# [1973] 3 S.C.R. 39

- **Citation:** [1973] 3 S.C.R. 39
- **Court:** Supreme Court of India
- **Decided:** 1972-12-11
- **Case number:** Civil Appeal No. 2139 of 1968
- **Bench:** M. Sikri, J.M. Shelat, A. N. Ray, D.-0. Palekar, M. H. Beg, S. N. Dwivedi, I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1973-3-s-c-r-39-5821
- **Pages:** 13

## Headnote

.
Nagpur Improvement Trust Act, 1936 and Land Requisition Act 1894
-Different terms of compensation for land acquired under
the
two
Acts-Where <;;overnment could acquire land under one Act or the other
at its choice there was discrimination violativ~ of Art. 14 of Constitu_tion-There can· be ho valid classificction as to payment of compensation
with reference to purpose for which land is acquired or of' Act μnder
which it is acquired.
·
The petitioner was tenant of some fields in a village in Patwari Circle
10, Nagpur. He had applied to the Agricultural Lands Tribunal under
a local Act for fixing the purchase price of the said fields.
The land in
question was however acquired under the Nagpur Improvement Trust Act,
. 1936.
Dissatisfied with the compensation awarded the petitioner filed a
petition under Arts. 226 and 227 of the Constitution. In this petition
the validity of the Improvement Act was challenged on various grounds,
one of the grounds being that the Improvement Act was in violation of
Art. 14 of the Constitution inasmuch as it empowered the acquisition of
lands at prices lower than those which would have been payable if they
had been ucquired under the Land Acquisition Act 1894 •. The High
Cou'rt allowed the petition and set aside the award. Appeal in this Court
against the High Court's judgment was filed with certificate.
Dismissing the appeal.
HELD :
The effect of the modifications made by Improvement Act
in the Land Acquisition Act in two respects is tremendous.
First the
O\\'-Oer where land is acquired under the Improvement Act is paid com ...
pensation not according to the market vaJue of the land but the market
value according to the use to which the land was put at the date with .
reference to which the market value is to be determined in that clause.
In other words, if the land is being used for agricultural purposes even
though it has a potential value as a building site, ·the potential value is
to be ignored.
The second respect in which the owner suffers if the land
is acauired under the Imorovement Act is that he does not ~et a sotatium
of 15% which he would have got if the land had been acquired under the
Land Acquisition Act.
It is true that he bas some minor advantage but
they hz.ve no comparison in value to the loss suffered by virtue of the
market value being de!ermined according to the use to which the land
was being put or the loss of 15% of the market value of the fand.
[146DJ
It is quite clear especially in view of s. 17A as inserted in the Land
Acquisition Act bv para 6 of the Schedule to the Improvement Act, that
the acquisition will be by the Government and it.is only on pavment of
the cost of acquisition bv the Government that the land-vest in the Trust. ·
It is true that the acquisition is for the Tru-st >and may be at its instance9
but nevertheless the acquisition is by the Government. If this is so, it
enables the State Government to discriminate between one owner equally
situated from another owner. [45G]
40
SUPREME COURT REPORTS
(1973] 3 S.C.R.
It is now well-settled that the State can make a reasonable classification
f?r the .purpose o_f the legisfation provided it is based on intelligible differen·
tia hav.mg. a r~tiona! ~elation with the object sought to be achieved by
the legislation in question.
In this connection it must be borne in mind
that the object itself should be lawful. [47D]
The legislature cannot lay down different princip~s of compensation
for lands acquired say for a hospital or a school or a Government build·
ing. All three objects are public purposes and so far as the owner is
concerned it docs not matter to him whether it is one public purpose or
the other. Art. 14 confers an individual right and in order to justify a
classification there should be something which justifies a different treatment to this individual right. Ordinarily a classification based on the
public purpose is not permissible under Art. 14 for the purpose of deter·
mining compensation. [48A]
Simil

## Text

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NAGPUR IMPROVEMENT TRUST AND ANOTHER
v .
VITHAL RAO AND OTHERS
December 11, 1972
[S, M. SIKRI, C. J., J.M. SHELAT, A. N. RAY, D.-0. PALEKAR,
M. H. BEG, S. N. DWIVEDI AND I. D. DUA, JJ.J
.
