http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: MAKHAN LAL MALHOTRA AND OTHERS

       Vs.

RESPONDENT: THE UNION OF INDIA

DATE OF JUDGMENT: 27/10/1960

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. SUBBARAO, K. WANCHOO, K.N.

CITATION:  1961 AIR  392            1961 SCR  (2) 120  CITATOR INFO :  R          1963 SC 181  (6)  D          1978 SC 747  (32)  R          1978 SC 771  (65)

ACT: Evacuee  Property-Rural  building-Claim  for   compensation- Classification-Validity of rules-Displaced Persons  (Claims) Supplementary Act, 1954 (12 of 1954), r. 5-Displaced Persons (Compensation and Rehabilitation) Act, 1954 (44 of 1954), r. 65 Constitution of India, Arts. 14, 31(5)(b)(iii).

HEADNOTE: The  petitioners  who  were  displaced  persons  from   West Pakistan  put  forward certain claims in regard  to  village houses which they had left there, but which were rejected by the Rehabilitation authorities.  The claims were for amounts above Rs. 20,000 in the case of some of the petitioners  and above Rs. 10,000 in the case of the others.  By r. 5  framed under  the  Displaced Persons  (Claims)  Supplementary  Act, 1954,  claims could be verified provided, inter  alia,  that where a claimant had been allotted any agricultural land  in India  and  such land so allotted exceeded four  acres,  the value of the building in respect of which the claim was made shall  not  be  less than Rs. 20,000 and where  it  did  not exceed  four  acres  the claim made was not  less  than  Rs. 10,000  Rule 65 of the Displaced Persons  (Compensation  and Rehabilitation) Act, 1954, provided that any person to  whom more than four acres of agricultural land had been  allotted shall not be entitled to receive compensation separately  in respect  of  his verified claim for any rural  building  the assessed  value of which was less than Rs. 20,000,  and  any person  allotted  four  acres or less was  not  entitled  to receive  compensation  where  the value was  less  than  Rs. 10,000  The  petitioners  challenged  the  validity  of  the aforesaid   rules  as  being  discriminatory   and   thereby contravening  Art.  14 of the Constitution of India  on  the grounds  that the object of the various Acts and  the  rules made thereunder was to rehabilitate displaced persons but by the  rules, classifications had been made with reference  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

houses  in rural areas which were discriminatory as  neither the  classes were based on intelligible differentia nor  was there  a  rational nexus between that  differentia  and  the object  sought  to  be  achieved.  It  was  found  that  the impugned  rules were made in pursuance of an  Inter-Dominion Agreement  between  the  two  Governments  with  regard   to evaluation   of   evacuee  property,  which   had   received recognition in Art. 31(5) (b)(iii) of the Constitution. Held, that the impugned rules afforded a reasonable justifi- cation  for the classification and did not  contravene  Art. 14 of the Constitution. 121

JUDGMENT: ORIGINAL JURISDICTION: Petition No. 44 of 1958. Petition  under  Art. 32 of the Constitution  of  India  for enforcement of Fundamental Rights. Naunit Lal and Gopal Singh, for the petitioners. H.   N. Sanyal, Additional Solicitor-General of India, N.   S. Bindra, K. R. Choudhri and R. H. Dhebar, for the  respondent. 1960.  October 27.  The Judgment of the Court was  delivered by KAPUPR.  J.-The petitioners have moved this Court under Art. 32  of the Constitution for a writ of mandamus  against  the respondent   to  verify  the  claims  put  forward  by   the petitioners  and to grant compensation in  respect  thereof; but  there is little merit to commend the acceptance of  the petition. The petitioners are displaced persons from West Punjab which is  now  known  as West Pakistan and  have  taken  up  their residences  in different parts of India.  They  put  forward certain  claims in regard to village houses which  they  had left  in West Pakistan and which were situate  in  different villages.   The petitioners have in their petition  set  out their   respective  claims  which  were  rejected   by   the Rehabilitation  authorities.   It  is  unnecessary  to  give details of the properties in the various villages in  regard to which claims were made.  It is sufficient to say that the claims were put forward and they were for amounts above  Rs. 20,000  in the case of petitioners Nos.  1 and 2  and  above Rs. 10,000 in the case of petitioners Nos. 3 The  petitioners  challenge the vires of two  rules--Rule  5 under  the  Displaced Persons  (Claims)  Supplementary  Act, 1954, (Act 12 of 1954) and r. 65 of the Rules made under the Displaced Persons (Compensation and Rehabilitation Act), Act 44 of 1954.  The challenge is on the ground of violation  of Art. 14 of the Constitution.  It is necessary at this  stage to  set  out  the various Acts and  regulations  which  were passed in regard to displaced persons dealing with 122 verification of their claims and the giving of  compensation to them. On April 1, 1948, the East Punjab Refugees (Registration  of Claims) Act, 1948, East Punjab Act 8 of 1948, was passed and this was followed by the East Punjab Refugees  (Registration of Land Claims) Act 12 of 1948.  In the latter Act " land  " was defined in s.   2(b) to mean " land which is not occupied as the site of any building  in a  town or village and is occupied or let  for  agricultural purposes  or for purposes subservient to agriculture or  for pasture and includes- (i)  the  sites  of buildings and other structures  on  such land;".

