# S'l:/ITE OF MAllARASIITRA & ANR v. BASAllTlBAl MOHANLAL KHETAN & ORS

- **Citation:** [1986] 1 S.C.R. 707
- **Court:** Supreme Court of India
- **Decided:** 1986-03-13
- **Case number:** Civil Appeal No. 1177 of 1984
- **Bench:** S. Venkataramiah, M.P. Thakkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-l-ite-of-mallarasiitra-anr-v-basalltlbal-mohanlal-khetan-ors-9300
- **Pages:** 24

## Headnote

Maharashtra
Housing
and
Development
Act,
1976
(Maharashtra Act XXVIIl of 1977), sub-sections 3 & 4 of
section 44, Constitutional validity of - Whether infringes the
provisions of Articles 14,
19, 21,
31
and 300A. of the
Constitution - Whether provisions of section 44(3) and (4) are
protected by Article 3l(c) of the Constitution.
One Mohanlal Fakirchand Khetan was the owner of a piece
of land measuring 3. 98, 60 hectares bearing Survey No. .28 at
village Bhuahi in Maval Taluka
of
Pune
District having
purchased it under the sale deed dated january 18, 1966, The
aaid land is, however, situated within the Dllnicipal limits of
Lonavala town. Mohanlal Fakirchand Khetan died on May 18, 1976
leaving behind him his widow, respondent No. 1, and children
respondents Nos. 2 to 5, as his heirs. In order to provide
housing accomoodation to economically weaker aectiona and to
persons belonging to low income group and middle income group
residing within Lonavala Dllnicipal limits and at the request
of the Maharashtra Housing and Area Development Authority, a
notice was published by the State Government under the proviso
to section 41(1) of the Maharashtra Housing and Development
Act, 1976 in Government Gazette dated August 30, 1979 inviting
objections to the proposed acquisition of land& including the
land which originally belonged to Mohanlal Fakirchand Kiletan.
Pursuant to the said notice Chandrakant l'.ohanlal Khetan,
respondent No. 3 herein lodged his protest on September 6,
1979. After considering the various objections received fl'Oll
different people including the objections filed by Chandrakant
Mohanlal Khetan on behalf of hi•elf and the other co-owners,
the
State
Government
published
the
notification under
sub-section (1) of section 41 in its Gazette dated July 3,
1980. On the publication of the said notification the land of
Mohanlal Fakirchand Khetan vested in the State Government free
from all encumbrances. On December 12, 1980 a notice w.,;
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708
SUPREME COURT REPORTS
[19861 l s.c.R.
·issued under section 42(1) of the Act, to the holders of the
lands to surrender and deliver possession of their lands to
the Collector, Pune within a period of 30 days. In January
1981, the legal representatives of Mohanlal Fald.rchand Khetan
objected to the notice on the ground that Survey No. 28 of
village Bhushi that is, the land belonging to them had not
actually been notified in the notification published in the
Gazette as it had been shown as lying in village Maval and not
in village Bhushi. On discovering the error which had crept
into the notification, on May 15, 1981 the State Government
published a corrigendum making the requisite correction and
thereafter issued a fresh notice on September 15, 1981 to the
heirs of Mohanlal Fald.rchand Khetan to deliver possession of
the land bearing Survey No. 28 of village Bhushi situated
within the Municipal limits of Lonavala.
The widow and
children of Mohanlal Fakirchand Khetan, respondents herein
filed a writ petition in the High Court of Bombay questioning
the validity of proceedings leading up to
the issue of
notification under section 41(1) of the Act and also the
notification. The High Court negatived all the contentions
raised by the respondents in the writ petition except the
conatitutionality of sub-section (3) and (4) of section 44 of
the Act. It found that sub-section 3 and sub-section 4 of
section 44 of the Act were unreasonable and discriminatory and
therefore ultra vires Article 14 of the Constitution. It found
that the said provisions were not protected by Article 31C of
the Constitution and further held that the impugned provisions
of the legislation were otherwise unfair, unjust and unreasonable. The High Court also found that the deprivation of
the property under sections 41 and 42 of the Act had not been
done by authority of law. The High Court accordingly allowed
the writ petition. Aggrieved by the decision of the High Court
the State of Maharashtra and the M

## Text

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707
S'l:/ITE OF MAllARASIITRA & ANR,
v.
BASAllTlBAl MOHANLAL KHETAN & ORS.
MARCH 13, 1986
[E,S. VENKATARAMIAH AND M.P. THAKKAR, JJ,]
Maharashtra
Housing
and
Development
Act,
1976
(Maharashtra Act XXVIIl of 1977), sub-sections 3 & 4 of
section 44, Constitutional validity of - Whether infringes the
provisions of Articles 14,
19, 21,
31
and 300A. of the
Constitution - Whether provisions of section 44(3) and (4) are
protected by Article 3l(c) of the Constitution.