Nagpur Improvement Trust Act, 1936 and Land Requisition Act 1894
-Different terms of compensation for land acquired under
the
two
Acts-Where <;;overnment could acquire land under one Act or the other
at its choice there was discrimination violativ~ of Art. 14 of Constitu_tion-There can· be ho valid classificction as to payment of compensation
with reference to purpose for which land is acquired or of' Act μnder
which it is acquired.
·
The petitioner was tenant of some fields in a village in Patwari Circle
10, Nagpur. He had applied to the Agricultural Lands Tribunal under
a local Act for fixing the purchase price of the said fields.
The land in
question was however acquired under the Nagpur Improvement Trust Act,
. 1936.
Dissatisfied with the compensation awarded the petitioner filed a
petition under Arts. 226 and 227 of the Constitution. In this petition
the validity of the Improvement Act was challenged on various grounds,
one of the grounds being that the Improvement Act was in violation of
Art. 14 of the Constitution inasmuch as it empowered the acquisition of
lands at prices lower than those which would have been payable if they
had been ucquired under the Land Acquisition Act 1894 •. The High
Cou'rt allowed the petition and set aside the award. Appeal in this Court
against the High Court's judgment was filed with certificate.
Dismissing the appeal.
HELD :
The effect of the modifications made by Improvement Act
in the Land Acquisition Act in two respects is tremendous.
First the
O\\'-Oer where land is acquired under the Improvement Act is paid com ...
pensation not according to the market vaJue of the land but the market
value according to the use to which the land was put at the date with .
reference to which the market value is to be determined in that clause.
In other words, if the land is being used for agricultural purposes even
though it has a potential value as a building site, ·the potential value is
to be ignored.
The second respect in which the owner suffers if the land
is acauired under the Imorovement Act is that he does not ~et a sotatium
of 15% which he would have got if the land had been acquired under the
Land Acquisition Act.
It is true that he bas some minor advantage but
they hz.ve no comparison in value to the loss suffered by virtue of the
market value being de!ermined according to the use to which the land
was being put or the loss of 15% of the market value of the fand.
[146DJ
It is quite clear especially in view of s. 17A as inserted in the Land
Acquisition Act bv para 6 of the Schedule to the Improvement Act, that
the acquisition will be by the Government and it.is only on pavment of
the cost of acquisition bv the Government that the land-vest in the Trust. ·
It is true that the acquisition is for the Tru-st >and may be at its instance9
but nevertheless the acquisition is by the Government. If this is so, it
enables the State Government to discriminate between one owner equally
situated from another owner. [45G]
40
SUPREME COURT REPORTS
(1973] 3 S.C.R.
It is now well-settled that the State can make a reasonable classification
f?r the .purpose o_f the legisfation provided it is based on intelligible differen·
tia hav.mg. a r~tiona! ~elation with the object sought to be achieved by
the legislation in question.
In this connection it must be borne in mind
that the object itself should be lawful. [47D]
The legislature cannot lay down different princip~s of compensation
for lands acquired say for a hospital or a school or a Government build·
ing. All three objects are public purposes and so far as the owner is
concerned it docs not matter to him whether it is one public purpose or
the other. Art. 14 confers an individual right and in order to justify a
classification there should be something which justifies a different treatment to this individual right. Ordinarily a classification based on the
public purpose is not permissible under Art. 14 for the purpose of deter·
mining compensation. [48A]
Similarly different principles cannot be laid if the land is acquired for
or by an Improvement Trust or Municipal C\Jrporation or Government
because so far as the owner is concerned it does not matt..°I' to him
whether the land is acquired by one authority or the other.
[48D]
It is equally immaterial whether it is one Acquisition Act or aoother
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Acquisition Act under which the land is acquired; if the existence of two
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Acts enables the State to give one owner different treatment from another
equally situated the owner who is discriminated against can claim the
protectiotn of Art. 14. [48E)
To accede to the contention of the appellant and the intt:rvening states
would be destructive of the protection afforded by Art. 14 of the Consti·
tution. The States would only have to constitute separate acquiring bodii:s
for each city, or Division or indeed to achieve one special public purpose
E
and lay down diff.erent principles of compensation.