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

Under s. 2(a) " claim " was defined as " a statement of loss or damage suffered by a refugee  since the  first day of March 1947, in respect of his land  within the  territory now comprised in the Province of  (Punjab  in Pakistan),   North   West   Frontier   Province,   Sind   or Baluchistan,  or  in any State adjac. ent to  the  aforesaid Provinces and acceding to Pakistan ". Section  4(1) of that Act made provision for submission  for registration  of  claims in respect of land abandoned  by  a refugee. On  November 19, 1949, East Punjab Displaced  Persons  (Land Settlement  Act)  1949,  East Punjab Act  36  of  1949,  was passed.   By s. 2(b) of this Act the word " allottee  "  was defined  and  by  s.  2(d)  "  land  "  was  defined.   This definition which was slightly different from the  definition in the East, Punjab Act (Act 12 of 1948) was as follows:- S.   2(d).   " " Land " means land which is not  urban  land and is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes  or for  purposes subservient to agriculture or for pasture  and includes- (i)  the  sites  of buildings and other structures  on  such land;".  On May 18,1950, another Act, the Displaced Persons (Claims) Act  44 of 1950, was passed by the Central Legislature.   In this Act " claim " was defined in 123 s.   2(a) as " the assertion of a right to the ownership of, or to any interest in- (ii)  such  class of property in any part of  West  Pakistan other  than  in  any urban area as may be  notified  by  the Central Government in this behalf in the Official Gazette;". This Act was in force for two years and then lapsed.   Under s. 2(a)(ii) the Central Government issued a notification  on May  27, 1950, specifying the property in respect  of  which claims might be submitted.  The properties were:- (1)  Any  immoveable property in West Pakistan  which  forms part  of  the  assets of an industrial  undertaking  and  is situate in an area other than an urban area. (2)  Any   other  immoveable  property  in   West   Pakistan comprising of a building situated in an area, other than  an urban  area, the estimated cost of construction of which  at present prevailing rates is not less than Rs. 20,000. (3)  Any agricultural land in any part of West Punjab ". This shows that claims could only be submitted in regard  to building  in a rural area which was valued at not less  than Rs.  20,000 and there was no such restriction in  regard  to urban area.  This notification was amended by a notification dated  September  13,  1950.  Clause  (2)  of  the  previous notification was substituted by a new clause: "  (2)  Any  other  immoveable  property  in  West  Pakistan comprising  of a building situated in an area other than  an urban area; provided  that  where the person making the claim  hag  been allotted any agricultural land in India (a) where the  gricultural land so allotted exceeds 4  acres the  value of the building in respect of which the claim  is made  shall not, according to the present estimated cost  of construction, be less than Rs. 20,000. (b)  where  the agricultural land so allotted is 4 acres  or less,  the  value of the building in respect  of  which  the claim is made shall not, according to the 124 present  estimated  cost of construction, be less  than  Rs. 10,000.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

