# MUNICIPAL CORPORATION OF TIIE CITY OF AHMEDABAD & ORS v. STATE OF GUJARAT & ORS

- **Citation:** [1973] 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1972-03-27
- **Bench:** S. M. S!Kri, Grover, A. N. Ray, D. G. Palekar, M. H. Beg
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-corporation-of-tiie-city-of-ahmedabad-ors-v-state-of-gujarat-ors-5777
- **Pages:** 14

## Headnote

The Government of India Act, 1935-S. 299-Constitutio11 of India
Act, Art. 31-Compensatlon-Bombay Provincial Municipal Corporation
Act, 1949r-Ss. 212, 216--Acquisition building or part of building
within "regular liTle of.public" street-Section if prescribes the principles
and manner of tdetermination of conipensation.
Bombay Provincial Municipal Corporation Ai:t, 1949-Ss. 412, 216--
Constitutionality of.
Section 210 of the Bombay Provincial Municipal Cotporation
Act,
1949 authorises tbe Municipal Commissioner to prescribe the "regular
line of a public street". If a building or a part of building is within the
regular line of a public street the Commissioner may undi:r s. 212 require the owner to pull down the building or pan thereof, which is
within the regular line of the street.
On his failure tO do
so,
the
Commissioner is entitled to pull down the offending part of. the builaing
at the cost of the owner. The land so vacated is to vest in the corporation. Secti0n 216(i) lays down that compensation .shall be paid by
the Commission~r to the owner "for any loss" which the owner
may
sustain and for "any expenst:" incurred by suc:h owner in consequ~D.ce
of the <irder made by the Comm.issioner.
Proviso (i) to secltion 216
prescribes that "any increa9~ 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 consi<bration and allowed for in determining the amount of
such compensation.
Under proviso (ii) "if any such increase in value
exceeds the amount of loss sustained or expenses incurred by the said
owner, the Commissioner may recover from such owner half-the amount
df such excess as betterment charge.". The Act gives the owner who is
aggrieved by the amount of compensation offered to him, the right to
appoal to the judge of the Small Causes Court and to the District judge
in second appeal.
Acting under s. 212 the Commissioner issued notices to the respondents to pull down parts of their building lying within the regular line
of the street. The respondents filed writ petitions contending that section
G
'212 was unconstitutional in so far as it violated the provisions of section
299 of the Government of India Act, 1935, and also of article 31 of
the Constitution. It was urged that the Act did not (i) provide for
payment of compensation for properly
acqui~.,d and (ii) specify
the
principles on which and the manner in whi<lh the compensation was tc'
be determined. The validity of section 212 and other allied sections was
also challeng,d on the ground that they infringed articles 14 and 19
of the Constitution. The High Court, upholding the challenge
unde'r
H
s. 299 of the Government of India. Act, held that the Act proviqed foe
payment of compensation 'out did not specify
the principles on which
and the manner in which the comp~nsation was to be determined. In
view of this finding the High Court did not consider the challenge
on
SUPREME COURT REPORTS
[1973] l S.C.R.
. the \>1ber. grounds.
In this Court it was argued that the two provisos to
sub-Sectio11 (i) of s. 216 if given effect to nullified the direction in subsection .(I) for payment of compensation and when reduced in the Contingencies visualized in the provisos the compensation turned out to
be
illusory.
Allowing the appeal,
A
l'IELD : that the order passed by the High Court had to be set ao;i<I
B
and the proceedings transmitted to the High Court for disposal in acC'ordance with the law.
·
. (i) The High Court was right in holding that the. ,-\ct provided fc.r
payment of compensation for property acquired under s. 212. sectkm
216 .and 389 rea\f too,dher make it clear that full indemnification in ferm;
of money for the loss caused is to be made to the owrie\' of the property or other· interest affected by reason of the exercise of the power
C
under s. 212. that the- compensation may in some rare contingencies
be very much reduced af

## Text

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MUNICIPAL CORPORATION OF TIIE CITY OF
AHMEDABAD & ORS.
v.
STATE OF GUJARAT & ORS.
March 27, 1972
1
[S. M. S!KRI, C.J., A. N, GROVER, A. N. RAY, D. G. PALEKAR
AND M. H. BEG, JJ.]
The Government of India Act, 1935-S. 299-Constitutio11 of India
Act, Art. 31-Compensatlon-Bombay Provincial Municipal Corporation
Act, 1949r-Ss. 212, 216--Acquisition building or part of building
within "regular liTle of.public" street-Section if prescribes the principles
and manner of tdetermination of conipensation.
