# STATE OF GUJARAT v. SURI SHANTILAL MANGALDAS & ORS - **Citation:** [1969] 3 S.C.R. 341 - **Court:** Supreme Court of India - **Decided:** 1969-01-13 - **Case number:** Civil Appeal No. 1377 of 1968 - **Bench:** M. Hidayatullah - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-gujarat-v-suri-shantilal-mangaldas-ors-4873 - **Pages:** 33 ## Headnote J. C. SHAH, V. RAMASWAMI, G. K. MITTER AND A. N. GROVER, JJ.J Bombay Town Planning Act (27 of 1955), ss. 53 and 61-Compensation at market value on a date many years before the date of extinction o/ ownerS' title-If violative of Art. 31(2) of Constitution after Fourth Amendment-Acquisition for town plcnning----lf protected by Art. 31(5) (b)(ii). By a resolution dated April 18, 1927, the Borough Municipality of Abmedabad declared its intention of making a town-planning scheme JJDder the Bombay Town Planning Act, 1915. A plot of land measuring 18,219 sq. yards belonging to the first respondent was covered by the scheme. In the draft scheme the plot was reconstituted into two plotsone plot measuring 15,403 sq. yards reserved for the first respondent and the other, measuring 2,817 sq. yards reserved for the Municipality. The arbitrators were appointed to decide various matters made little progress. In 1955, the 1915-Act was repealed by the Bombay Town Planning Act. 1955 which received the assent of President on August 1, 1955, and came into force on April 1, 1957. By s. 90(2) of the 1955 Act, the proceedings preparing a scheme commenced under the repealed Act was continued. Under the 1955 Act, on the coming into forc.e of the scheme all lands which are required by the local authority, unless otherwise determined in the scheme, by the operation of s. 53(a) vest absolutely therein free from all encumbrances. By cl. (b), ownership in a plot belonging to a person is substituted by the owne'rship in the reconstituted plot, his ownership in the original plot is extinguished and simultaneously therewith he becomes the owner of a reconstituted plot subject to the rights settled by the Town Planning Officer. The reconstituted plots, having regard to the .exigencies of the scheme need not be of the same dimensions as the original land and are generally smaller. Section 67 provides that the difference between the market value df the plot with all the buildings and works thereon at the date of the declaration of the intention to make a scheme and the market value of the plot as reconstituted on the same date and without reference to the improvements contemplated in the scheme is to be the compensation due to the owner. Section 71, which is a corollary to s. 67, provides, inter alio that if the owner of the origina1 land is not allotted a plot at all, he shall be paid the value of the original plot at the date of the declaration of intention to make a scheme. The Town Planning Officer informed the first respondent that Rs. 25,411 were awarderi to him as compensation. He filed a petition in the High Court, challenging the validity of the Act on the ground that it violated Art. 31 (2) of the Constitution. The High Court declared ss. 53 and 67 of the Act ultra vires and declared the town planning scheme invalid as a coronary. In appeal to this Court on the questions, (I) whether the Act was exempt from the operation of Art. 31(2), because its object was promotion of public health and fell within the terms of Art. 31 (5)(b) (ii), and (2) whether the Act specifies the 'principles on which compensation is to be determined and the guarantee under Art. 31 (2) is on that account not infringed, 342 SUPREME COURT REPORTS (!969] 3 S.C.R. . HELD: (I) Section 53(a) of the Act is a law for compulsory acquisi- A tlon of land;. 1t cannot. be said .th~t because the object of the Act is to promore J?Ubhc health 1t falls w1th1D the exception of Art. 31(5)(b)(iiJ. The prmc1pal objects of town planning legislation no doubt are to provide for planned and controlled development and use of land in urban areas ~ith special 're&:a.r~ to requirements of better living conditions and sanitation; but acqu1s1t1on of property for such purposes could not be made under laws coming within the purview of Art. 3!