[49D]
Nandeshwar Prasad v. U.P. Govt., A.LR. 1964 S.C. 1217, P. Vairavelu Mudaliar v. Special Deputy Collector, Madras, (1965) 1 S.C.R. 614;
619 and Balammal & Ors. v. State of Madras, [1969)
1 S.C.R.
90,
referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2139 of
1968.
Appeal by certificate from the judgment and order dated July
16, 17, 1968 of the Bombay High Court in S.C.A. No. 504 of
1967.
V. M. Tarkunde, Y. R. Dandige and A. G. Ratnaparkhi, for
appellant No. 1.
S. V. Natu, K. K. Khamberker, P. Kesava Pillai and M. R. K.
Pillai, for respondent No. 1.
B. D. Sharma, for respondent No. 2.
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Y. S. Dharmadhjkari, Advocate-General, Madhya Pradesh and
8
I. N. Shroff, for Advocate-General Madhya Pradesh {Intervener).
0, P. Rana, for Advocate-General U.P. (Intervener).
NAGPUR IMPROVEMENT TRUST V. V, RAO (Sikri, C.J.)
~ l
A
D. Goburdhan, for Advocate-General, Bihar (Intervener).
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A. V. Rangam and A. Subhashini, for Advocate-General,
Tamil Nadu (Intervener).
K. M. Nair, for Advocate-General, Kerala (Intervener).
0. N. Tikku and Vineet Kumar, for Advocate-General, J. & K.
(Intervener).
The Jud&ment of the Court was delivered by
SIKRI, C.J. This appeal by certificate of fitness granted °!?Y
the High Court of Judicature at
Bom~ay, Nag~ur ~ench\ . 1s
directed against the judgment of the High Court m Wnt Petltion
No. 504 of 1967 filed under arts. 226 and 227 of the Constitution,
by Vithal Rao, respondent before us, hereinafter referrd to as the
petitioner.
The petitioner was a tenant of some fields in village Binakhi
in Petwari Circle No. 10, Nagpur.
He had applied to the Agricultural Lands Tribunal under a local act for fixing the purchase
price of the said fields.
On May 3, 1962, a notice was issued
under s. 39 of the Nagpur Improvement Trust Act, 1936-hereinafter referred to as the Improvement Act.
Section 39 of this
Act deals with the preparation, publication and transmission of
notice as to improvement schemes. and supply of documents to
applicants.
On November 17, 1961 the Improvement Trust applied for
sanction of its scheme by the Government, and on January 9,
1965, the Government sanctioned the scheme under s. 45 of the
Improvement Act.
On February 28, · 1966 proceedings were
started before the Land Acquisition Officer and on June 12, 1967
an award was passed by the Land Acquisition Officer fixing the
compensation at Rs. 45,910/- for 44.19 acres of land acquired.
On June 15, 1967 the petitioner filed the writ petition under
arts. 226 and 227 of the Constitution. In this petition the validity
of the Improvement Act was challenged on various grounds, one
of the grounds being that the Improvement Act was in violation
of Art. 14 of the Constitution inasmuch as it empowered the acquisition of lands at prices lower than those which would have been
payable if they had been acquired under the Land Acquisition
Act, 1894.
The High Court held that as the acquisition is by the State in
all cases where the property is required to be acquired for the
P~s
.of. a scheme !I°l!Illed ~y the Trust and such beinit the
po&1tlon, 1t IS not penruss1ble without v10Iating the guarantee under
Article 14 of the Constitution for the State to acquire any property
42
SUPREME COURT REPORTS
(1973) 3 S.C.R.
under the provisions of the Land Acquisition Act as amended by
the Improvement Trust Act in so far as they relate to the basis of
determination and payment of compensation. It must, therefore,
be held that the provisions of paragraphs 10(2) and 10(3) in so
far as they add a new Clause ( 3) (a) to Section 23 and a proviso
to Sub-section (2) of Section 23 of the Land Acquisition Act are
ultra vires as violating the guarantee of Article 14 of the Constitution.
In the result the petition was allowed, the award set aside,
and the matter was remanded to the Land Acquisition Officer
for determination of compensation aceording to the law and in
the light of the decision by the High Court.
