paid under sub- section (1) of Section 301 of the
BMC Act for his/their acquired land. For the unpaid amount of such
compensation, interest at 6% per annum was also ordered to be paid from the
date of taking possession of the land till its actual payment. The present
appeals by special leave are filed on behalf of the BMC, against the said
judgments of both the Court of Small Causes and the High Court, assailing the
amounts of compensation determined for the acquired portions of lands of the
respondent/s, on the basis of the principle of their market value, purporting
to be under sub-section (1) of Section 301 of the BMC Act.
3. The
learned counsel appearing for the BMC the common appellant in all the present
appeals, contended that the Court of Small Causes, as well as, the High Court
had gone wrong in determining the compensation payable to the owner under
Sub-section (1) of Section 301 of the BMC Act for his land acquired under
Sections 298 and 299 thereof, was its market value, when such compensation to
be determined Could not have been anything other than the loss which that owner
had to sustain as a consequence of such acquisition and the expense which that
owner had to incur as a consequence of such acquisition. He also contended that
the method of determining the amount of market value of the whole land of the
respondent in each appeal including that which was acquired and apportioning that
market value to the portion of the acquired land, was indeed, not a method
which the Court of Small Causes and the High Court, could have adopted for
determining- the compensation payable under sub-section (1) of Section 301 of
the BMC Act. On the other hand, learned counsel who appeared for contesting
respondent/s 695 in the present appeals, sought to support the judgments of the
Court of Small Causes and the High Court by which it has been held that the
compensation payable to the owners for their portions of lands acquired by the
BMC under Sections 298 and 299 thereof cannot be anything but their market
value, and when such market value was given as compensation to owners for their
acquired lands, there was no warrant for interfering with the same, by this
Court. They also sought to obtain support for their contention from the
decision of Privy Council in Municipal Council of Colombo v. Kuna Mana Navanna Suna
Pana Letchiman Chettiar1.
4.The
questions which we have formulated at the outset as those requiring our
consideration and answers, in deciding the present appeals, since take within
their fold the aforestated rival contentions of learned counsel for the
contesting parties, they could now be considered and answered, in their serial
order.
Re :
Question (i) 5.Does the provision in sub-section (1) of Section 301 of the BMC
Act specify a principle of determination of compensation payable to the owners
of buildings or lands acquired for public streets under Sections 298 and 299
thereof, is the question.
6.As
the answer to the said question has to necessarily depend on the content of
sub-section (1) of Section 301 of the BMC Act, it could be reproduced to
understand its content thus:
"301.
(1) Compensation shall be paid by the Commissioner to the owner of any building
or land acquired for a public street under Section 298 or 299, for any loss
which such owner may sustain in consequence of his building or land being so
acquired and for any expense incurred by such owner in consequence of the order
made by the Commissioner under either of the said sections; provided that any
increase or decrease in the value of the remainder of the property of which the
building or land so acquired formed part likely to accrue from the setback to
the regular line of the street shall be taken into consideration and allowed
for in determining the amount of such compensation." The said sub-section
as could be seen from its content while provides for payment of compensation to
the owner for his building or land acquired under Section 298 or Section 299 of
the BMC Act, requires that such compensation could comprise of, loss which such
owner may sustain and expense which such owner may incur, as a consequence of
acquisition of his building or land. In this context, if it is noted, that what
is acquired under Section 298 of the BMC Act is the portion of land within the
regular line of public street, that is, the portion of land occupied by a
building fallen down or burnt down or taken down, and that what is acquired
under Section 299 of the BMC Act is the portion of land occupied by a building
external to the building abutting the public street or a verandah, a step, a
platform or other structure within the regular line of public street, the same
furnishes the 1 (1947) AC 188 : AIR 1947 PC 118:51 CWN 504 696 reason as to why
the principle of compensation required to be adopted under sub-section (1) of
Section 301 of the BMC Act, for payment of compensation for such acquisition is
confined to merely the loss sustained and the expense incurred, as a
consequence of such acquisition. Thus, when sub-section (1) of Section 301 of
the BMC Act requires the loss sustained by the owner as a consequence of
acquisition and the expense incurred by the owner as a consequence of
acquisition, to be made good to such owner by way of compensation, what is
found in that sub-section cannot be anything other than the principle of
determination of compensation which is deliberately or wantonly specified
therein, having regard to the vulnerability of a portion of land or a portion
of building being acquired for the public street. This situation, makes us take
the view that sub- section (1) of Section 301 of the BMC Act specifies the
appropriate principle of determination of compensation for a building or a land
acquired either under Section 298 or Section 299 thereof. Our view that
sub-section (1) of Section 301 of the BMC Act specifies the principle of
determination of compensation for building or land acquired under Section 298
or Section 299 thereof, gives no room for doubting, since it receives,
fortification from a Constitution Bench decision of this Court in Municipal Corpn.