(5)(b)(ii) without payment of compensation. [354 F, G] B Dy. Com111issioner and Collector, Kamrup v. Durga Nath Sarma, [1968] I S.C.R. 561, followed. (2) The legislature s ## Text _Characters 0–39,912 of 93,998. This is a partial read: ask again with offset=39912 for what follows._ A B c D ' E F G ' H. STATE OF GUJARAT v. SURI SHANTILAL MANGALDAS & ORS. January 13, 1969 [M. HIDAYATULLAH, C.J., J. C. SHAH, V. RAMASWAMI, G. K. MITTER AND A. N. GROVER, JJ.J Bombay Town Planning Act (27 of 1955), ss. 53 and 61-Compensation at market value on a date many years before the date of extinction o/ ownerS' title-If violative of Art. 31(2) of Constitution after Fourth Amendment-Acquisition for town plcnning----lf protected by Art. 31(5) (b)(ii). By a resolution dated April 18, 1927, the Borough Municipality of Abmedabad declared its intention of making a town-planning scheme JJDder the Bombay Town Planning Act, 1915. A plot of land measuring 18,219 sq. yards belonging to the first respondent was covered by the scheme. In the draft scheme the plot was reconstituted into two plotsone plot measuring 15,403 sq. yards reserved for the first respondent and the other, measuring 2,817 sq. yards reserved for the Municipality. The arbitrators were appointed to decide various matters made little progress. In 1955, the 1915-Act was repealed by the Bombay Town Planning Act. 1955 which received the assent of President on August 1, 1955, and came into force on April 1, 1957. By s. 90(2) of the 1955 Act, the proceedings preparing a scheme commenced under the repealed Act was continued. Under the 1955 Act, on the coming into forc.e of the scheme all lands which are required by the local authority, unless otherwise determined in the scheme, by the operation of s. 53(a) vest absolutely therein free from all encumbrances. By cl. (b), ownership in a plot belonging to a person is substituted by the owne'rship in the reconstituted plot, his ownership in the original plot is extinguished and simultaneously therewith he becomes the owner of a reconstituted plot subject to the rights settled by the Town Planning Officer. The reconstituted plots, having regard to the .exigencies of the scheme need not be of the same dimensions as the original land and are generally smaller. Section 67 provides that the difference between the market value df the plot with all the buildings and works thereon at the date of the declaration of the intention to make a scheme and the market value of the plot as reconstituted on the same date and without reference to the improvements contemplated in the scheme is to be the compensation due to the owner. Section 71, which is a corollary to s. 67, provides, inter alio that if the owner of the origina1 land is not allotted a plot at all, he shall be paid the value of the original plot at the date of the declaration of intention to make a scheme. The Town Planning Officer informed the first respondent that Rs. 25,411 were awarderi to him as compensation. He filed a petition in the High Court, challenging the validity of the Act on the ground that it violated Art. 31 (2) of the Constitution. The High Court declared ss. 53 and 67 of the Act ultra vires and declared the town planning scheme invalid as a coronary. In appeal to this Court on the questions, (I) whether the Act was exempt from the operation of Art. 31(2), because its object was promotion of public health and fell within the terms of Art. 31 (5)(b) (ii), and (2) whether the Act specifies the 'principles on which compensation is to be determined and the guarantee under Art. 31 (2) is on that account not infringed, 342 SUPREME COURT REPORTS (!969] 3 S.C.R. . HELD: (I) Section 53(a) of the Act is a law for compulsory acquisi- A tlon of land;. 1t cannot. be said .th~t because the object of the Act is to promore J?Ubhc health 1t falls w1th1D the exception of Art. 31(5)(b)(iiJ. The prmc1pal objects of town planning legislation no doubt are to provide for planned and controlled development and use of land in urban areas ~ith special 're&:a.r~ to requirements of better living conditions and sanitation; but acqu1s1t1on of property for such purposes could not be made under laws coming within the purview of Art. 3!(5)(b)(ii) without payment of compensation. [354 F, G] B Dy. Com111issioner and Collector, Kamrup v. Durga Nath Sarma, [1968] I S.C.R. 561, followed. (2) The legislature specified in the 1955 Act, principles for determination of compensation. The principles· for determination of compen- · sation cannot be said to be irrelevant, nor can the compensation determined, be said to be illusory. Being a principle relating to compensation, C a challenge to that principle, on the ground that a just equivalent of what the owner was deprived of is not provided, is excluded by Art. 31(2) after the Constitution Fourth Amendment Act. [370 DJ (a) It was not necessary to provide for compensation for the entire land of which a person is deprived, because, the concept that the lands ve•t in the local