One Mohanlal Fakirchand Khetan was the owner of a piece
of land measuring 3. 98, 60 hectares bearing Survey No. .28 at
village Bhuahi in Maval Taluka
of
Pune
District having
purchased it under the sale deed dated january 18, 1966, The
aaid land is, however, situated within the Dllnicipal limits of
Lonavala town. Mohanlal Fakirchand Khetan died on May 18, 1976
leaving behind him his widow, respondent No. 1, and children
respondents Nos. 2 to 5, as his heirs. In order to provide
housing accomoodation to economically weaker aectiona and to
persons belonging to low income group and middle income group
residing within Lonavala Dllnicipal limits and at the request
of the Maharashtra Housing and Area Development Authority, a
notice was published by the State Government under the proviso
to section 41(1) of the Maharashtra Housing and Development
Act, 1976 in Government Gazette dated August 30, 1979 inviting
objections to the proposed acquisition of land& including the
land which originally belonged to Mohanlal Fakirchand Kiletan.
Pursuant to the said notice Chandrakant l'.ohanlal Khetan,
respondent No. 3 herein lodged his protest on September 6,
1979. After considering the various objections received fl'Oll
different people including the objections filed by Chandrakant
Mohanlal Khetan on behalf of hi•elf and the other co-owners,
the
State
Government
published
the
notification under
sub-section (1) of section 41 in its Gazette dated July 3,
1980. On the publication of the said notification the land of
Mohanlal Fakirchand Khetan vested in the State Government free
from all encumbrances. On December 12, 1980 a notice w.,;
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708
SUPREME COURT REPORTS
[19861 l s.c.R.
·issued under section 42(1) of the Act, to the holders of the
lands to surrender and deliver possession of their lands to
the Collector, Pune within a period of 30 days. In January
1981, the legal representatives of Mohanlal Fald.rchand Khetan
objected to the notice on the ground that Survey No. 28 of
village Bhushi that is, the land belonging to them had not
actually been notified in the notification published in the
Gazette as it had been shown as lying in village Maval and not
in village Bhushi. On discovering the error which had crept
into the notification, on May 15, 1981 the State Government
published a corrigendum making the requisite correction and
thereafter issued a fresh notice on September 15, 1981 to the
heirs of Mohanlal Fald.rchand Khetan to deliver possession of
the land bearing Survey No. 28 of village Bhushi situated
within the Municipal limits of Lonavala.
The widow and
children of Mohanlal Fakirchand Khetan, respondents herein
filed a writ petition in the High Court of Bombay questioning
the validity of proceedings leading up to
the issue of
notification under section 41(1) of the Act and also the
notification. The High Court negatived all the contentions
raised by the respondents in the writ petition except the
conatitutionality of sub-section (3) and (4) of section 44 of
the Act. It found that sub-section 3 and sub-section 4 of
section 44 of the Act were unreasonable and discriminatory and
therefore ultra vires Article 14 of the Constitution. It found
that the said provisions were not protected by Article 31C of
the Constitution and further held that the impugned provisions
of the legislation were otherwise unfair, unjust and unreasonable. The High Court also found that the deprivation of
the property under sections 41 and 42 of the Act had not been
done by authority of law. The High Court accordingly allowed
the writ petition. Aggrieved by the decision of the High Court
the State of Maharashtra and the Maharashtra Housing and Area
Development Authority have filed this appeal by special leave.
Allowing the appeal the Court,
G
Bl!LD : 1. Sub-sections 3 and 4 of the Maharashtra
Houaing and Development Act, 1976 are constitutionally valid.
(730 F-G)
2.1 Every Act carries with it the presU111ption of constitutionality and unless a party aggrieved in a writ petition is
H
able to discharge the said burden by placing adequate
STATE v. BASANTIBAI
7.09
material, the Court should not
strike down a legislative
provision particularly by the application of Article 14.
[726
A-Cl
In the instant case, sub-1sections 3 and 4 of section 44
of the Act cannot be said to be discriminatory and violative
of Article 14 of the Constitution, merely because in the caae
of lands in nunicipal area all the methods of valuation under
the Land Acquisition Act, are not made available. [726 B-Cl
2,2
The Act is not introduced for the benefit of areas
like Bombay Corporation area and areas under the jurisdiction
of other corporations and nunicipalities only, It is enacted
for the whole State more than 90 per cent of which constitutes
rural area. The potentialities of a land in a 111111icipal area
are far higher than the potentialities of land in a rural
area. There is also no occasion under the Act for the State
Govet'Illlent to treat one piece of land in a nunicipal area in
one way and another piece of land in that area differently.