As the case was important, the High Court granted a certificate under art. 132(1) and art. !31(1)(c) of the Constitution.
Before we deal with the contentions of the learned counsel for
the appellant we· may briefly examine the relevant provisions of
the Improvemell'I Act. This Act came into force on December 25,
1936. It was passed before the Government of India Act, 1935
came into force. The Preamble states :
"Whereas it is expedient to make provision for the in1provement and expansion of the Town of Nagpur in the
manner hereinafter provided .... "
Section 3 of the Act creates the Nagpur Improvement Trust as a
body corporate. Chapter IV of the Act deals with the Improvement schemes. Section 26 provides for the matters which may be
included in an improvement scheme.
One of the matters is "the
acquisition by purchase, exchange, or otherwise of any property
necessary for or affected by the execution of the scheme." Section
27 describes various types of inlprovement schemes.
They are
(a) a general improvement scheme, (b) a re-building scheme; (c)
a re-housing scheme; ( d) a street scheme; ( e) a deferred street
scheme (f) a development scheme; (g) a housing accommodation
scheme; (h) a future expansion or improvement scheme and (i)
a drainage or drainage including sewage disposal scheme.
The scheme in pursuance ol' which the lands in the present case
were acquired was a housing accommodation scheme.
Section
39, as stated above, provides for the issue of a notice after an
improvement scheme has been framed.
Under s. 41, the Trust
is obliged to serve a notice of the proposed acquisition of land on
certain persons.
Section 43 enables the Improvement Trust to
abandon an improvement scheme, ·after considering any objection,
representation or statement of dissent received and after hearing
all persons, or to apply to the State Government for sanction to
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NAGPUR IMPROVEMENT TRUST V. V. RAO (Sikri, C.J.)
43
the scheme with such modifications, if any, as the Trust may consider necessary. The decision would be that of the Improvement
Trust.
Section 44 gives wide powers to the Government to sanction
with or without modification or to refuse a sanction or to re<tum for
consideration any improvement scheme submitted to it under s. 43.
Under s. 45 the State Government is obliged to notify the sanction
of an improvement scheme. Section 46 enables the Trust to alter
an improvement scheme before it has been completed, subject to
certain conditions.
Chapter V deals with the powers and duties of the Trust
where a scheme has been sanctioned. Chapter VI deals with
acquisition and disposal of land. Under s. 58 the Ti:ust is enabled
to acquire by purchase, lease or exchange any land within the
area comprised in a sanctioned scheme.
Section 59 deals with
compulsory acquisition and may be set out in full : It provides :
"59. The Trust may, with the previous sanction of
the State Government, acquire land under the provisions
of the Land Acquisition Act, 1894, as modified by the
provisions <:Jf this Act, for carrying out any of the purposes of th ts Act."
Section 60 says that "a Tribunal shall be constituted, as provided
in section 62, for the purpose of performing the functions of the
Court in reference to the acquisition of land for t.11e Trust, under
the Land Acquisition Act, 1894." Section 61 modifies the Land'
Acquisition Act in the following words :
"For the purpose of acquiring land under the Land AcquisitioD'
Act, 1894, for the Trust-
( a) the Tribunal shall except for the purposes of section ( 54) of that Act, be deemed to lie the Court,
and the President of the Tribunal shall be deemed to be the Judge thereunder;
(b) the Act shall be subject to the. further modifications as indicated in the Schedule;
( c) the President of the Tribunal may summon witnesses and enforce their attendance and may
compel the production o4' documents, )ly the
same means, and so far as may be, in the same
manner, as is provided in case of a Civil Court
under the Code of Civil Procedure, 1908; and
( d) the award of the Tribunal shall be deemed to be
the award of the Court under the Land Acquisition Act, 1894, and shal! be final."
44
SUPREME COURT REPORTS
(1973] 3 S.C.R.
We need not deal with the provisions dealing with the constitution
·of the Tribunal, remuneration of its members, etc.
Section 68 enables an owner to apply to the Trust requesting
that the acquisition of land not required for the purposes of a
scheme may be abandoned on his executing an agreement to
observe conditions specified by the Trust in respect of the development of the property and to pay a charge to be calculated in
accordance with subi-section (2) of section 69 of the Act. The
Trust can abandon an acquisition without requiring sanction of the
Govermnent.