Bombay Provincial Municipal Corporation Ai:t, 1949-Ss. 412, 216--
Constitutionality of.
Section 210 of the Bombay Provincial Municipal Cotporation
Act,
1949 authorises tbe Municipal Commissioner to prescribe the "regular
line of a public street". If a building or a part of building is within the
regular line of a public street the Commissioner may undi:r s. 212 require the owner to pull down the building or pan thereof, which is
within the regular line of the street.
On his failure tO do
so,
the
Commissioner is entitled to pull down the offending part of. the builaing
at the cost of the owner. The land so vacated is to vest in the corporation. Secti0n 216(i) lays down that compensation .shall be paid by
the Commission~r to the owner "for any loss" which the owner
may
sustain and for "any expenst:" incurred by suc:h owner in consequ~D.ce
of the <irder made by the Comm.issioner.
Proviso (i) to secltion 216
prescribes that "any increa9~ 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 consi<bration and allowed for in determining the amount of
such compensation.
Under proviso (ii) "if any such increase in value
exceeds the amount of loss sustained or expenses incurred by the said
owner, the Commissioner may recover from such owner half-the amount
df such excess as betterment charge.". The Act gives the owner who is
aggrieved by the amount of compensation offered to him, the right to
appoal to the judge of the Small Causes Court and to the District judge
in second appeal.
Acting under s. 212 the Commissioner issued notices to the respondents to pull down parts of their building lying within the regular line
of the street. The respondents filed writ petitions contending that section
G
'212 was unconstitutional in so far as it violated the provisions of section
299 of the Government of India Act, 1935, and also of article 31 of
the Constitution. It was urged that the Act did not (i) provide for
payment of compensation for properly
acqui~.,d and (ii) specify
the
principles on which and the manner in whi<lh the compensation was tc'
be determined. The validity of section 212 and other allied sections was
also challeng,d on the ground that they infringed articles 14 and 19
of the Constitution. The High Court, upholding the challenge
unde'r
H
s. 299 of the Government of India. Act, held that the Act proviqed foe
payment of compensation 'out did not specify
the principles on which
and the manner in which the comp~nsation was to be determined. In
view of this finding the High Court did not consider the challenge
on
SUPREME COURT REPORTS
[1973] l S.C.R.
. the \>1ber. grounds.
In this Court it was argued that the two provisos to
sub-Sectio11 (i) of s. 216 if given effect to nullified the direction in subsection .(I) for payment of compensation and when reduced in the Contingencies visualized in the provisos the compensation turned out to
be
illusory.
Allowing the appeal,
A
l'IELD : that the order passed by the High Court had to be set ao;i<I
B
and the proceedings transmitted to the High Court for disposal in acC'ordance with the law.
·
. (i) The High Court was right in holding that the. ,-\ct provided fc.r
payment of compensation for property acquired under s. 212. sectkm
216 .and 389 rea\f too,dher make it clear that full indemnification in ferm;
of money for the loss caused is to be made to the owrie\' of the property or other· interest affected by reason of the exercise of the power
C
under s. 212. that the- compensation may in some rare contingencies
be very much reduced after taking into acc.ount the value of the benefit
conferred on the owner by reason the widening of the street is no adequate reason to hold that the Act does not provide for payment of. compeasation.
Both the provisos come into play only after. the .compensation
for loss is detei'mined under sub-section (i) of •ection 216 and since
that sub-section declares that full compensation -must be paid for the Joss
or deprivations suffered by the owner it must be held that the Act proD
vi<!es for the payment of compensation for the property acquired.
[9D11F-G].
(ii) The Act specilles the principles on which
and the manner ;n
which compensation is to be detemrined.
Havmg regard to the fact that in the course of widening the street
the ·corporation may have to acquir"> very irregular, shapeless and small
E
pieces of land for the purpose of the street, a h\)St of principles may
have to be employed to determine the com~ensatlon. This very difficulty
in specifying any known rule of compensation is responsible for the wording of section 216 and section 389 of the Act which gets over the difficulty by providing ftill indemnification for the loss or deprivation suffered
by the owner of the building or other interests in the property.
The
involwment of civil courts in finally determining compensation imports
judicial norms and since full indemnification in accordance with judicial
F
norms is the goal set by the Act, it is implicit in such a provision that
the rules for dc'.crmination of rnmpensation shall be appropriate to the
propei'ty acouired and such as will achieve th<o goal of full iridemnitv
against loss. - This, by itself, is a specification of a principle for the. determination of compensation. J13-A-DJ
·
.Stale of Gujamt v. Shri' Shanti/al Mangalda> & Ors., f,1%9] (3) S.C.R.