All lands in " nunicipal area have to be valued in only one
way that is in accordance with section 44(3) and (4) of the
Act and all lands in rural ar"49 have also to be valued only
in one way and that is in accordance with the provisions of
the Land Acquisition Act, 1894. There could have been two
different Acts one for 111111icipal areas and another for rural
areas, each providing for a different method of valuation of
land. Such a classification would have been un-exceptionable
having regard to the object and purposes of the two Acts and
the difference in the potentialities of the two types of
lands, The method of capitalization is also one of the
recognised ..,thods which is adopted for the purpose of valuation of properties acquired under the Land Acquisition Act,
1894. All methods of valuation adopted under that Act are
intended to achieve the same purpose, namely, determination of
the market value of the land acquired. It is difficult to say
whether any of them is superior to the other in the context of
Article 14 of the Constitution and to hold that there will be
discrimination, if any of them is not allowed to be availed of
for purposes of valuation. [723 G-11; 724 A-El
State of Gnjarat v. Shri Slumtilal Miqpld• & Ora.,
[1969] 3 s.c.R. 341; Prakash Alll.chand Shah v. State of Gnjarat:
A
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6 Ora., (1986] 1 S.C.C, 581; Raja Vyricherla llaraymia Gejapatiraju v. 'lbe Revenue Diviaional Officer, (1939] 66 IA 104 •
H
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710
SUPREME COURT REPORTS
[1986] 1 S.C.R.
A.I.R. 1939 PC 98; llust• Cavasjee Cooper v. ll!rl.on of India
[1970) 3 s.c.R. 530; Union of India & Anr. v. s..:. Shanti Devi
& Ora., [1983] 4 s;c.c. 542; Special Land Acqniaition Officer,
Davangere v. P. Veer.imdrappa & Ors., [1984) 2 s.c.c. 120; ·
Oriental Gas Co. Ltd. & Ora. , v. State of West Beagal [l 979) 1
s.c.R. 617 and Government: of Bombay v. llorwmji limcberji
B
Calla, 10 Dom. LR 907 referred to.
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2.3
Even granting for purposes of argument that subsections 3 & 4 of section 44 are violative of Article 14 of
the Constitution, the said provisions receive the protection
of Article 31C of the Constitution. (726 C-0)
3.1 Article 31C does not say that an Act there should be
a declaration by the appropriate legislature to the effect
that it is being enacted to achieve the object contained in
Article 39(b). In order to ascertain whether it is protected
by Article 31C, the Court has to satisfy itself about the
character of the legislation by studying all parts of it. The
question whether an Act is intended to secure the objects
contained in Article 39(b) or not does not depend upon the
declaration by the legislature but depends on its contents.
[727 B-D)
3.2
The Maharashtra Housing and Development Act, 1976
1lllkes provision ,or acquisition of private lands for providing
sites for building houses or housing accoamodation to the
comnunl.ty. The title to the lands of the private holders which
are acquired first vests in the State Governaent; Later on the
land is developed and then distributed 8110ngst the people as
house sites. It also provides for reserving land for providing
public llllllnl.ties without which people cannot live there.
Comunity centres, shopping complex, parks, roads, drains,
play grounds, are all necessary for civic life and these
-nities are enjoyed by all. That is also a kind of distribution within the IM&ning of Article 39(b) of the Constitution. The Act is brought into force to implement the directive
principle contained in Article 39(b) and hence even if there
is any infraction of Article 14 it is cured by Article 31C
which is clearly attracted to the case. [727 E-F; 729 A-Bl
Sanjeev Cake llamf.eturing eo.pay "• llbarat Coking Coal
Ltd. • Anr., (19831 l s.c.R. 1000; Bl.a Bou- Ieeav....ta
llbarati SrlpMmplnua "• State of lerala, [H73J Supp. S.C.R.
I
'
STATE v. BASANTIBAI
711
A
l; 111.nerva Mills Ltd. & Ors. v. Union of India & Ors., [1981]
l s.c.R, 206 and State of lanatU4 & br. etc. v. Sbri
Ranganetha led4)r & br. etc., [1978) l s.c.a. 641 referred to.
4, The Maharashtra Housing and Development
Act,
1976
does not infringe Article 300A of the Constitution. Article B
300A was not in force when the f!ct was enacted. Article 31 (1)
of the Constitution which was couched in the s1111e language was
however in force. Article 31C gave protection to the Act even
if it infringed Article 31. In this case, sub-section 3 and 4
of section 44 of the Act cannot be struck d<>Wn on the ground
that they are neither just nor fair or reasonable. Nothing
contrary has been done
by the authorities. Certain vacant C
lands lying inside a 1111nicipal area are being acquired for
providing housing accolllllOdation after paying an amount which
is computed in accordance with a D!thod considered to be a
fair one by Courts. The purpose for which the lands are
acquired is a public purpose. The owners are given opportunity
to make their representations before the notification is 0
issued. All the require...nts of a valid exercise of the power
of eminent domain even in thP. sense in which it is understood
in the United States of America where property rights are
g1 ven greater protection than what is required to be done in
our country are fulfilled by the Act. [729 B-PI
5, Land ceiling laws, laws providing for acquisition of E
land for providing housing accomodation,
laws
imposing
ceiling on urban property etc. cannot be struck down by invoking Article 21 of the Constitution. Article 21 essentially
deals with personal liberty. It has little to do with the
right to own property as such. This is not a case where the
deprivation of property would lead to deprivation of life or F
liberty or livelihood. On the other hand land is being
acquired to improve the living conditions of a larger nlimber
of people. To rely upon Article 21 of the Constitution for
striking down the provisions of the Act amounts to a clear
misapplication of the great doctrine enshrined in Article 21.