authority when the inrention to make a scheme is notified is against the plain inrendment of the Act. A part of the plot or even the D whole plot belonging to an owner may go to form a reconstituted plot which may be allotted to another person or may be appropriated to public purposes under the scheme. No process actual or notional of transfer is contemplated in that appropriation. The lands covered by the scheme are subjected by the Act to the power of· local authority to re-adjust titles, but no reconstituted plot vests at any stage in the local authority un1e.ss it is needed for a purpose of the authority; and when land is so required on the coming into force of the scheme, compensation is paid to the E owner of the land. [356B, F-H] ( b) The Act specifies the principles on which the compensation is tc be determined and given. Specification of principles means laying down general guiding rules applicable to all pe'rsons or transactions governed the'reby. Compensation determined on the basis of market value prevailing on a date anterior to the date of extinction of interest is still determined on a principle specified. Whether an owner of land is given a reconstituted plot or not. the rule fdr determining what is to be given as recompense remains the same. It is a principle applicable to all cases in which by virtue of the o~ration of the Town Planning Act a person is deprived of land whether in whole or in part. [357H-358B] (c) By Art. 31(2) as it originally stood, exercise of the power to legislate for compulsory acquisition was subject to the condition that the law for compulsory acquisition for public purposes eit~er fixed the amount o'f the compensation or specified the principles on which, and the manner in which, the compensation was to be determined and given. This Court in Bela Banerjee'.• case [1954] S.C.R. 558 and Subodh Gopa/'s case, F G fl 954] S.C.R. 587. held that 'compensation' meant a 'just equivalent'. But after the Fourth Amendment Act, adequacy of compensation fixed b}' the Legislature or awa'rded according to the principles specified by the legislature for determination is ~ot justiciable. I~ d~s not me3.!1. how~ve~, H that something fixed or determined by the apphcatton of specified prn~c1ples which is illusory or can in no sense be regarded as compensation must be upheld by the courts, for to do so, would be to grant a charter of arbitrariness, and permit a device to defeat a constitutional guarantee. ' ,- /f> A B c D E F G H GUJARAT v. SHANT!LAL 343 But compenstion fixed or determined on principles specified by the Legis· lature cannot be permitted to be challenged on the indefinite plea that it is not a "just or fair' equivalent. Principles may be challenged on the ground that they are irrelevant to the determination of compensation, but not on the plea that what is awarded as a result of the application of those principles is not just or fair compensation. Such a challenge will be in clear violation of the constitutional decla'ration that adequacy of compensation provided is not justiciable. [366 A-DJ Observations contra in P. Vajravelu Mudaliar v. The Special Deputy Collector, Madras, [1965] I S.C.R. 614, obiter. Union of India v. Metal Corporation of India Ltd. [1967] I S.C.R. 255 overruled, because (i) Parliament had specified in the Metal Corporation of India (Acquisition of Undertaking) Act, 1965, the principles for determining compensation of the undertaking, (ii) those principles expressly related to the determination of compensation payable, (iii) they were not irrelevant to the determination of compensation, and (iv) the compensation was not illusory. [370C] ( d) The statute which permits the property of an. owner to be compulsorily acquired by payment of market value at a date which is many years before the date on which the title of the owner is extinguished cannot be attacked on the ground of unreasonableness, because, a law made under Art. 31(2) is not liable to challenge on the ground that it violates Art. 19(1 )(f). [370 HJ Smt. Sitabati Dehi v. State of West Bengal, [1967] 2 S.C.R. 749. followed. (e) The validity of the statute cannot depend upon whether in a given case it Dperates harshly. If the scheme came into force within a rca!lonable time from the date on which the declaration of intention to make the scheme was notified, it could not he contended that fixation of compensation according to s. 67 i would make the seheme invalid. The fact that con<;iderable time elapsed cannot be a ground for declaring the section ultra i·ires. f371 B] (f) If s. 71 read with s. 67 lays down