of the City of Ahmedabad v. State of Gujarat city2, wherein dealing with the
content of the provision in sub- section (1) of Section 216 of the Bombay
Municipal Corporation Act 1949 which is exactly similar to the provision in
sub-section (1) of Section 301 of the BMC Act, it has been held thus: (SCC pp.
812, 813, para 15) "Since full indemnification in accordance with judicial
norms is the goal set by the Act, it Is implicit in such a provision that the
rules for determination of compensation shall be appropriate to the property
acquired and such as will achieve the goal of full indemnity against loss. In
other words, the Act provides for compensation to be determined in accordance
with judicial principles by the employment of appropriate methods of valuation
so that the person who is deprived of property is fully indemnified against the
loss. This, by itself in our opinion, is a specification of a priniciple for
the determination of compensation."(emphasis supplied)
7.
Hence, we answer the question in the affirmative and to the effect that
sub-section (1) of Section 301 of the BMC Act, itself, specifies the principle
of determination of compensation payable for land or building acquired under
either of the Section 298 or Section 299 thereof.
Re:
Question (ii) 8.Principle of determination of compensation payable to owners
for the portions of their building or lands acquired either under Section 298
or Section 299 of tile BMC Act, specified under sub-section (1) of Section 301
of the BMC Act, as could be seen therefrom requires that such compensation
shall be confined only to the loss Sustained or the expenses incurred, by the
owner, as a consequence of acquisition of his building or land lying within 2
(1972) 1 SCC 802: (1973) 1 SCR 1 697 the regular line of the public street. If
that be so, question of determining the compensation under sub-section (1) of
Section 301 of the BMC Act for acquisition of lands lying within the regular
line of public street under either Section 298 or Section 299 thereof, on the
basis of their market value, cannot arise. Market value could, undoubtedly, be
a principle on the basis of which compensation may be required to be determined
under certain statutes, for lands acquired thereunder. For instance, the Land
Acquisition Act, 1894 provides for payment of compensation for the land
acquired thereunder on the basis of market value, that is, the price which a
willing vendor might reasonably obtain from a willing purchaser for such land.
It may be recalled in this context that in fact sub- section (1) of Section 301
of the BMC Act, before its amendment by Bombay Act 1 of 1925, also required
payment of compensation for lands acquired under Sections 298 and 299 of the
BMC Act, on the basis of market value, in that, it read:
"301.
(1) Compensation shall be paid by the Commissioner to the owner of any building
or land acquired for a public street under Section 298 or 299, for the value of
the said land and for any loss, damage or expense sustained by such owner in
consequence of the order made by the Commissioner under either of the said
sections." 9.As seen from the said unamended sub-section, compensation was
payable to the owner for his land or building acquired for a public street
under either of the Sections 298 or 299 of the BMC Act, included the value of
the land. But, sub-section (1) of Section 301 of the BMC Act as it stands
amended, even though specifies the principle of compensation payable for land
acquired under either of the Sections 298 or 299 of the BMC Act, does not
require the payment of compensation to be paid thereunder, to include the value
of land. The amended sub-section, therefore, makes it clear that the payment of
value, that is, market value, as compensation for the acquired land is, in
fact, excluded thereunder. If that be so, to hold that the market value of the
acquired land is payable as compensation to the owner under sub-section (1) of
Section 301 of the BMC Act for the acquired lands envisaged there under, is to
order something to be done which the Legislature required, not to be done.