34 l at p. 357, referred to.
G;
Under s. 390 the Commissioner or such other officer as may be authorised by him shall hold such inquiry as he thinks fit and determine the
amount of compcn.sation to be paid.
Since there is an appeal from such
determination to the judge of the small causes court and a second appeal
to the Distrkt court it is clear that the enquiry must be held on broad
judicial ·lines.
There arc no limitations placed on the powers of the appella~~ judges in determining the loss· in a just and appropriate manner;
H
therefore, the Commissioner 0r his authorised officer who holds the enquiry in the fir.' t instance, will be guided by princip)es which meet with
the approval of the appellate authorities. [13EJ
Al
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CORPORATION v. GUJAllAT (Palekar, 1.)
:>
CIVIL ApPEJ.LA'iE Ju&ISDICTION : C.A. Nos. 135 tQ 149, 2091,
2092 and 2121 to 2122 of 1968, 41 and 42 and 574 of 1969.
Appeals from the judgment and Order dated tile 5th December,
1966 of the Gujarat High Court ii:t Special Civil Applications Nos.
1454 to 1456 of 1965 etc., eic.
B
M. C. Setalvad, V. B. Patel and I. N. Shroff, for the appellant~
<In all the appeals).
·
B .. D. Sharma for. S. P. Nayar, for respondent No. 1 (In all the
appeals).
A.H. Mehta, S. K. Dholakia and Vineet Kumar, for respondent
C
No. 2 (ln C.As. No. 135, 137, 138, 142, 143 of 1968) Respondent Nos. 2 to 5 (In C.A. No. 140 of 1968.)
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S. S. Khunduja and Pramod Swarup for respondent No. 2 (In
C.A. No. 574 of 1969.)
The Judgment of the Court was delivered by
Palekar, J.-These Civil Appeals by certificate arise out of 23
Writ Petitions filed by owners of lands and buildings within tbe
Municipal limits of, the City of Ahmedabad.
The petitioners
challenged section 212 and some other allied sections of the
Boinbay Provincial Municipal Corporation Act, 1949, (hereinafter called the Corporations Act) and prayed for the issue of a
writ of mandamus directing the Municipal Corporation of the
City of Ahmedabad to treat the notice or notices issued to them
under section 212 of the Corporations Act as null and void and
further dlrectii:ig the Municipal authorities not to act upon the
same or in furtherance of the said notice or notices. Besides the
Municipal Corporation, the Municipal Commissioners 'Yllre also
made parties to the petitions. Since the validity of the .Provisions
of the Corporations Act was challeng,ed the State of Gujarat was
:1lso made a respondent.
All the writ petitions raised the same
questions and, therefore, the High Court of Gujarat .disposed of
all the petitions by a common judgment. As the decision was
against the Municipal authorities, they have n9W come in appeal.
For the purposes of dispos~! of these appeals it would . be
mfficient to refer to the allegations made in Special Civil Application No. 1454/ 1965 which is the subject matter of appeal in',
Civil Appeal No. 135/1968 before us. The petitioner Girdharlal
G~npatram was the owner of Survey Nos. 4222, 4223, 4224/ A-BC and 4225/ A-B of Jamalpur, Ward No. 2 Ahmedabad.
On
these survey numbers there is a building belongin~ to Gird.harlal. ·
on the ground floor oi'-which there are shops occupied by Gudhar- .
Jal and his tenants.
SUPREME COURT REPORTS
(1973] 1 S.C.R.
The Corporations Act being Act No. LIX/1949 was enacted
o~ December 29, !949 and came into force on July l, 1951. By
this Act, the previous statute namely the Bombay Municipal
Boroughs Act, 1925, was repealed.
Under section 210 of the Corporations Act the Municipal
CommillSionec is entitled to prescribe what is known as the
"regular lino of a public street." After following the necessary
formilities, the regular line of the public street was prescribed by
the Commissioner. Parts of the building of Girdharlal came withi.i this regular line and so on 3-4-1962 the Commissioner issued a
Sllow cause notice under section 212(l)(b) of the Corporations
Act calling upon Girdharilal to show cause why superstructure
standing upon the aforesaid Survey numbers and lying within the
regular ~
of the street be not remo-;ed and the land thereunder
be acquired under the provisions of the Act for the purposes of
a street. Girdharlal filed objections but they were over-ruled.