The Schedule modifies the Land Acquisition Act in various
respects. The relevant modifications are these :
1. After clause (e) of section
3,
the
following
clause shall be deemed to be inserted, namely,-
" ( ee) the expression 'local authority' includes the
'.{'rust constituted under the Nagpur improvement Trust
Act, 1936."
2. ( 1) The first publication of a notice of an improvement scheme under section 39 of the Nagpur Improvement Trust Act, 1936, shall be substituted for, and
have the same effect as publication in the official Gazette, and in the locality of, a notification
under subsection ( 1) of section 4, except where a declaration
under section 4 or section 6 has prevkmsly been made
and is still in force.
(2) Subject to the provisions of clauses 10 and 11
of this Schedule, the issue of a notice under sub-section
( 4) of section 32 o.f the Nagpur Improvement Trust Act,
1936, in the case of land acquired under that sub-section,
and in any other case the publication of a notification
under section 45 of the Nagpur Improvement Trust Act,
1936, shall be substituted for, and have the same effect
as a declaration by the State Government under section
6, unless a declaration under the last mentioned section
has previously been made and is in force.
3. The full-stop at the end of section 11 shall be deemed to
be changed to a semi-colon, and the following shall be deemed to
be added, namely :-
"and
(iv) the costs which, in his opinion, should be allow-
-ed to any person who is found to be entitled to compensation and who is not entitled to receive the additional
'8UD1 of fifteen per centum mentioned in sub-section ( 2)
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NAGPUR IMPROVEMENT TRUST v. V. RAO (Sikri, C.J.)
4S
of section 23 as having been actually and reasonably incurred by such person in preparing his claim and putting
his case before the Collector.
The. Collector may disallow wholly or in part costs
incurred by any person, if he considers that the claim
mad-, by such person for compensation is extravagant."
4 ......... : : ............. .
5. ( 1) In sub-section (3) of section 17 after the figure "24''"
the words, figures, and letter "or section 24-A" shall be deemed
to be inserted.
( 2) To section 17, the following shall be deemed to be
added, namely:-
" ( 5) When proceedings have been taken under this
section for the acquisition of any land, and any person
sustains damage in consequence of being suddenly dispossessed of such land, compensation shall be paid to
SJJch petson for such dispossession."
Para 6 of the Schedule inserts section 17-A.
It reads:
"17 -A. In every case referred to in section 16 or section 17,.
Collector shall, upon payment of the cost of acquisition, make
overcharge of the land to the Trust and the land shall thereupon
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vest in the Trust, subjeot to the liability of the Trust to pay any
further costs which may be incurred on account of its acquisition."
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Para 10 amends section 23 thus :-
"10(1) ............................... .
10(2) The full-stop at the end of sub-section (2) of
section 23 shall b,e deemed to be changed to a colon,
and the following proviso shall be deemed to be added :-
"Provided that this sub-section shall not apply to any land
acquired under the Nagpur Improvement Trust Act, 1936, except-
( a) buildings in the actual occupation of the owner
or occupied free of rent by a relative of the
owner, and land appurtenant thereto, and
(b) gardens not let to tenants but used by the owners.
as a place of resort."
10(3) For the purposes of clause first of sub-section·
(I ) of this section-
( a) the market -value of the land shall be the marketvalue according to the use to which the land wa& .
-46
SUPREME COURT REPORTS
(1973] 3 S.C.R.
put at the date with reference to which the
A
market-value is to be determined under that
clause; . ............. "
Another advantage which is, said to accrue to these persons is
.provided by s. 48-A, as inserted by para 14. It reads:
"48-A. ( 1) If within a period of two years from the
date of the publication of the declaration under section 6
in respect of any land, the Collector has not made an
award under section 11 with respect to such land, the
owner of the land shall, unless he has been to a material
extent responsible for the delay, be entitled to receive
compensation for the damage suffered by him in consequence of the delay.
(2) The provisions of Part III of tl1is Act shall
apply so far as may be, to the determination of the compensation payable under this section."