Explanation 1....................... Explanation  11.   For the purpose of this clause  a  person shall  be deemed to have been allotted agricultural land  in India  if he is allotted such land in any manner  whatsoever whether on temporary or quasipermanent basis." On   March   23,  1954,  the  Displaced   Persons   (Claims) Supplementary  Act, 1954, Act 12 of 1954, was passed and  a. 12 provided for the making of rules.  Rule 5 was made in the following terms:- "  R. 5. The classes of property in respect of which  claims may be verified under these rules shall be the same as under the principal Act and the rules made thereunder, that is  to say (1)  any  immoveable property situated within an urban  area in West Pakistan; (2)  any  immoveable property in West Pakistan, which  forms part  of  the  assets of an industrial  undertaking  and  is situated in any area other than an urban area ; (3)  any   other  immoveable  property  in   West   Pakistan comprising of a building situated in any area other than  an urban area; Provided  that  where  a  claimant  has  been  allotted  any agricultural land in India and that (a)  where  the agricultural land so allotted  exceeds  four acres,  the  value of the building in respect of  which  the claim is made shall not, according to the present  estimated cost of construction, be less than Rs. 20,000, (b)  where the agricultural land so allotted does not exceed four  acres, the value of building in respect of  which  the claim is made, shall not, according to the present estimated cost of construction, be less than Rs. 10,000." Explanation  II is in the same terms as in the  notification of September 13, 1950. On October 9, 1954, the Displaced Persons (Compensation  and Rehabilitation) Act 44 of 1954 (to be hereinafter termed Act 44 of 1954) was enacted by Parliament.  Section 2(a) defines compensation pool 125 which  is constituted under s. 14.  Section 2(e)  defines  " verified claim " as follows : "  " Verified claim " means any claim registered  under  the Displaced Persons (Claims) Act, 1950 (44 of 1950) in respect of  which  a final order has been passed under that  Act  or under  the  Displaced Persons  (Claims)  Supplementary  Act, 1954, but does not include Section   4   provided  for  application  for   payment   of compensation.  Section 7 for the determination of the amount of compensation and s. 40 for the making of rules. Rules  were made under this Act by a notification No. S.  R. O. 1363, dated May 21, 1955.  Rule 2(h) defines " urban area "  and a. 2(f) " rural area " which means area which is  not an   urban  area   Rule  16  provides  for  the   scale   of compensation  which is set out in appendix 8 or 9. Under  r. 18  compensation was to be determined on the total value  of all claims which included all kinds of properties other than agricultural land left by claimants in West Pakistan.   Rule 44 deals with allotment of acquired evacuee houses in  rural areas  in  lieu of compensation.  Under sub-s. (3)  of  this rule  houses  in  rural areas were graded and  under  r.  47 payment  of  compensation was to be made subject to  r.  65. Rule  57  provided for allotment of houses  in  addition  to agricultural land.  This rule provided: R.   57.  "  A displaced person having a verified  claim  in respect of agricultural land who has settled in a rural area and  to whom agricultural land has been allotted a house  in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

addition  to  such  land in accordance  with  the  following scale- (1)  Claimants allotted land up to Ten Standard acres  Grade (H), (2)  Claimants allotted and exceeding Ten Standard acres but not exceeding fifty standard acres ............. Grade (G) provided  that  if  such person holds a  verified  claim  in respect  of  any  rural building and  that  claim  has  been satisfied  wholly or partially before the allotment of  such land the provisions of rule 65 shall not be 126 applicable  in his case but he shall not be entitled to  the allotment  of a house or a site and building grant  in  lieu thereof. Explanation  1-Where  no  house is  available  in  the  same village, an allottee may be granted: (a)  if he has been allotted agricultural land not exceeding ten standard acres, a site measuring 400 square yards and  a building grant of Rs. 400; and (b) if he has been allotted agricultural land exceeding  ten standard acres but not exceeding fifty standard acres a site measuring 600 square yards and a building grant of Rs. 600. Explanation  II-The reference to grades in this rule  is  to the grades of houses specified in rule 44." Rule 61 deals with refusal of acceptance of allotment and is as under:- Rule 61.  " Where any person refuses to accept the allotment of  any  agricultural  land offered to  him  the  claim  for compensation  of the allottee shall be deemed to  have  been satisfied  to the extent of the value of the  allotted  land and such land shall be available for allotment to any  other claimant." The impugned rule 65 provided:- "   (1)  Any  person  to  whom  more  than  four  acres   of agricultural  land have been allotted shall not be  entitled to  receive  compensation  separately  in  respect  of   his verified claim for any rural building the assessed value  of which is less than Rs. 20,000. (2)  Any  person to whom four acres or less of  agricultural land  have  been allotted shall not be entitled  to  receive compensation separately in respect of his verified claim for any rural, building the assessed value of which is less than Rs. 10,000 ". It  was argued on behalf of the petitioners that the  object of  the  various Acts and the rules made thereunder  was  to rehabilitate   displaced   persons  but  by  the   rules   a classification  had  been made which was  discriminatory  as neither   the  classes  were  based  on   any   intelligible differentia  nor  was there a rational  nexus  between  that differentia  and  the  object sought to  be  achieved.   The classification,  according to the argument was: (1)  between urban population and rural 127 population; (2) between refugees from rural areas who  owned lands and those who owned only rural houses and (3)  between those who had quasi-permanent and permanent allotments. In order to determine the question raised it is necessary to trace  in  chronological order the various  steps  taken  to rehabilitate  the  millions of persons who  were  forced  to migrate into India leaving behind properties worth varyingly large amounts.  When displaced persons came from West Punjab and  other  provinces of India which  became  Pakistan,  the authorities  allotted to every agricultural  family  certain area  of  agricultural  land the object being  (1)  to  give temporary  shelter  to  the displaced  persons  and  (2)  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