[730 A-<:]
.
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6, So... problems presettting difficulty of valuation in
the application of clause 5 of First. Schedule to section 44(1) ·
of'the Act in regard to valuation of open lands situated in a
city like Bombay or lands with building potentialf.ties situat- H
ed within the limits of big tOllllS, are easily surmountable
712
SUPREME COURT REPORTS
[1986] 1 s.c.R.
A
problems of valuation in relation to individual lands and do
not
reflect on
the
constitutionality of
the impugned
provision. The concerned authorities entrusted with
the
function of lllllking evaluation will doubtless resolve such
probl"""' aa are likely to arise appropriately in accordance
with law. (730 D-E]
B
lluanti lbaf. !!nhap!al 1beta • Ors. v. State of llabs-
.... htra A.I.R 1984 Bombay 366 reversed.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1177 of
1984.
C
From the Judgment and order dated 8.11.1983 of the
Bombay High Court in W.P. No. 4192 of 1981.
Ashok Desai, M. Ganesh, G.B. Sathe and A.S. Bhasme for
the Appellants.
D
S.B. Bhasme, Mrs. V.D. Khanna, A.H. Khanwalkar and Anil
Kumar Gupta for the Respondents.
The Judgment of the Court was delivered by
11!!!!1ATlRAMIAH, J. This appeal by special leave is filed
E
against the judgment dated November 8, 1983 in Writ Petition
No. 4192 of 1981 by which the High Court declared sub-section
(3) and sub-section (4) of section 44 of the Maharashtra
Housing and Development Act, 1976 (Maharashtra Act No. XXVIU
of 1977) (hereinafter referred to as 'the Act') as void and
gave certain ancillary directions.
F
One Mohanlal Fakirchand Khetan was the owner of a piece
of land measuring 3. 98. 60 hectares bearing Survey No. 28 at
village Bhushi in Mavai taluka of Pune district having
purchased it under the sale deed dated January 18, 1966. The
said land is, however, situated within the 1111nicipal limits of
G
Lcinavala town. Mohanlal Fakirchand Khetan died on May 18, 1976
leaving behind him his widow, respondent No. I, and children,
respondents Nos. 2 to 5 as his heirs. On August 1, 1978 the
Maharashtra
Housing
and
Area
Development
Authority
(hereinafter referred to as 'the authority' establish"4 under
section 3 of the Act wrote a letter to the Municipal Council,
H
,
STATE v. BASANTIBAI [VENKATARAMIAH, J,]
713
A
Lonavala seeking information regarding its needs for providing
housing accormoodation to economically weaker sections and to
persons belonging to low income group and middle income group
residing within'' Lonavala municipal limits.
In order to
ascertain the demand for tenements, the Municipal Council of
Lonavala issued two advertisements in local newspapers on B
August 3, 1978 and February 10, 1979 inviting applications for
housing accommodation from the general public. After taking
into consideration the representations made by the people and
assessing there requirements, the municipal council informed
the authority about the extent of land needed for providing
housing accommodation for the people. The authority in .its
turn informed the State Government by its letter dated C
September 15, 1979 that an extent of 26 hectares of land .was
needed initially for providing accommodation for people within
the limits of Lunavala Municipal Council and requested the
State Government to issue a notification under sub-section (l)
or section 41 of the Act. The proposal was. processed by the
Public Works Department and the Housing Department of the D
State Government and a notice was publsied under the proviso
to section 41
(1) of the Act in Government Gazette dated
August
30,
1979
inviting
objections
to
the
propi>s~d
acquisition.
In that notice it was
mentioned that 'the
Government proposed to acquire the land which originally
belonged to Mohanlal Fakirchand Khetan refer to above also. E
Pursuant to the said notice Chandrakant Mohanlal .Khetan,
respondent No.3 herein lodged his protest on September 6,
1979, After considering the various objections received from
different people including the objections filed by Chandrakant
Mohanlal Khetan on behalf of himself and the other co-owners
the State Government published the notification under subF
section. (1) of 41 in its Gazette dated July 3, 1980. On the
publication of the said notification the land mentioned in it
including the land of Mohanlal Fakirchand Khetan vested in the
State Government free from all incumbrances. On December 12,
1·980 a' riot ice was issued under section 42(1) of the Act to the
holders of the lands· which had been riotified under section G
41(1) of the Act to surrender and deliver possession to the
Collector, Pune within a period of 30 days. In January, 1981
the legal representatives
of Mohanlal Fakirchand Khetan
objected to the notice on the ground that Survey No. 28 of
village Bhushi, that is, the land belonging to them had not
actually been notified in the notification published in the H
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714
SUPREME COURT ·REPORTS
[1986l'l s;c,R.