10.In deed
the decision of the Privy Council in Municipal Council of Colombo v. Kuna Mana Navanna
Suna Pana Letchiman Chettiar1, relied upon by counsel for respondent/s to
support the view of Court of Small Causes and the Division Bench of the High
Court that, that compensation payable under sub-section (1) of Section 301 of
the BMC Act, is the market value of the land acquired under either of the
Section 298 or Section 299, goes against such view. The Privy Council in that
case was concerned with a provision which provided for payment of compensation
for a land acquired for a public street according to the value of the land as
required by the statute - the Land Acquisition Ordinance. When the judgment of
Supreme Court of Colombo appealed against, indicated that the compensation was
ordered to be paid according to the loss sustained by the owner of the land
acquired 698 for the public street, instead of ordering compensation, according
to the market value of the acquired land, the Privy Council observed thus:
"The
Supreme Court in valuing the acquired strip as part of the rest of the land of
the respondent which is not either actually or nationally in the market, have
not ascertained the market value of the acquired strip; they have attempted to
ascertain the loss which the respondent has sustained by reason of the
acquisition of the acquired strip. That method finds no warrant in the
Ordinance." 11.Thus, the above decision of the Privy Council, if anything,
makes it clear that what is to be paid by way of compensation for a land
acquired under a statute is what is required to be paid thereunder, by way of
compensation for the acquired land and not payment of something by way of
compensation which is not envisaged under the statute.
12.Hence,
our answer to the question is that the principle specified in sub-section (1)
of Section 301 of the BMC Act for determination of compensation payable to the
owners for their lands or buildings acquired under either of the Section 298 or
Section 299 thereof, does not warrant determination of compensation according
to market value of such building or land.
Re :
Question (iii) 13.Method adoptable for determining the amount of compensation
payable to the owners under sub-section (1) of Section 301 of the BMC Act for
land or building acquired under either Section 298 or Section 299 thereof,
arises for consideration here. The compensation payable under sub- section (1)
of Section 301 of the BMC Act to the owner of the acquired land or building can
only be the loss sustained and the expense incurred by the owner because of
such acquisition and not the market value of the acquired building or land, as
pointed out by us hereinbefore while considering Question (ii). Therefore,
compensation payable under the said sub-section should be the amount which is
required to be made good to the owner towards reimbursement of his loss
sustained, if any, on account of acquisition and his expense incurred, if any,
on account of acquisition.
Sometimes
there may not be any loss sustained and sometimes there may not be any expense
incurred. At other times, there may be both loss sustained and expense incurred
by the owner. Therefore, depending upon a given situation, what should be the
compensation payable under that sub-section, has to be determined. Moreover, as
is required by the proviso to the said subsection "any increase or
decrease in the value of the remainder of the property of which the building or
land so acquired formed part, likely to accrue from the setback to the regular
line of the street shall be taken into consideration and allowed for", in
determining the amount of such compensation.
14.If
such amount, is the compensation payable to the owner under the said
sub-section, what method should be adopted for determining such amount of
compensation is the real question, which needs our answer.
699
15.The method which in our considered opinion, is the most appropriate for
adoption in determining the compensation payable under sub-section (1) of
Section 301 of the BMC Act to the owner for his acquired property, having
regard to the determinants or indicia specified in that sub-section, is that which
should necessarily involve the following exercise:
(1)Of
determining the market value of the whole property or land of the owner before
a portion of that property or land was acquired under either Section 298 or
Section 299 of the BMC Act.
(2)Of
determining the market value of the remainder property left with the owner
after a portion of it got acquired under either Section 298 or Section 299 of
the BMC Act.
That
market value of the remainder property must be that determined taking into
consideration the increased value accrued to it or decreased value suffered by
it, as a result of improved street formed by acquisition of its portion and
acquisition of similar portions of properties of others.
Whenever
the remainder property gets the benefit of improved street formed with acquired
portions of lands, it can be presumed in the absence of contrary evidence that
there is increase in its value, although the quantum of increase ought to
depend on extent or strips of lands acquired for the improvement of the street
and importance gained by it.
(3)If
the amount of the market value of the property, as determined under item (2)
falls short of the amount of market value of the property as determined in item
(1), it is that amount of the shortfall, which could be regarded as the loss to
the owner for his acquired portion of the property, the principal component of
compensation payable under subsection (1) of Section 301 of the BMC Act to the
owner for his acquired portion of property or land.