Thereafter, with the approval Of the Standing Committee, the
Commissioner acting un<ier sub-section (2) of Section 212 of the
Corporations Act issued final notices to Girdharlal requiring him
to pull down the building or parts thereof which offended against
the regular Ihle of the street within 7 days of the receipt Qf the
notice.
Certain proceedings followed with which we are not
now concerned and thereafter on 6-2-1965, Girdharlal filed the
writ petition in the High Court for the relief already referred to,
His contention was that section 212 and certain other allied sections of the Corporations Act were ultra vires and unconstitutional
and hence the notices issued under secion 212 were illegal.
Section 212 which is found in Chapter XIV of the Corporations Act deals with streets, their construction, maintenance and
improvement. Section 212 is one of the several sections devoted
to this subject. It is as follows :
212. ( 1) If any building or any part thereof is within the regular line of a public street and if, in the opinion of the Commissioner, it is necessary to set bar,k
the building to the regular line of the street he may, if
the provisions of section 211 do not apply, by wntten
notice--
(a) require the owner of such building to show
cause. within such period as is specified in such notice
by a statement in writing subscribed by him or by an
agent duly authorised by him in that behalf and addressed to the Commissioner, why such building or any part
thereof which is within the regular line of the street
shall not be. pulled down and the land witHin the said
line acquired by the Commissioner; or
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CORPORATION V. GUJARAT (Palekar, /.)
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(b) require the said owner on such aay at. such
time and place as shall be 'specified in such notice to
attend personally or by an agent duly authorised by him
in that behalf and show cause why such building or
any part thereof which is within the regular lini- of the
street shall not be pulled down and the land within the
said line acquired by the Commissioner.
(2) If such owner fails to show sufficient cause to
the satisfaction of the Commissioner why such building
or any part thereof, which is within the regular line of
the street shall not be pulled down and the land within
the said line acquired as aforesaid the Commissioner may,
with the approval of the Standing Committee, require
the ewner by a written notice, to pull down the building
or the part thereof which is within the regular line of
the street (and where a part of a building is required
to be pulled down, to also enclose the remaining part
by putting up a protecting' frontage wall) within such
period as is prescribed in the notice.
(3) If within such period the owner of such build~
ing fails to pull down such building or any part thereof coming within the said line, the Commissioner may
pull down the same (and where a part of a building is
pulled down, may also enclose, the remaining part by.
putting up a protecting frontage wall)
and all the
expenses incurred in so doing shall be paid by the owner.
( 4) The Commissioner shall at once take possession
on behalf of the Corporation of the portion of thl' land
within the said line theretofore occupied by the said building, and such land shall thence forward be deemed a
part of the public ~treet and shall vest as such in the
Corporation.
(5) ......................... .'
It is common ground that the provisions of section 211 do
not apply. It is also not disputed that a part of tho building comes
within the regular line of the public street ard notices have been
issued by the Commissioner, as in his opinion, it was necessary
to set set back the building to the regular line of the street. In pursuance of the power given to him, the Commissiorer required
the owner of the building to show cause. Objections raised by
the owner were considered and over-ruled.
Thereafter
under
section 212(2) the Commissioner required the owner Girdharlal
to pull down the building or the part thereof which was within
the regular line of the street within 7 days. It is obvious that on
'
SUPREME COURT REPORTS
[1973] l S.C.R.
!his failure to do so, t)Ie Commissioner was entitled under sub-
;;~ti~n (3) of section 2)2 to puHdown the olfonding part of the
building at the cost of the owner.
After such pulling down of
the building the land so yacated was to vest in the Corporation
under sub-section ( 4) of "that section.
For the loss thus caused to the o\\'.ner by the action of the
Commissioner, provision was made for 'payment of compensation
under section 216 which is as follows :
216. (1) Compensation shall be paid by the Commissioner to the owner of any building or land required
for a public street under section 211, 212, 213 or 214
for anv loss which such owner mav 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 :
Provided that-
(i) any increase or decrease in the value of
the
remainder of the property of which the building
land so acquired formed part likely to accrue_
from the set-back to the regular line of the
street· shall be taken into
consideration
and
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allowed for in detem1ining the amount of such
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compensation.
(ii) if any such increase in value exceeds the amount
of loss sustained or expenses incurred by
the
said owner, the Commissioner may ,recover
from such owner half ~he amount of such. excess
as a betterment charge."
·
ll
Chapter XXIV of the Act deals with the supject of compen-
,
sat ion generally.