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It would be seen that the effect of the modifications in two
respects is tremendous. First, the owner whose land is acquired
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under the Improvement Act is paid compensation not according
to the market viilue of the land but the market value according to
the use to which the land was put at the date with reference to
which the market value is to be determined in that clause. In other
words, if the land is being used for agricultural purposes, even
though it has a potential value as a building site, the potential E
value is to be ignored. The second respect in which the owner
suffers if the land is acquired under the Improvement Act is that
he does not get a solatium of 15 % which he would have got if the
land had been acquired under the Land Acquisition Act. It is
('
true that he has some minor advantages which have been pointed
out by the learned counsel but they have no comparison in value p
,
to the loss suffered by virtue of the market value being determined
\_
according to the use to which the land was being put or the loss of
15% of the market value1of the land.
The first point which was raised was : whether it is the State
(iii
which is the acquiring authority or it is the Improvement Trust
which is the acquiring authority, under the Improvement Act. It
seems to us that it is quite clear, especially in view of s. 17 A as
G
inserted by para 6 of the Schedule, that the acquisition will be by
the Government and it is only on payment of the cost of acquisition
to the Government that the lands vest in the Trust. It is true that
1he acquisition is for the Trust and may be at its instance, but
nevertheless the acquisition is by the Government.
If this is so, then it is quite clear that the Government can
H
acquire for a housing accommodation scheme either under the
Land ~cquisition Act or under the Improvement Act. If this is
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NAGPU!l IMPROVEMllNT TRUST v. V. RAO (Sikri, C.J.)
,7
so, it enables the State Government to discriminate between one
owner equally situated from another owner.
This Court held in Nandeshwar Prasad v. U.P. Govt.(') that
the fact that 'the lands could be acquired for a scheme under the
Kanpur Urban Development Act (U.P. Act VI of 1945) did not
prevent the Government from acquiring the lands for the same
purpose under the Land Acquisition Act (as amended by the
Kanpur Act). We may mention that the Kanpur Act amended
the Land Acquis;tion Act by the schedule for the purpose of
acquisition of land for the Board in a similar manner as in the
Nagpur Improvement Trust Act.
A similar point was abandoned in P. Vaijravelu Mudaliar v.
Special Deputy Collector, Madras(') by Mr. Viswanatha Sastri
in view of the above decision of this Court in Kanpur case.
The question then arises whether the High Court is right in
holding that the impugned provisions were hit by Art. 14 of the
Constitution.
It is now well-settled that the State can make a reasonable
classification for the purpose of legislation.
It is equally wellsettled that the classification in order to be reasonable must satisfy
two te&ts (i) the classification must be founded on intelligible
differentia and (ii) the differentia must have a rational relation
with the object sough1 to be achieved by the legislation in question.
In this connection it must be borne in mind that the object itself
should be lawful. The object itself cannot be discriminato;y, for
otherwise, for instance, if the object is to discriminate against one
section of 1he minority the discrimination cannot be justified on
the ground that there is a reasonable classification because it has
rational relation to the object sought to be achieved.
What can be reasonable classification for the purpose C>f determining compensation if the object o{ the legislation is to compulsorily acquire land for public purposes ?
It would not be disputed that different principles of compensation cannot be formulated for lands acquired on the basis that
the owner is old or young, healthy or ill, tall or short, or whether
the owner has inherited the property or built it with his own efforts,
or whether the owner is a politician or an advocate. Why is this
sort of classification not sustainable ? Because the object being to
compulsorily acquire for a public purpose, the object is equally
achieved whether the land belongs to one type or another type.
Can classification be made on the hp.sis of the public purpose
for the purpose of compensation for which land is acquired ? In
(I) A.l.R. 1964 S.C. 1217.
(1) [1965] I S.C.R. 614, 619.
48
SUPREME COURT REPORTS
[1973] 3 s.c.R.
other words can the legislature lay down different principles •Of
compensation for lands acquired say for a hospital or a school or
a Government building ? Can the legislature say that for a hospital land will be acquired at 50% of the market value, for a school
at 60% of the value. and for a Government building at 70% oi the
market value ? All three objects are public purposes and as far as
the owner is concerned it does not matter to him whether it is one
public purpose or other. Art. 14 confers an individual right and
in order to justify a classification there should be something which
justifies a different treatment to this individual right. It seems to
us that ordinarily a classification based on the public purpose is
not permissible under Art 14 for the purpose of determining compensation. The position is different when the owner of the land
himself is the recipient of benefits from an improvement scheme,
and the benefit to him is taken into consideration in fixing compensation.