a principle of valuation, it cannot be st'ruck down on the ground that, because of the exigencies of the scheme, it is not possible to allot a reconstituted plot to an O\vner of land covered by the scheme. [371 D] (g) The n1ethod of determining compensation in respect of lands which are subject to the town planning scheme is prescribed in the Town Planning Act nnd when power is given under the statute to do a certain thing in a certain way, it must be done in that way or not at all. Therefore, unlike Va;rc;velu Mudaliar's case, ·where the State Government could re•ort to one of two methods-the Land Acquisition Act, 1894 or the Land Acquisition (Madras Amendment) Act, 1961,-and therefore arbitrarily, 1n the present case, the local authority can only act under the Town Planning Act for purposes of town planning, and the'refore does not violate Art. 14. [372 D-E. HJ Taylar v. Taylor, [1875] I Ch. D. 426, applied. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1377 of 1968. . Appeal from the judgment and order dated January 24, 1968 of the Gujarat High Court in Special Civil Application No. 837 of 1960. 344 SUPREME COURT REPORTS [1969] 3 S.C.R. N. S. Bindra, S. K. Dholakia and S. P. Nayar, for the appellant. M. C. Chagla and /. N. Shroff, for respondent Nos. 1 to 3. HIDAYATULLAH, C. J., delivered a Separate Opinion. The Judgment of SHAH, RAMASWAMI, MITTER and GROVER JJ was delivered by SHAH, J. ' . Hidayatullah, C.J. I have read the weighty judgment proposed to be delivered by my brother Shah and I find myself so much in agreement with it that I consider it unnecessary for me to express myself. However, it is proper for me to say a few words in explanation since I was a party to P. Vajravelu Mudaliar's case(') and the obiter pronouncement of some opinions there. That case was heard with N. B. Jeejeebhoy's case('). One was a postConstitution (Fourth Amendment) case and the other a preConstitution case. The judgment in the two cases were delivered on the same day. It appears that the reasoning in the two cases was not kept separate and the whole of the matter was discussed in a case in which it was not n.~cessary for the ultimate conclusion. Because of the close ;iroximity of. the decisions, it escaped me that the discussion was in the wrong case and the other merely followed it. My brother Shah has not made the two cases to fall in their proper places. It is certainly out of the question that the adequacy of compensation (apart from compensation which is illusory or proceeds upon principles irrelevant to its determination) should be questioned after the Amendment of the · Constitution. The Amendment was expressly made to get over the effect of the earlier cases. which had defined compensation as _just equivalent. Such a question could not arise after the amendment. I am in agreement that the remarks in P. Vajravelu's case(') must be treated as obiter and not binding on us. I am also of the opinion that the Metal Corporation case(') was wrongly decided and should be overruled. Shah, J. In a writ petition field by the first respondent Shantilal Mangaldas the High Court of Gujarat has declared ss. 53 and 67 of the Bombay Town Planning Act 27 of 1955, ultra vires, insofar as they authorise the local authority, 2nd respondent in this appeal, to acquire lands under a town-planning scheme, and as a corollary to that view has declared invalid the City Wall Improvement Town Planning Scheme No. 5 framed in exercise of the powers conferred under the Act. By Resolution dated April 18, 1927, the.Borough Municipality Qf Ahmedabad which was a local authority under the Bombay Town ·Planning Act 1 of 1915 declared its intention to make a town-planning scheme known as "The City Wall Improvement · (1) [1965] 1 S.C.R. 614. (2) (1965] lS.C.R. 636. (3) (1967] I S.C.R. 255. A ,. B .~. ·;- c \I J· D • E F G H A B c D E F G H GUJARAT v. SHANTILAL (Shah, /,) 345 Town Planning Scheme" in respect of a specified area. A plot of land No. 221 measuring 18,219 square yards belonging to the first respondent was covered by the scheme. The Provincial Government sanctioned the intention to make the scheme, and a draft scheme was then prepared under which the area of plot No. 221 was reconstituted into two plots--Plot No. 176 measuring 15,403 square yards reserved for the first respondent and Plot No. 178 measuring 2,816 square yartls reserved for the local authority for constructing quarters for municipal employees. The draft scheme was sanctioned by the Government of Bombay on August 7, 1942. On August 13, 1942, the Government of Bombay appointed an