Section 329 (1) provides as follows :
389. ( 1) "In the exercise of the powers under the
following provisions of this Act by ·the Commissioner
or any other municipal officer or servant or any other
person authorised by or under this Act to execute any
work, as little damage as can be shall be done
and
compensation assessed in the manner prescribed by or
under this Act shall be paid to any person who sustains
damge in consequence of the e;<ercise· of such power,
namely ................................. : .. c
(f) acquiring any building or land required
for
a
public street-under section 216."
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CORPORATION v. GUJARAT (Polekar, /.)
7
Section 390 is .as follows :
"Subject to the provisions of this Act, the Com-
~ssi?n'er .or such other officer as~ay be au~or~secl by
-him m this behalf shall, after holCling such mqmry as
he thinks fit, determine the amount of compensation to
be paid under section 389."
This determination, however, is not final because two
appeals
are provided.
Under section 391 it is provided as under :
"Any person aggrieved by the decision of the Commissioner or other officer under section 390 may within a period .. of one month, appeal to the Judge in accordance with the provisions of Chapter XXVI."
"the Judge" means under section 2 clause (29) the Judge of
the Court of Small Causes in the City of Ahmedabad.
Section
411 provides for a second appeal to t]:ie District Court. It says
"An appeal shall lie to the District Court Caa) from a decision
of the Judge in an appeal under section 391 against an assessment of compensation under clause (f) of sub-section (1)
of
section 389." As regards the procedure to be followed in respect,
of these appeals, provision is made in section 434 sub-section ( 1)
whereof is "Save as expressly provided by this Chapter (Chapter'
XXVI) the provisions of the Code of Civil Procedure,
1908,
·elating to appeals from original decrees shall apply to appeals
.o the Judge from the orders of the Commissioner and relating
to appeals from appellate decrees shall apply, to appeals to the
District Court".
These relevant provisions which have been quoted above at
one place show that where the Commissioner acquires land for
the purposes of the street by asking the owner of the land to pull
down nis building or pa_rt of it, the owner is entitled to be paid
compensation for the loss suffered by him.
The compensation
must, in the first instance, _re determined by the Commissioner or
an Officer authorised by him. in that behalf and if, on determination of such compensation, the owner of the building who loses
any part of the land to the street is aggrieved by the amount of
compensation offered to him, he is entitled 'to appeal to the Judge
of the Small Causes Court and to the District Court in second
appeal. It is obvious that if the owner is liot sufficiently compensated for the loss suffered by him by the Commissioner or his
authorised Officer, the Judge in the Court of Small Causes or the
District Judge, as the case may be, would be entitled to determine
the proper compensation to be paid to him.
· The complaint of the owner in the Writ Petition took various
'forms. But the principal attack was on the ground
that the
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SUPREME COURT REPORTS
[1973] l S.C.R.
provisions with regard to acquisition in section 212 were
unconstitutional for several reasons.
The Corporations Act was
passed before the Constitutj,pn crune into force. when the Government of India Act, 1935 fls in force. Subsections (1) and (2)
of section 299 of the Government of India Act, 1935, which
are roughly similar in content to clauses (1) and (2) of Article
31 of the Constitution, both before and after the Constitution 4th
Amendment Act, 1955, required that the Jaw authorising compulsory acquisition for a public purpose, ( 1) should provide for
the payment of compensation for the property acquired; (2) fix
the runount of compensation; or ( 3) specify the princip1es on
which and the manner in which it is to be determined.
It is
common ground that the Corporations Act is a Jaw which by
itself does not fix the amount of compensation. While the submission of the Municipal Corporation is that it provides for the
payment of compensation for the property acquired and also
specifies the principles on which and the manner in which it is
to be determined, the contention of the petitioners is that it does
neither.
Therefore, the pet:tioners contended that section 212
of the Corporations Act was unconstitutional in so far as it violated
the provisions of section 299 of the Government of India Act,
1935 and also of Article 31 of the Constitution.
Certain other challenges were also made in the petiliJns to
the validity of section 212 and some other allied sections of the
Corporations Act on the ground that they ·infringed the constitutional sateguards embodied in Articles 14 and 19 of the Constitution. The High Court rejected the challenge under :~rticle 19
( 1 )(g). It did not think it necessary to consider the challenge
under other heads in view of its finding that the challenge under
section 299 of the Government of India Act, 1935 was successful.