(4)Expenses
incurred by the owner, if any, on account of acquisition of a portion of his
property if not already taken into consideration in determining the market
value of the remainder property under item (2), then that amount of expenses
incurred by the owner should be regarded as the other component of compensation
payable to him under subsection (1) of Section 301 of the BMC Act.
(5)
The amount of loss in item (3) and the amount of expense in item (4) together
constitute the total compensation payable under sub-section (1) of Section 301
of the BMC Act to the owner for his acquired property or land.
16.How
by adoption of the said method the amount of compensation payable under
sub-section (1) of Section 301 of the BMC Act is determinable could be
illustrated with reference to a hypothetical case of acquisition of 20 sq. mts.
of land out of 100 sq. mts. of land whereby the owner is allowed to retain the
remainder land of 80 sq. mts. of land.
700
17.Amount
of market value to be fetched for 100 sq. mts. of land before acquisition of
its portion, is found to be, say Rs 180 per sq. mt. Such market value would be
100 times Rs 180, that is, Rs 18,000.00. Amount of market value to be fetched
for 80 sq. mts. of remainder land, is found to be, say of Rs 200 per sq. mt.,
such market value would be 80 times Rs 200, that is, Rs 16,000.00. The amount
of market value of the entire 100 sq. mts. of land before a portion of it was
acquired, minus the amount of market value of the remainder land would furnish
the amount of loss sustained by the owner, that is, Rs 18,000.00 minus Rs
16,000.00 = Rs 2000.00. The loss so sustained by the owner as a consequence of
acquisition of a portion of his land and the amount of expenses, say Rs
1000.00, incurred by him because of the acquisition, (such expenses if not
already included in determining the market value of the remainder land of 80
sq.
mts),
together, would be the compensation. That is Rs 2000.00 + Rs 1000.00 = Rs
3000.00. Therefore, compensation payable under sub-section (1) of Section 301
of the BMC Act to the owner for his acquired land, would be Rs 3000.00.
18.Hence,
our answer to the question is that the method of determination of compensation
payable under Section 301(1) of the BMC Act to the owner for his acquired
property or land under either Section 298 or Section 299 thereof, requires the
assessment of the loss sustained by the owner as a consequence of acquisition,
such loss being the amount of market value of the property or land as a whole,
as stood before its acquisition, minus the amount of market value of the
remainder property or land and assessment of the expenses incurred by the owner
as a consequence of acquisition. The said method has commended itself for our
acceptance, since it accords with the principle specified in sub-section (1) of
Section 301 of the BMC Act for determination of compensation payable to the
owner of a property or land acquired under either Section 298 or Section 299
thereof. However, what method should be adopted for determining the market
value of the whole property of the owner or remainder property of the owner,
shall, as it ought to be, depend on the nature of property concerned.
19.There
is, however, another question which requires our consideration and answer. That
question concerns the payment of interest on the amount of compensation payable
under sub-section (1) of Section 301 of the BMC Act to the owner for his
acquired property referred to therein.
20.Sub-section
(1) of Section 301 of the BMC Act as it stands does not provide for payment of
interest on the amount of compensation payable to the owner for his properties
acquired either under Section 298 or Section 299 of the BMC Act. There is no
other provision also found in the BMC Act providing for payment of interest on
such amount of compensation. The question is, if the statute which provides for
acquisition of property and payment of compensation therefor, does not provide
for payment of interest on such compensation, does any interest become payable.
701
21.It
is now settled by three-Judge Bench decision of this Court in Union of India v.
Hari Krishan Khosla3, that no interest is payable on the compensation payable
under the Requisitioning and Acquisition of Immovable Property Act, since there
is no provision made in that regard in that Act.
The
ratio of the said decision since forbids payment of interest on the amount of
compensation payable under sub- section (1) of Section 301 of the BMC Act, we
are constrained to hold that no liability arises for payment of interest on
such compensation.
22.Now
coming to the facts of the cases which have led to the filing of the present
appeals by the BMC, what has been done in the judgments of the Chief Judge of
the Court of Small Causes and the High Court appealed against, is to determine
the amount of market value, as such, of the acquired portions of the lands of
respondent/s in the appeals and order payment of such amounts of market value
as compensation along with 6 per cent interest per annum from the date of
taking possession of the lands till the date of its payment.