arbitrator under Act 1 of 1915 to decide matters set out in s. 30 of the Act. From time to time several arbitrators were appointed, but apparently little progress was made in the adjudication of matters to be decided by them under the act. The Bombay Town Planning Act 1 of 1915 was repealed by s. 90 of the Bombay Town Planning Act 27 of 1955 with effect from April l, 1957. By s. 90(2) making of any scheme commenced under the repealed Act was to be continued and the provisions of thd new Act were to have effect in relation to the publication, declaration of intention, draft scheme, final scheme, sanction, variation, restriction, proceedings, suspension and recovery to be made or compensation to be given. The arbitrator appointed under Act 1 of 1915 was designated "Town Planning Officer" under Act 27 of 1955, and the proceedings under the City Wall Improvement Town Planning Scheme were continued before him. On August 23, 1957, the Town Planning Officer informed the first respondent that Rs. 25,411 were awarded to him as compensation for plot No. 178. The first respondent then filed a petition in the High Court of Gujarat (which bad jurisdiction after reorganization of the State of Bombay) challenging the validity of Act 27 of 1955 and acquisition of plot No. 178 on the plea that the Act infringed the fundamental right of the first respondent guaranteed by Art. 31 (2) of the Constitution. The scheme was sanctioned by the Government of Gujarat on July 21, 1965, and the final scheme came into operation on September 1, 1965. The High Court entered upon an elaborate analysis of the provisions of the Act and held : "Section 53 read with section 67 in so far as it authorises acquisition of land by the local authority under pending schemes continued under section 90 of the new Act must, therefore, be held to be violative of Article 31 (2) and the acquisition of petitioners' lands in the 3 46 SUPREME COURT REPORTS [!969] 3 S.C.R. various petitions under the City Wall Improvement Town Planning Scheme No. 5 must be held to be invalid.", and on that view the High Court did not consider the other contentions raised on behalf of the first respondent. With certificate granted by the High Court, this appeal is preferred by the State of Gujarat. The declaration of intention, preparation of the draft scheme and proceeding for preparation of the final scheme , were made under Act 1 of 1915. Intimation of the amount of compensation determined to be payable to the first respondent was however given under Bombay Ad 7.7 of 1955 and the scheme was also sanctioned .. But bys. 90 of the .kt as amended by Gujarat Act 52 of 1963, continuity of the operations for making and implementing the Town Planning Scheme is maintained. The principal objects of the towin planning legislation are to provide for ~lanned and controlled development and use of land in urban areas. Introduction of the factory system into methods of manufacture, brought about a great exodus of population from the village into the manufacturing centres leading to congestion and overcrowding, and cheap and insanitary dwellings were hurriedly erected often in the vicinity of the factories. Erection of these dwelJings was generally subject to little supervision or control by local authorities, and the nev.; dwellings were built in close and unregulated proximity with little or no regard to the requirements of ventilation and sanitation. Necessity to make a planned development of these new colonies for housing the influx of population in sanitary surroundings was soon felt. The Bombay Legislature enacted Act 1 of 1915 with a view to remedy the situation. The Bombay Town Planning Act 27 of 1955 is modelled on the same pattern as Act 1 of 1915, but with one important variation. By Ch. II of the new Act it is made obligatory upon every local authority to carry out a survey of the area within its jurisdiction and to prepare and publish in the prescribed manner a development plan and submit it to the Government for sanction. A development plan is intended to lay down in advance the manner in which the development and improvement of the entire area within the jurisdiction of the local authority are to be carried out and regulated, with particular reference to- (a) proposals for desigr.ating the use of the land, for the purposes such as (1) residential, (2) industries (3) commercial, and ( 4) agricultural; A c D E F G H A B c D E F G H GUJARAT V. SHANTILAL (Shah, J.) (b) proposals for designation ofland for public purposes such as parks, play-grounds, recreation grounds, open spaces, schools, markets or medical, public health of physical culture institutions; ( c) proposals for roads and highways; (d) proposals for the reservation of land for the purpose of the Union, any State, any local authority or any other authority established by Jaw in India; and (e) such other proposals for public or other purposes as may from time to time be approved by a local authority or directed by the State Government in that behalf. 