Learned counsel for the respondents before us did not press
the challenge under Article
19 (1 ) ( g) . Therefore,
the
o!11Y
question which survives for consideration is whether the
~1gh
Court was right in holding that section 212 of the Corporations
Act is unconstitutional on the ground of its alleged violation of
the provisions of section ~9~ of the Gov7rnment of ~dia Act
or Article 31 of the Constitutton. If the vtew of the High Court
in this respect is not upheld, it is obvious that the case will have
to go back to the High Court for the c:onsideraion of J><?i!lts not
finally decided for the purpose of the disposal of the petitions.
The contention on behalf of the property owners was that the
Corporations Act did not provide ( 1) for the payment of compensation for the property acquired and (2) did not specify the
principles on which and the manner in which it is. to be d~ter
mined. The High Court only partially accepted this c?ntention.
It did not agree with the contention that the Corporations Act
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CORPORATION v. GU<fARAT (Palekar, J,)
9
did ~ot provide for the payment of compensation for the p~
acqmred.
On the second question, however, the l{igh Court
~greed that the Act ~eithe~ sp~ified the principles of compensauon nor the manner m which 1t was to be determined.
We are in agreement with the view of the High Coun that the
ff
Corporations Act does provide for the payment of compensation
for Ure property acquired. We have only to refer to section 216
and section 389 of the A~t for this purpose.
Section 216(1)
clearly lays down that compensation shall be paid by the Commissioner ·to the owner of any building or land required for
public s•:reet under sections 211, 212, 213 and 214 for any loss
c
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.
Then section 389 ( 1) provides that compensation assessed in the
manner prescribed by or under the Act shall be paid to any
person who sustains damage in consequence of the exercise of
D
such power, namely, "(f) acquiring any building or land roguired for 1a .public street under section 216." The.two sections read
together make it clear that full indemnification in terms of money
for the loss caused is to be made to the owner of the property or
other interests affected by reason of the exercise of power under
section 212..
Under the latter section what is acquired for the
purP\}ses of the street is the land of the owner which falls within
.E
the ~egular line of the street. Several provisions are made in
Chapter XIV for the widening of streets within the limits of the
Corporation. With the enormous increase in traffic in the more
congested parts of a growing City, Municipal authorities are
constantly u:1der pressure to widen the streets and one of the
several methods prescril;>ed in Chapter XIV is cont~ned in sec-
.F
tion 212. The regular' line of the street as prescnbed under
section 210 often.passes through the properties of owners abutting
on the streets and it is impossible to widen the streets unless parts
of !!Inds belonging to the owners are acquired.
Sometimes a
building or a structure or part of it stands on su~h land and unless" that portion of the building which falls within the line
1 is
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removed ~he acquisition of the land for the purpose of the street
is ·not possible. Therefore, in the first instance the section requires
that the Commissioner shall issue a show cause notice why the
buildings or a part of the building which fa:lls, within the line of
street should not be pulled down with a •.view to release the land
uiidemeatli ·for t.lie purposes of the street. If after hearing the
H
owpel: the Commissioner is of •tl)e ooinion that tJ:e building or
part the_reof should be pulled down, he must obt.am the approval
of ihe Standing Committee and then serve a nottc~ ~n the. o':"ner
to pull down° the offending building' or part of bmldmg w1thm a
12-1208 S"P· Cl/72
10
SUPREME COURT REPORTS
[1973] 1 s ('"
certain time. If the owner cooperates, he will himself remove th~
offending .structure and release. the land underneath it for being
absorbed 1Il the street. If he does not, the Commissioner is empowered to pull down the offending structure at the cost of the
owner.
Then sub-section ( 4) of section 212 provides that the
Co~ioner shall at once take possession on behalf of the
Corporation of the portion of the land within the said line (line
of the public street) theretofore occupied by thtr said bt•ilding,
and such land shall thence· forward be deemed a part of the
public street and shall vest as such in the Corporation. The provfaions of section 212, therefore, clearly declare that what is acquired under that section is the land lying within the line of the
public street.
The technical question as to whether there is acquisition of the building when the owner himself does not pull down
the offending part of the structure but the Commissioner do 'S it
at the owner's expense is not necessary for the disposal of the question whether the Act provides for the payment of compensation.
Since every kind of loss is ·required to be compensated as a consequence of the order passed by the Commissioner under section
216 of the Act, the question whether the Act need have provided
for compensation as on the acquisition of the building or a' part
of the building which is pulled down under section 212, does not
survive.