23.In
answering the various questions considered by us hereinbefore, we have held
that the compensation payable under sub-section (1) of Section 301 of the BMC
Act for the properties acquired under either Section 298 or Section 299 thereof
cannot be determined on the basis of their market value, as it would go against
the principle of determination of compensation specified in that sub-section
and that no interest shall be payable on such amount of compensation for
delayed payment, as the same is not made payable by any provision in the BMC
Act. Hence, the judgment of the Chief Judge of Small Cause Court, as well as,
the judgment of the High Court, appealed against in these appeals, directing
payment of compensation for the acquired portions of lands, according to their
actual market value along with interest thereon @ 6 per cent per annum, become
unsustainable and are liable to be set aside by allowing the present appeals.
Then,
do the cases under present appeals, require to be remanded to the Chief Judge
of the Court of Small Causes, Bombay for
their disposal in the light of this judgment, is the question, which calls for
our consideration.
24.It
was submitted by learned counsel for the respondent/s, that we should instead
of remanding the cases under appeals to the Chief Judge of the Court of Small
Causes at Bombay for fresh disposal in accordance with this judgment, as was
suggested by us, the amounts of compensation awarded to the respondent/s in the
appeals having regard to the fact that a period of 20 years has elapsed from
the year in which the acquisitions concerned were made, and the total amounts
awarded, that is, about 11 lakhs, not being a very big amount from the point of
the BMC, should be allowed to stand undisturbed. We have given our anxious
consideration to the submission. What has been now done by the Court of Small
Causes as well as the High Court is to determine the market value of the whole
of the land 3 1993 Supp (2) SCC 149 702 of each of the respondent/s in the appeals,
as stood before Its portion was acquired, on square yard basis and award out of
that amount of compensation, the amount of market value apportionable to the
acquired portion of the land, according to its area on square yard basis. If
the material, as to what was the total extent of land of the respondent/s in
each of the appeals, before a portion of it was acquired, was made available to
us, we would have ourselves determined the compensation, according to the
method which is already suggested by us for adoption. When such material, is
unavailable, we have no option but to remand the cases for disposal by the
Chief Judge of the Court of Small Causes at Bombay in the manner which we shall presently indicate.
25.The
market value of the remainder land (land left out after acquisition) of
respondent/s in each of the appeals, will have naturally increased, due to the
advantage got by it on account of improved road made by acquisition of their
several parcels of lands. In the absence of evidence of such increased value,
in our view, the facts and circumstances of tile present cases warrant granting
of an increase in the market value of the remainder land of each of the
respondent/s by 10 per cent.
26.Therefore,
the Chief Judge, Court of Small Causes must firstly, find out thetotal market
value of the remainder land of each of the respondent/s in the appeals,
according to the rate per square yard already fixed for it by the High Court
and secondly add to such market value 10 per cent increase adverted to. Then,
the Chief Judge must also find out, separately, the amount of market value of
the whole land of respective respondent/s in each of the appeals again finding
out such market value according to the rate per square yard already fixed by
the High Court.
27.The
amount of market value of the whole land of the respondent/s in each of the
appeals arrived at, as stated, minus the amount of market value of the
remainder land of respective respondent/s arrived at, as stated, shall be
treated as the loss sustained by each of them, as a consequence of acquisition
of their respective portions of land. Such amount of loss, if any, shall alone
be the amount, to be ordered to be paid to the respondent/s concerned, as
compensation payable to him/them, under sub- section (1) of Section 301 of the
BMC Act, inasmuch as there is no claim or evidence in the cases as to the
expenses incurred, by him/them, as a consequence of acquisition, which would
have otherwise become payable as a component of compensation under that sub-section.
That no interest is payable on the amount of compensation to be ordered to be
paid, shall, however, be noted.
28.In
the result, we allow these appeals, set aside the judgments of tile Chief Judge
of Small Cause Court at Bombay and of the High Court of Bombay, appealed
against, and remit the cases to the Court of the Chief Judge of Small Cause
Court at Bombay for deciding them according to the directions contained and
indications given in this judgment, after hearing parties or their counsel.
However, in the circumstances of these appeals, we make no order as to costs.
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