Gazette as it had been shown as lying in village Maval and 119t
in village Bhushi. On ·discovering the error which had crept
into the notification, on May 15, 1981 the State Government
published a corrigendum making the requisite correction and
thereafter issued a fresh notice on September 15, 1981 to the
heirs of Mohanlal Fakirchand Khetan to deliver possession of
the land bearing Survey No.28 of village Bhushi situated
within· the llllnicipal limits of Lonavala. The widow and
children of Mohanlal Fakirchand Khetan, respondents herein,
thereafter filed the writ petition out of which this appeal
arises on December 17, 1981 on the file of the High Court of
Bombay questioning the validity of proceedings leading up to
the issue of the notification under section 41(1) of the Act
and also the notification.
The respondents contended in the writ petition filed by
them inter alia : (1) that there was no material with the
st'ate Govemiiii!rit to form an opinion about the need for issuing
the notification under section 41(1) of the Act; (ii) that the
respondents had not been heard personally after they had filed
the objections under the proviso to section 41(1) of the Act
to the proposal of acquisition; (iii) that the land of the
respondents had actually not been notified; and (iv) that the
provisions of sub-sections (3) and (4) of section 44 of the
Act lihich contained the basis for the determination of
compensation payable in respect of the land were violative of
Article 14, 'Article 19 and Article 31 of the Constitution and
therefore the said two sub-sections and the notification were
liable to be declared as void. They also stated that the
compensation payable to them was illusory in its quantum and
the procedure prescribed for the acquisition was not fair and
reasonable.
The petition was contested by the State Government and
the Authority. The High Court negatived the contentions of the
respondents namely that there was no material before the State
Government for forming an opinion about the need for issuing
the notification under section 41(1) of the Act,
that the
respondents had not been given adequate opportunity to submit
their objectiona to the notification under, the proviso to
section 41(1) of the Act, and that the land belonging to them
had .not been included in the notification. The High Court
found that the correspondence which had preceded the issue of
the notification between
the Government,
the Authority,
\
STATE v. BASANTIBAI [VENKATARAMIAH, J.]
715
Municipal Council, Lonavala and the representations received,
by the Munkipal Council, Lonavala from the public and the
proceedings of the State Government constituted sufficient
basis for the Government to form- opinion about the need for
issuing the notification under section 41(1)
of the Act. The
High Court found that although the names of the respondents
had not been shown in the record of rights after the death of
Mohanlal Fakirchand Khetan, respondent No.3 who was acting on
behalf of all the heirs of Mohanlal Fakirchand Khetan had
lodged his objections under proviso to section 41(1) of the
Act and that he had also been personally heard by the
Collector, Pune before the publication of the notification
under
sub-section
(1)
of
section 41.
The
High
Court,
therefore, held that the respondents suffered no prejudice
whatsoever on that account. The High Court further found that
the description of the land of the respondents as the land
bearing Survey No.28 of village Maval had been duly corrected
by the issue of the corrigendum and that there was no doubt
about the 'identity of the land of the respondents which was
being acquired. After rejecting the above contention, the High
Court however proceeded to uphold the contention of the
respondents as regards the constitutionality of sub-section
(3) and sub-section (4) of section 44 of the Act. It found
that sub-section (3) and sub-section (4) of section 44 of the
Act were unreasonable and discriminatory and therefore ultra
vires Article 14 of the Constitution. It found that the said
provisions
were
not
protected
by
Article
31C
of
the
Constitution anrl further held that the impugned provisions of
the
legislation
were
otherwise
unfair;
unjust
and
unreasonable. The High Court found that the deprivation of the
property under sections 41 and 42 of the Act had not been done
by authority of law. The High Court accordingly allowed the
writ petition. Aggrieved by the decision of the High Court the
State of Maharashtra and the Authority have filed this appeal
by special leave.
In the course of this appeal the parties have not
questioned the correctness of the decision of the High Court
as regards the facts which had been found against the
respondents. The arguments were confined to the constitutional
validity of sub-sections (3) and (4) of section 44 of the Act.
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Before the Act was enacted in the year 1976 by the State
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716
SUPREME COURT REPORTS
[1986] l s.c.R.