".'he ownernas to be comnensated for every deprivation or loss and, therefore, prima facie it must be held that the
Coroorations Act provides for 1he pavm~nt of compensation
for the property acquired:
It was, however, argued that the two provisos '.v sub-section
( 1) of section 216 when given effect to may not oniy nullify the
direction given in sub-section (1) for payment of compensation
but also in certain contingencies compel the owner to -pay the
Corporation something out of his own pocket. When sub-section
( l) provides for payment of compensation for the loss suffered
it provides for adequate indemnification or compensation. When
such compensation is reduced in the contingencies visualized in
the two provisos the compensation, it was submitted, may turn
out to be illusory and the provision for the payment of compensation an empty assurance.
Proviso ( 1) prescribes that "any
increase or decrease in the value of the remainder of the property
of which the building or land so acquired formed parl likely to
accrue from the set-back to the regular line of the street shall
be taken into consideration and allowed for in determining the
amount of such compensation." Proviso (ii-) states that "if any
such increase in the value exceeds the amount of loss sustained
or exnen<.~s incurred ,by 1he said owner, the Commissioner may
recover from such owner half the amount of such excess as a
betterment charge:" Proviso (i) implies that the , compensation
payable under sub-section ( 1) is liable to be increased or reduced
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CORPORATION v. GUJARAT (Palekar, 1.)
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after the set-back. It envisages that by reason of the set-back or
the widening of the street the property which still remained with
the owner is likely, on account of the new situation, either to
increase or decrease in value. If that happens, that is to be takCl!l
into consideration and the amount determined under sub--section
( 1) will have to be adjusted accordingly. The High Court is of
the view that proviso (1) is unobjectionable as it is a principle
governing the determinauon of compensation and can be rightly
employed in determining the compensation for the property acquired. The High Court, however, was not inclined to hold that
proviso (ii) lays down any prim;iple for determination of com~
pensation payable for the property acquired.
It held, nevertheless, that the proviso was severable from the main part . of the
seetion and did not affect the provisions of sub-section ( l) for
payment of compensation.
It is obvious that it is only in very
rare contingencies that proviso (ii) may become operative. But
in considering the question as to whether the Act provides for
compensation for acquisition or not, there can be little doubt that
it docs so in sub-section (I) of section 216. That it may in some
rare contingencies be very much reduced after taking into account
the value of the benefit conferred on the owner by reason of the
witjening of the street is no adequate reason to hold that the Act
does not provide for payment of compensation.
As a matter of
fact in an actual enquiry for determining the amount of compensation to be paid the authority charged with the duty will have to
assess, in the first instance, the value of the total Joss or deprivation actually suffered. The provisos may in some rare contingencies go to reduce the amount so determined. Proviso (ii) envisages
a situation where the widening of the street has so much benefited
the owner that the value of the benefit even exceeds the actual
Joss suffered by him. In such a case iilstead of getting any compensation for the loss the owner might have to pay out of his own
pocket.
As to whether proviso (ii) prescribes/ any principle for
determination of compensation or not is not relevant for our
present purpose. Both the provisos come into play only after the
comoensation for loss is determined undec sub-section
(1) of
section 216 and since that sub-section 'declares that full compensation must be paid for the loss or deDrivation suffered by the
'owner it will be incorrect to say that the Act does not make provision for the payment of compensation for the property acquired.
We have, therefore, no hesitation in agreeing with the High Court
that the Corp,orations Act provides for the payment of compensation for the property acquired under section 212.
The next question is whether the Act specifies the principles
on which and the manner in which compensation is to be determined. The High Court has been Of the view that neither, prin-·
ciples for determination of .compensation nor the manner"ef its
12
S\Jl"REME COURT REPORTS
[1973] 1 S.C.R.
determination has been specified and that is the ground on which
i.t has held that the provisions of section 212 ~re unconstitutional.
We are unable to agree with that view. What is meant by specific3tion of principles for determining compensation ? In the
State of Gujarat v. Shri Shanti/a/ Mangaldas & Ors.( 1) this Court
observed:-
"Specification of principles means laying down general guiding rules applicable to all persons or transactions
governed thereby.
Under the Land Acquisition Act
compensation is determined on the basis of "market
value" of the land on the date of the notification under
s. 4 (1) of that Act. That is a specification of principle."