347 By making it obligatory upon a local authority to prepare a development plan under Bombay Act 27 of 1955 it was clearly intended that the Town Planning Schemes should form part of a single cohesive pattern for development of the entire area over which the local authority had jurisdiction. Chapter m of Bombay Act 27 of 1955 relates to the making of the Town Planning Scheme. Chapter JV deals with the declaration of intention to make a scheme and making of a draft scheme. Chapter V deals with the appointment of Town Planning Officers and the Board of Appeal and their powers. Chapter VI deals with the splitting up of schemes into sections and preliminary schemes. Chapter VII deals with Joint Town Planning Schemes and Ch. Vill with finance. Under Bombay Act 27 of 1955 after a development plan is sanctioned, the local authority makes a declaration of its intention to make a scheme and then prepares a draft scheme setting out the size and shape of every reconstituted plot, so far as may be, to render it suitable for building purposes and where the plot is already built upon, to ensure that the building as far as possible complies with the provisions of the scheme as regards open space. The scheme may also make provision for lay out of lands; filling up or reclamation of lands, lay out of new streets, roads, construction, diversion, extension, alteration, improvement ana stopping up of streets, roads and communications; construction, alteration and removal of buildings, bridges and other structures; allotment or reservation of lands for roads, open spaces, gardens, recreation grounds, schools, markets, green belts, dairies, transport facilities, and public purposes of all kinds; drainage, lighting; water-supply; preservation of objects of historical or national interest or beauty and of buildings used for religious purposes; imposition of conditions relating to constructions and other matters not inconsistent with the object of the Act as may be prescribed. The -· 348 SUPREME COURT REPORTS [1969] 3 S.C.R: draft scheme is published afte~ it receives the sanction of the State Government The State Government then appoints Town Planning Officer to perform the duties specified in s. 32 of the Act. An appeal lies to a Board of Appeal against certain decisions which the Town Planning Officer may make. After the Town Planning Officer has dealt with the various matters relating to the draft scheme, and the appeals against his orders have been disposed of, the State Government may sanction the scheme, and on and after the date fixed in the notification sanctioning the scheme, the townplanning scheme has effect as if it were enacted in the Act. In making a town-planning scheme the lands of all persons covered by the scheme are treated as if they are put in a pool. The Town Planning Officer then proceeds to reconstitute the plots for residential buildings and to reserve lands for public purposes. Reconstituted plots are allotted to the landholders. The reconstituted plots having regard to the exigencies of the scheme need not re of the same dimensions as the original land. Their shape, and size may be altered and even the site of the reconstituted plot allotted to an owner may be shifted. The Town Planning Officer may lay out new roads, divert or close existing roads, reserve lands for recreation grounds, schools, markets, green belts and similar public purposes, and provide for drainage, lighting, water-supply, filling up or reclamation of low-lying, swamp or unhealthy areas or levelling up of land so that the total area included in the scheme may conduce to the health and well-being of the residents. Since the town-planning scheme is intended to improve the sanitary conditions prevailing in a locality, the owners of plots are required to maintain land open around their buildings. The object of the scheme being to provide amenities for the benefit of the residents generally, the area in the occupation of the individual holders of land is generally reduced, for they have to contribute out of their plots, areas which are required for maintaining the services beneficial to the community. l!nder the Act the cost of the