Legislature there were in force in the State of Maharashtra,
the Bombay Housing Board Act,
1948, in the Bombay and
Hyderabad areas of the State, the Madhya Pradesh Housing Board
Act, 1950 in the Vidarbha area of the State, the Bombay
Building Repairs and Reconstruction Board Act, 1969 and the
Maharaahtra Slum Improvement Board Act, 1973. All these Acts
were repealed by section 188 of the Act and in their place,
the Act was brought into force inter alia with the object of
unifying, ·consolidating and amending the laws relating to
housing, repairing and reconstructing dangerous buildings and
carrying out improvement works in slum areas. The Preamble to
the Act stated that before the Act was passed there were in
existence various corporate and statutory bodies in the State
for dealing with the problem of housing, accommodation, for
repairing and reconstructing buildings in a bad state of
disrepair and presenting a dangerous possibility of collapse,
for carrying out improvemental works in slum areas, and for
advancing loans for construction of houses. It took note of
the fact that the programmes undertaken by these bodies were
more or less complementary and there was considerable overlapping in their working or functioning and hence it was
considered necessary and expedient to co-ordinate the housing
programes for an orderly_ development of the urban· areas in
the State. It was felt that it was necessary to provide for a
more comprehensive and co-ordinated approach to the entire
problem of housing development in a balanced manner, with
sufficient attention to ecology, pollution, over-crowding and
amenities required for leading a wholesome civic life, and
that it was expedient to establish a single Corporate Authority for the whole State and establish new Boards for certain
areas of the State to carry out the plans, programes and
other functions of the Authority. The Act was paased by the
State Legislature for the aforesaid purposes. It received the
assent of the President on April 25, 1977.
Chapter II of the Act provides for the establishment of
the Authority and Boards. Section 3 of the Act authorises the
State Government to establish the Authority by a notification
in the Official Gazette for securing the objectives and
purposes of the Act. The Authority is a body corporate having
perpetual succession and a common seal with the powers to own
property and to enter into contract. Section 18 of the Act
provides for the establishment of Boards for implementing the
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STATE v. BASANTIBAI [VENKATARAMIAH, J.]
717
provisions of the Act. Four Boards are constituted for the
four areas of the State namely, Bombay area, Nagpur area,
Aurangabad area and the Pune area. The functions, duties and
powers of the Authority and the Boards are set out in Chapter
Ill of the Act. Section 28 which is in Chapter Ill of the Act
provides that subject to the provisions of the Town Planning
Act and the provisions of clauses (b) and (h) of sub-section
(1) of section 12 and section 13 of the Metropolitan Act it is
the duty and function of the Authority among others to prepare
or direct th Boards to prepare and execute proposals, plans or
projects for (i) housing accommodation in the State or any
part thereof, sale, inclU:ding transactions in the nature of
hire-purchase of tenements in any building vested in, or
belonging to, the Authority, letting or exchange of property
of the Authority (ii) development including provisions for
amenities in areas within the jurisdiction of the Authority,
(iii) clearance and re-development of slums in urban areas,
(iv) development of peripheral areas of existing urban areas
to ensure an orderly urban overspill, (v) development of
commercial
centres,
(vi)
development
of
new
towns
in
accordance with the provisions of the Town Planning Act, (vii)
development of lands vested in the Authority, etc. etc.. The
functions of the Aiithority as stated above naturally involve
acquisition of land and disposal of property of the Authority.
Chapter V of the Act deals with the acquisition of land and
disposal of property of the Authority. Section 41 of the Act
which deals with the power of the State Government to acquire
land reads thus
"41.
( 1) Where,
on any representation from the
Authority or any Board it appears to the State
Government that, in order to enable the Authority
to discharge any of its functions or to exercise
any of its powers or to carry out any of its
proposals, plans or projects, it is necessary that
anY land should be acquired, the State Government
may acquire the land by publishing in the Official
Gazette_ a notification to the effect that the State
Government has decided to acquire the land ·in
pursuance of this section :
Provided that, before publishing such notification,
the State Government shall, by notice published in
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SUPREME COURT REPORTS
[1986] l S.C.R.
the Official Gazette and served in the prescribed
manner, call upon the owner of, or any other person
who, in the opinion of that Government, may be
interested in, such land to show cause, why it
should not be acquired, and after considering the
cause, if any, shown .by the
owner or any other
person interested in the land, the State Government
may pass such order as it thinks fit.
(2)
The
acquisition of land for any purpose
mentioned in sub-section (1) shall be deemed to be
a public purpose.
(3) Where a notification as aforesaid is published
in the Official Gazette, the land shall, on and
from the date on which the notification is so
published, vest absolutely in the State Government
free from all encumbrances."
Section 42 of the Act confers power on the State
Government to require the person in possession of land which
is vested under sub-section (3) of section 41 of the Act to
surrender
or
deliver
possession thereof
to
the State
Government. Section 43 of the Act provides that every person
ha'ling any interest in any land acquired under Chapter V of
the Act would be entitled to recei'le from the State Government
an amunt as provided by the provisions contained in Chapter
V, Sections 44 to 49 of the Act deal with acquisition of lands
in mnicipal areas and section 50 deals with acquisition of
lands in rural areas. The land situated in any area within the
Jurisdiction of any Municipal Corporation or Municipal Council
is considered as land lying in a 1111nicipal area for purposes
of determination of compensation .and the land outside the
jurisdiction of a Municipal.Corporation or a Municipal Council
is treated as land in a rural area for the said purpose.
Section 44 which is material for purposes of this case which
lays down the basis for determination of the amunt for
acquisition of lands in !lllnicipal areas read thus :
"44.