Can classification be made on the basis of the authority
acquiring the land ? In other words can different principles of
compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government ? It
seems to us that the answer is in the negative because as far as the
owner is concerned it does not matter to him whether the land is
acquired by one authority or the other.
It is equally immaterial whether it is one Acquisition Act or
another Acquisiton Act under which the land is acquired. If the
existence of two Acts enables the State to give one owner different
treatment from another equally· situated the owner who is discriminated against, can claim the protection of Art. 14.
It was said that if this is the true position the state would find
it impossible to clear slums, to do various other laudable things, If
this argument were to be accepted it would be totally destructive
of the protection given by Art. 14. It would enable the State to
have one law for acquirin_g lands for hospital, one law for acquiring
lands
for
schools,
one
law
acquiring
lands for
clearing slums, another for acquiring lands for Government
buildings;
one
for
acquiring
lands
in
New
Delhi
and
another for acquiring lands in Old Delhi. It was
said that
in many cases, the value of the land has increased not because
of any effort by the owner but because of the general development of the city in which the land is situated. There is no doubt
that this is so, but Art. 14 prohibits the expropriation of the unearned increment of one owner while leaving his neighbaur untouched. This neighbour could sell his land reap the unearned
increment. If the object of the legislation is to tax unearned
increment it should be done throughout the State. The State cannot achieve this object piece-meal by compulsory acquisition of
land of some owners leaving others alone. If the object is to clear
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NAGPUR IMPROVEMENT TRUST V. V. RAO (Sikri, C./.)
49
slums it cannot be done at the expense of the owners whose lands
are acquired, unless as we have said the owner are directly benefited
by the scheme. If the objeot is to build hospitals it cannot. be
done at the expense of the owners of the land which is acquired.
The hospital, schools etc. must be built at the expense of the whole
community.
It will not be denied that a statute cannot tax some owners of
land leaving untaxed others equally situated. If the owners of
the land cannot be taxed differently how can some owners be indirectly taxed by way of compulsory acquisition ? It is urged
that if this were the law it. will tie the hands of the State in undertaking social reforms. We do not agree. There is nothing in the
Constitution which debars the State from bettering the lot of
millions of our citizens. For instance there is nothing to bar the
State from taxing unearned increment if the object is to deny
owners the full benefit of increase of value due to development of
a town. It seems to us, as we have already said, that to accede to
the contentions of the appellant and the States would be destructive
of the protection afforded by Art. 14 of the Constitution.
The
States would only have to constitute separate acquiring bodies for
each city, or Division or indeed to achieve one special public purpose and l_ay down different principles of compensation.
In P. Vajrave/u Mudaliar v.
Special Deputy Collector,
Madras(') there were two Acts under which the land of an owner
could be acquired.
The land could have be~ acquired for
E
various schemes under the Land Acquisition Act, referred to as
the Principal Act, in the judgment, and the Amending Act (The
Land Acquisition (Madras
Amendment) Act, 1961).
This
Court observed: -
r
G
H
"The land could have been
acquired for all the
said purposes under the Principal Act after paying the
market value of the land.
The Amending Act empowers the State to acquire land for housing scheme
at a price lower than that the State has to pay if the
same was acquired under the Principal Act."
The Court examined various justifications for
the classifications which were put forth by the State,
and then concluded:-
"From whatever aspect the matter is looked at, the
alleged differences have no reasonable relation to the
object sought to be achieved.
It is said that the
object of the Amendine; Aot in itself may project the
differences in the lands sought to be
acquired under
the two Acts. This argument puts the cart before the
horse. It is one thing to say that the existing differ-
(!) [1965] I S.C.R. 614.
S-L631 Supreme Court/73
50
SUPREME COURT REPORTS
[1973] 3 S.C.R.
ences
between
persons
and
properties
have
a
reasonable relation to the object sought to be achieved
and it is totally a different thing to say that the object
of the Act itself creat-,,d the differences.