scheme is to be met wholly or in part by contributions to be levied by the local authority on each plot included iQ the final scheme calculated in proportion to the increment which is estimated to accrue in respect of each plot. To ensure that no undue hardship is caused and owners of plots have an opportunity of raising objections to the provisions of the scheme including its financial provisions, power is conferred upon the Town Planning Officer to entertain and hear objections against the recO'llstitution of the plots and relating to matters specified in s. 32 i.e. the physical, legal lliOld financial provisions of the scheme. Only after the objections have been heard and disposed of, the scheme is published and becomes final. A B c D E F G H A B c D E F G H GUJARAT V, SHANTILAL (Shah, J.) 349 The relation between ss. 53 and 67 which have been declared ultra vires by the High Court and the other related provisions may now be determined. Section 53 of the Act provides : "On the day on which the final scheme comes into force,- (a) all lands required by the local authority shall, unless it is otherwise determined in such scheme, vest absolutely in the local authority free from all encumbrances; (b) all rights in the original plots which have tie.!n re-constituted shall determine and the re-constituted plots shall become subject to the rights settled by the Town Planning Officer." Th~ expression "re-constituted plot" is defined in s. 2(9) as meaning a plot which is in any way a)tered by the making of a town planning scheme, and by the Explanation the word "altered" includes alteration of ownership. By cl. (b) of s. 53 ownership in a plot belonging to a person is substituted by the ownership in the reconstituted plot his ownership in the original plot is extinguished and simultaneously therewith he becomes the owner of a reconstituted plot subject to the rights settled by the Town Planning Officer. On the coming into force of the scheme all lands which are required by the local authority, unless otherwise determined in the scheme, by the operation of s. 53(a), vest absolutely there- ; n free from all encumbrances. The result is that there is a complete shuffling up of plots of land, roads, means of communication, and rearrangement thereof. The original plots are r~on stituted, their shapes are altered. portions out of plots are separated. lands belonging to two or more owners are combined into a ;ingle plot, new roads are laid out, old roads are diverted or closed up, and lands originally belonging to private owners are used for public purposes i.e. for providing open spaces, green belts dairies etc. In this process the whole or part of a land of one person, may go to make a reconstituted plot, and the plot so reconstructed may be allotted to another person; and the lands needed for public purposes may be earmarked for those purposes. The re-arrangement of titles in the various plots and reservation of lands for public purposes require financial adjustments to be made. The owner who is deprived of his land has to be compensated, and the owner who obtains a re-constituted plot in surroundings which are conducive to better sanitary living conditions has to contribute towards the expenses of the scheme. This is because on the making of a town planning scheme the value of the plot rises and a part of the benefit which arises out of the unL8Sup.C.l/u9--4 350 SUPREME COURT REPORTS (1969] 3 S.C.R. earned rise in prices is directed to be contributed towards financing of the scheme which enables the residents in that area to more amenities, better facilities and healthier living conditions. For that purpose provision is made in s. 65 that the increment shall be deemed to be the amount by which at the date of the declaration of intention to make a scheme, the market value of a plot included in the final scheme, estimated on the assumption that the scheme has been completed, would exceed at that, the market value of the same plot estimated without reference to improvements contemplated by the scheme. By s. 66 the cost of the scheme is required to be met wholly or in part by contributions to be levied by the local authority on each plot included in the final scheme calculated in proportion to the increment which is estimated to accrue in respect of such plot by the Town Planning Officer. Section 67 provi· des: "The amount by which the total value of the plots included in the final scheme with all the buildings and works thereon allotted to a person falls short of or exceeds the total value of the original plots with all the buildings