(1) Where any land including any building·
thereon is acquired and 'lested in the State
Go'/ernment under this Chapter and such land is
situated in any area within the jurisdiction of any
STATE v. BASANTIBAI [VENKATARAMIAH, J.]
719
Municipal Corporation or Municipal Council, the
State Government shall pay for such acquisition an
amount which shall be determined in accordance with
the provisions of this section.
(2) Where the amount has been determined with the
concurrence of the Authority by agreement between
the State Government and the person to whom it is
payable, it shall be determined and paid in
accordance with such agreement.
(3) Where no such agreement can be reached, the
amount payable in respect of any land acquired
shall be an amount equal to one hundred times the
net average monthly income actually derived from
such land, during the period of five consequti ve
years immediately preceding the date of publication
of the notification referred to in section 41 as
may be determined by the Land Acquisition Officer.
(4) The net average monthly income referred to in
sub-section ( 3) shall be calculated in the manner
and in accordance with the principles set out in
the First Schedule.
(5) The Land Acquisition Officer shall, after
holding an inquiry in the prescribed manner,
determine in accordance with the provisions of
sub-section (4) the net average monthly income
actually derived from the land. The Land Acquisition Officer shall then publish a notice in a
conspicuous place on .the land and serve it in the
prescribed manner calling upon the owner of the
land and every person interested therein to intimate to him, before a date specif led in the notice,
whether such owner or person agrees to the net
average monthly income actually derived from the
land as determined by the Land Acquisition Officer.
If such owner or person does not agree, he may
intimate to the Land Acquisition Officer before the
specified date what amount he claims to be such net
average monthly income.
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SUPREME COURT REPORTS
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(6) Any person, who does not agree to the net
average monthly income as determined by the Land
Acquisition Officer under sub-section (5) and the
amount for acquisition to be paid on that basis and
claims a sum in excess of that amount may pref er an
appeal to the Tribunal, within thirty days from the
date specified in the notice referred to in
sub-section (5).
(7) On appeal, the Tribunal shall, after hearing
the appellant, determine the net average monthly
income and the amount to be paid on that basis and
its determination shall be final and shall not be
questioned in any court. 11
Section 45 of the Act provides for apportionment of
amount
payable
on
acquisition
amongst
different
persons
claiming interest in the amount of compensation. Section 46 of
the Act lays down the procedure
for payment
of
atoc1unt
for
acquisition or for depositing of same in the Court. Section 47
of the Act lays down the powers of the Land Acquisition
Officer in relation to determination of the amount
for
acquisition and section 48 of the Act provides for payment of
interest on that am.June at the rates specified therein, by the
State Government. The Land Acquisition Officer is appointed by
the State Government under the powers conferred by section 49
of the Act.
Section 50 of the Act which contains the
provisions relating to th.e basis for determination of amount
for acquisition of l.ands in rural areas and the procedure to
be followed Jn that case reads thus :
"SO.
(I) Where any land (including any building
thereon) is acquired
and
vested
in the State
Government under this Chapter and such land is
situated in any are'a out.o;ide the jurisdiction of
any Municipal Corporation or Municipal Council (in
this Chapter referred to as 'a rural area'), the
State Government shall pay for such acquisition an
aroount, which shall be determined in accordance
with the provisions of this section.
(2) Where the amount has been determined, with the
concurrence of the Authority, by agreement
between
I
STATE v. BASANTIBAI [VENKATARAMIAH, J.]
721
the State Government and the person
payable it shall be
determined
accordance with such agreement.
to whom it is
and
paid in
A
(3) Where no such agreement can be reached, the
State Government shall ref er the case to the B
Collector, who shall determine the amount for
acquisition in accordance with the principles for
determining compensation laid down in the Land
Acquisition Act, 1894, and the provisions of that
Act (including provisions for reference to Court
and appeal) shall apply thereto mutatis mutandis as
if the land has been acquired and compensation had c
to be determined, apportioned and paid under the
provisions of that Act, subject to the modifications that reference in section 23 and 24 of that
Act to the date of publication of the notification
under section 4, sub-section (1) were reference to
the date on which the notice under the proviso to D
sub-section (1) of section 41 of this Act is
published, and the references to the time or date
of the publication of the declaration under section
6 of that Act were references to the date of
publicationof
the
notification .refer
to
in
sub-section (3) of section 41 of this Act in the E
Official Gazette.
Explanation -
In this section, "Collector" means
the Collector of a District and includes any
officer specially appointed by the State Government
or by the Commissioner to perform the functions of F
a Collector under the Land Acquisition Act, 1894".