At a later stage the Court again observed at page 362 :
/
"Rules enunciated by the courts for
determining
compensation for compulsmy acquisition under the Land
Acquisition Act vary according to the nature of the land
acquired. For properties which are not marketable commodities, such as lands, buildings and incorporeal rights,
valuation has ·to be made on the application of different
rules. Principle of capitalisalion of net rent at the current
niarket rate on guilt-edged securities, principle of reinstatement, principle of determination of original value
less depreciation, determination of break-up value in
certain types of property which have out-grown their
utility, and a host of other so-called principles are employed for determination of compensation payable for
acquisition of lands, houses, incorporeal rights, etc."
The Land Acquisition Act makes market value at a certain·date
the basis for the determination of comuensation. But there is no
one sure way of applying the principle.
As is well-known when
set-back is imposed by the line of the s·.reet, the land actually
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1acquired by the Corporation may be in some cases a few sq. yards
·/ .. ,or even a few sq. inches.
Then again the land acquired. may be
' of no significant use to anybody except to the Corporation as a
part of the sireet.
The land acquired may be wedge-shaped,
wmetimes irregular in contour and often shapeless. If the principle of a willing seller and a willing buyer is applied there can
possibly be no market at all for the property acquired.
It is not
suggested that in every case of acquisition of land for the street
this principle will break 1down. But having regard to the fact that in
the course of widening the street the Corporation may have to acquire very .irregular, shapeless and small pieces of land for the purposes
of the street, a host of principles may have to be employed to determine the comoensation. We asked learned counsel for the respon-
(1) [1969j(3) S.C.R. 341 at P. 357.
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CORPORATION v. GUJARAT (Palekar, J.)
13
dents what one general principle of determination of compensation in such cases could have been approp1iately specified. We
did not get any satisfactory reply. It appears to us that this very
difficulty in specifying any known rule of compensation is respunsible for the wording of section 216 and section 389 of the Act
which, in our opinion, gets over tlie difficulty by providing full
indemnification {or the loss or deprivation suffered by the owner
of the building or other interests in the property. We have referred to the provisions with regard to appeals. The first appeal lies
to the Judge of the Small Causes· courts and a second appeal to
the Di<trict Judge.
The involvement of Civil Courts in finally
determining compensation imports
judicial norms.
Since full
indemnification in accortlance 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
i& deprived of property is fully indemnified against the loss.
This, by itself, in our opinfon, is a specification of a principle for
the determination of compensation.
As regards the manner of determination of compensation, it is
provided in section 390 of the Corporations Act. Under that
section the Commissioner or such other officer as may be authorised by him shall hold such enquiry as he tliinks fit and determine
the amount of compensation to be paid. Either the Commissioner·
or an Officer authorised by him has to hold an appropriate enquiry
before determining the amount of compensation. Since, as already .
seen. 1here is an app~al from such determination to the Judge of
the Small Causes Court under section 391 and a second appeal to
tlie District Court under section 411 it is clear that the enquiry
must be made on broad judicial lines. Any arbitrary determination is bound to be set aside in appeal because the Judges in
appeal will be chiefly concerned to see whether the enquiry is made
i.1 accordance with nornrnl judicial procedures for evaluati~ the
loss by the application of methods of valuation appropriate to 1he
particular acquisition before them. Since no limitations are placed
on the nowers of the Appellate Judges in determining the loss in
a ju~t and a'.)!'ropriate manner, it is expected that the Commissioner
or his authorised officer, who holds the enquiry in the first instance.
will be guided bv nrincinles which meet with the aPnroval of the
A-mellate authorities. In our ooinion. therefore. th'e manner of
the determination of compensation is also specified by the Act.
It is conceded before us that if this Court holds that the Corporations Act has provided for th.~ payment of compensation and
14
SUPREME COURT REPORTS
(19'73] l S.C.R.
aJso. specified the principle on which and the manner in which
compensation is to be determined, it would not be possible to say
that the Act is either in violation of the provisions of. section 299
of the Government of India Act, 1935 or Article 31 of the Constitution.
Since the High Court had not considered the challenge to the
validity of section 212 and the allied sections of the Act on the
ground of infringement of fundamental rights under Article 14
and partially under Article 19. of the Constitution, and the foamed counsel for both sides agree that the cases should be remanded
to the High Court for disposal after considering the points raised
in that regard, we send down the cases accordingly for disposal.
The ap11eals are allowed. The order passed by the High Court
is set aside and the proceedings are or.d~red to b~ transmitted .to
the High Court for disposal in accordance with th~ law after hearing the parties on points kept open and undecid~d by the High
Court in its Judgment dated 5-12-1966. The appellants shall get
one set of costs from th.~ respondents other t:ian the State of
Gujarat in this Court.
K.B.N.
Appeals allowed.
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