and works thereon of such person shall be deducted from or added to, as the case may be, tha contributions leviable from such persons, each of such riots being estimated at its market value at the date o the declaration of intention to make a scheme or the date of a notification under sub-section (1) of section 24 and without reference to improvements due to the alteration of its boundaries." ~· Section 67, it will clearly appear, is intended to make adjustments between the right to compensation for loss of land suffered by the owner, and the liability to make contribution to the finances of the scheme; and s. 71 is a corollary to s. 67. Section 71 provides : "If the owner of an original plot is not erovided with a plot in the final scheme or if the contribution to be levied from him under section 66 is less than the total amount to be deducted therefrom under any of the provisions of this Act, the net amount of his loss shall be payable to him by the local authority in cash or in such other way as may be agreed upon by the parties." The provision~ relating to payment of compensation and recovery of contributions are vital to the successful implementation of the scheme. The owner of the reconstituted plot who gets the benefit of the scheme must make contribution towards the expenses of the scheme; the owner who loses his property must similarly be compensated. For the purpose of determining the compensation, the Legislature has adopted the basis of market value of land expropriated, but the land is valued not on the date of exA B c D . E F G H A B c D E G H GUJARAT v, SHANTILAL (Shah, J.) 351 tinction of the owner's interest, but on the date of the declaration of intention to make the scheme. In the view of the High Court this pattern of computing compensation infringes the fundamental right guaranteed under Art. 31 (2), of the Constitution. Since the Act authorises comjlulsory transfer of ownership in land to the local authority for pubhc purposes the High Court held it clearly falls within the terms of Art. 31(2A) of the Constitution, and on that account there is acquisition of land within the meaning of Art. 31(2) of the Constitution, and the Act is not protected by Art. 31(5)(b)(ii). The High Court further held that in determining the compensation payable to the owner of the land which is appropriated to public purposes, the increase in the value of the reconstituted plot allotted cannot be taken into account, because it is not attributable or relateable to the acquisition of their plots, but is a benefit which they share in common with the other members of the community as a result of the scheme, "quite irrespective whether their, plots are acquired or not", aod it is, therefore, not liable to be-ciken into account in determining whether the compensation received by them for acquisition of their plots was adequate, that in any event the increment in the value of the plot allotted to the owner is uncertain as well as irreleyant as a principle for determining compensation, since it is quite possible that no plot may be allotted to an owner of land in a Town Planning Scheme. Further, observed the High Court, compensation for loss of land being determined under s. 67 of the Act only on the basis of the market value at the date of declaration of intention to make the scheme and not the market value at the date on which the scheme comes into force, the Act· dues not give for the original plot of land of the owner a reconstituted plot together with compensation for loss of the difference in the area between the original and reconstituted plot. The High Court further observed that a provision for awarding compensation on the basis of market value under s. 67 of the Act is a sufficient specification of a principle of compensation within the meaning of Art. 31 (2), but the Act was still not saved for two reasons- (1) that there was no principle for compensating' an owner of land to whom no reconstituted plot was allotted; and (2) that payment provided by the Act in satisfaction of the claim to land statutorily exprnpriated based on the market.valu_e of the land at the date of the declaration of intention to make a scheme was not payment of compensation guaranteed by Art. 31(2). The High Court was of the view that compensation based on the market value may be sufficient specification of principle of compensation within Art. 31 (2) only if it is a just equivalent of the land expropriated and payment. computed on the market value at a date many years before the date on which the land was acquired is inconsistent with the C