Wherever the amount payable on acquisition is settled by
agreem_ent
there is no distinction between a land in a
municial area or a land in a
rural area. The point of
distinction which is alleged to be discriminatory between the G
two types of land lies in the method of computation of the
amount payable on acquisition where there is no agres ment •
.,
Whereas in the case of the land situated in a rural areas
· I
section 50 of the Act provides that the valuation of the land
shall be made in accordance with the provisions contained in
section 23 and section 24 of the Land Acquisition Act, 1894 in H
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SUPREME COURT REPORTS
[1986] 1 s.c.R.
the case of the land situated in a nunicipal area the amount
payable has to be calculated according to sub-section (3) of
section 44 of the Act. Section 44(3) of the Act provides that
the said amount shall be equal to one hundred times the net
average monthly income actually derived from such land during
the period of five
consecutive years immediately pr~ceding
the date of publication of the notification referred to in
:<
section 41 of the Act as may be determined by the Land
i
Acquisition Officer. Under sub-section (4) of section 44 of
the Act the net average monthly income ref erred to in
sub-section (3) of section 44 is required to be calculated in
the manner and in accordance with the principles set out in
the First Schedule to the Act. The First Schedule to the Act
reads thus :
"FIRST SCHEDULE
(See sub-section (1) of section 44)
Principles for determination of the net average
monthly income
1,
The
land
Acquisition Officer shall first
determine the gross rent actually derived by the
owner of land acquired, i11cluding any building on
such land, during the period of five consecutive
years ref erred to in sub-section (3) of section 44,
2. For such determination, the Land Acquisition
Officer may hold any local inquiry and obtain, if
necessary, certified copies of ei<tracts from the
""
property
tax
assessment
books
of
the
local
-I'""
authority concerned showing the rental value of
such land.
3. The net a\rerage monthly income referred to in
sub-section (3) of section 44 shall be sixty per
cent, of the average monthly gross rent which shall
be one-sixtieth of the gross rent during the five
consecutive years
as
determined
by
the Land
Acquisition Officer under paragraph 1.
·'11'
4. Forty per cent, of the gross monthly rental
referred
to
above
shall · not
be
taken
int··
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STATE v. BASANTIBAI [VENKATARAMIAH, J.]
723
consideration
in determining
the
net
average
monthly income but shall be deducted in lieu of the
expenditure which the owner of the land would
normally incur for payment of any property tax to
the local authority, for collection charges, income
tax or bad debts as well as for works of repair and
maintenance of the building, if any, on the land.
5. Where the land or any portion thereof has been
unoccupied, or the owner has not been in receipt of
any rent for the occupation of the land during the
whole or any part of the said period of five years,
the gross rent . shall be taken to be the income
which the owner would in fact have derived if the
land had been leased out for rent during the said
period, and for this purpose the rent actually
derived from the land during a period prior or
subsequent to the period during which it remained
vacant or from similar land in the vicinity shall
be taken into account."
The High Court does not say that the amount payable under
sub-sections (3) and (4) of section 44 of the Act for the land
situated in 111.1nicipal area is illusory. It however says that
the method of capitalization set out in section 44(3) and
(4)
of the Act being the only method out of the several methods of
valuing the land under the Land Acquisition Act, 1894 the
Owner of land in a 111.1nicipal area is placed in a less
advantageous position and is denied equality of treatment. In
order to appreciate this ground of objection, it is necessary
to examine whether the classification of the land under the
Act into the land in lllllnicipal area and the land in rural area
for purposes of determining the amount payable on acquisition
is bad. It is not denied that the land in lllllnicipal area
conmands various advantages which are not available in the
case of land in rural areas. The Act is not introduced for the
benefit of areas like Bombay Corporation Area and areas under
the jurisdiction of other Corporations and Dl.lnicipalities
~nly. It is enacted for the whole State more than 90 per cent
of which constitutes rural area. The potentialities of a land
in a Dl.lnicipal area are far higher than the potentialities of
land in a rural area. There is also no occasion under the Act
for the State Government to treat one piece of land in a
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SUPREME COURT REPORTS
[19861 1 s.c.R.
mnicipal area in one way and another piece of land in that
area differently. All lands in a 111micipal area have to be
valued in only one way that is in accordance with section
44(3) and (4) of the Act and all lands in rural areas have
also to be valued only in one way and that is in accordance
with the provisions of the Land Acquisition, 1894. There could
have been two different Acts one for municipal areas and
another for rural areas, each providing for a different method
of valuation of land. Such a classification would have been
unexceptionable having regard to the object and purposes of
the two Acts and the difference in the potentialities of the
two types of lands. It may be noticed that in State of Qijarat
v. Shri Sbantilal Hangaldaa & Ors., [1969] 3 s.c.R. 341 this
Court has upheld the classification of land under the same Act
for purposes of valuation at different stages of town planning. This view is adopted and followed in Prakash Amichand
Shah v. State of Qijarat & Ors., [1986] l S.C.C. 581, recently. The method of capitalization is also one of the recognised
methods which is adopted for the purpose of valuation of
properties acquired under the Land Acquisition Act, 1894. All
methods of valuation adopted under the Act are intended to
achieve the same purpose, namely, determination of the market
value of the land acquired.