Assuming
that the said proposition is sound, we cannot discover
any differences in the people owning lands or in the
lands on tho~ basis of the object.
The object is to
acquire lands for housing schemes at a low price. For
achieving that object, any land falling in any of the
said catei:ori·~s can be acquired under the Amending
Act.
So, too, for a public purpose any such land can
be acquired under the principal Act.
We, therefore,
hold that discrimination is writ large on the Amending
Act and it cannot be sustained on the principal of
reasonable classification.
We, therefore, hold that the
Amending Act clearly infringes Art. 14 of the Constitution and is void".
In Balammal & Ors. v. State of Madras(') in which the facts
are substantially similar, the Board constitured under the Madras
City Improvement Trust Act, (Madras Act 16 of 1945) was
authorised by virtue of sec. 71, with the previous sanction of the
Government, to acquire land under the provisions of the Land
Acquisition Act, 1894 for carrying out any of the purposes of
the Act which included Town Expansion Scheme (This sec. 71
is equivalent to sec. 59 of the Improvement Act). For the purpose of acquiring land for the Board under the Land Acquisition
Act, 1894 sec. 73 provided inter alia, that the said Act shall be
subjected to the modifications specified in the Schedule (This
section 73 corresponds to sec. 61 of the Improvement Act). The
Schedule to the Act provided for modification in the Land Acquisition Act for certain specific purposes.
The Madras Act of
1945 as replaced by the Madras City Improvement Trust Act
(Madras Act 37 of 1950) made an important change inasmuch
as the result was that by the change persons whose lands were
compulsorily acquired under the Madras Act 37 of 1950 were
deprived of the right to the solatiwn which would be awardable if
the lands were acquired under the Land Acquisition Act.
In
this connection this Court observed :
"But, in our judgment, counsel for the owners is
right in contending that sub-cl. (2) of cl. 6 of the
Schedule to Act 37 of 1950, insofar as it depriwd the
owners of the lands of the statutory addition to the market-value of the lands under s. 23(2) of :ile Land
Acquisition Act is violative of the equality clause of the
Constitutjon, and is on
that account void. If the
(I) [1969] l S.C.R. 90.
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NAGPUR IMPROVEMENT TRUST v. V. RAO (Sikri, C.J.)
51
State had accquired the lands for improvement of the
town under the Land Acquisition Act, the acquiring
authority was bound to award in addition to the marketvalue 15% statutory under s. 23(2) of the Land
Acquisition Act.
But by acquiring the lands under the
Land Acquisition Act as modified by the Schedule to
the Madras City Improvement Trust Act 37 of 1950
for the Improvement Trust which is also a public purpose lhe owners are, it is claimed, deprived of the right
to that statutory addition. An owner of land is ordinarily entitled to receive the solatium in addition to
the market-value for compulsory acquisition of his land,
if it is acquired under the Land Acquisition Act, but
not if it is acquired under the Madras City Improvement Trust Act.
A clear case of discrimination which
infringes the guarantee of equal protection of t1ie law
arises, and the owners of the lands which are compul·
sori!y acquired must on 'he decisions of ;this Court, be
deemed invalid".
After reviewing some ,_, ... -lier cases, the Court held :
"We, therefore, hold that cl. 6 sub-cl. (2) of the
Schedule read with s. 73 of Madras Act 37 of 1950
which deprives the owners of the statutory right to
solatium at the rate of 15 % on the market-value of the
lands, is invalid, and the owners of the lands
are
-entitled to the statutory solatium under s. 23(2) of the
Land Acquisition Act in consideration of compulsory
acquisition of their land."
The learned counsel was not able to satisfy us that the above
case was distingttishable.
We are of the opinion that the case
was rightly dcx:ided and must govern this case.
In this view of
the matter, it -is not necessll!Y to refer to all the cases referred to
us at the Bar.
We may mention that Mr. Tarkunde also placed
reliance on Art. 31(A)(l)(a) of the Constitution.
It is now
well settled that Art. 31 (A~ (1 )(a) has relevance to agrarian
reforms and development. · It has nothing to do with acquisition
of land for building of a capital of a State.
In the result the appeal fails and is dismissed with costs.
G.C
Appeal dismissed.