preserve  whatever crops bad been left by persons  who  went away to Pakistan. At  an Inter-Dominion Conference between the Governments  of India  and Pakistan held at Karachi between January  10  and 13,  1949, a permanent Inter-Dominion Commission was set  up to  consider  the  question  of  administration,  sale   and transfer  of  evacuee property in both  the  dominions.   In pursuance of this decision the question in respect of  shops and  houses in rural areas was considered by the  Commission at  New Delhi on March 11 and 13, 1949.  It was  recommended at  this meeting that buildings in rural areas of the  value of Rs. 20,000 or more should be considered to be substantial buildings and the buildings which were of lesser value  than that  were to be treated as appendages of agricultural  land and as such were to be treated as " agricultural  properties "  :  vide  the  minutes of that meeting  at  p.  242  of  a compilation   known  as  "  Documents   concerning   Evacuee Property"  of  the years 1947-51.  Chapter IX  of  the  Land Resettlement  Manual  for Displaced Persons  by  Mr.  Tarlok Singh,  a  book of undoubted authenticity and  value,  deals with allotment of rural houses and sites.  Rule 3 shows  how the equitable distribution of houses was to be effected.  In order to ensure fairness the size of the land allotment made to a displaced person and the type of house abandoned by him were considered to be major factors.  For each standard acre allotted 128 one  mark  was to be given and subject to a  maximum  of  20 marks  houses  abandoned in West Punjab were valued  at  the rate  of one mark for each one thousand of the value of  the house and houses above the value of Rs. 20,000 were excluded for allotment as they were to be dealt with according to the terms  of an earlier agreement between India  and  Pakistan. In  each village after their relative rights had been  valu- ed,  the  allottees  could choose houses  according  to  the village  list.  In appendix 11 of that book is set  out  the summary of principles of allotment of rural evacuee  houses. Evacuee  houses of kamins (menial servants), artisans,  etc. were to be given to displaced artisans and evacuee shops  to evacuee   shopkeepers.   Rule  3  provided  that   temporary allotment  did not create any rights of allotment on  quasi- permanent  basis but subject to this, allottees were not  to be  disturbed  if they are otherwise qualified  for  similar accommodation in the villages.  Elaborate rules are given in that  Chapter  as to how these allotments were  to  be  made including  partition  of houses where two or  more  families could  be  accommodated.  Rule 20 is important  and  may  be quoted :- Rule  20.  "Where necessary, evacuee abadi sites  should  be extended  to  suit  the  layouts  of  model  villages.   The Additional Deputy Commissioner should endeavour to  persuade the  allottees  to  surrender a part of  their  holdings  in exchange  for  land out of the common pool or out  of  areas excluded from allotment ". Rule 21 gave effect to another Inter-Dominion agreement  and therefore  houses of the value of Rs. 20,000 or  more  which were liable to exchange or sale were excluded from allotment. Thus according to these instructions contained in that  book every  effort was made to allot houses to persons  who  were allotted lands and in this manner compensation was sought to be given to displaced persons. By rule 97 made under Central Act 44 of 1954, rehabilitation grants  to  allottees of agricultural land of  less  than  4 acres were to be given as follows:-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

129 R.   97.  " Any person who has been allotted four  acres  or less  of  agricultural land and whose claim  in  respect  of rural buildings left in West Pakistan has, by virtue of such allotment,   been   totally   rejected  may   be   given   a rehabilitation great: Provided that- (a)  he has not accepted such allotment of the  agricultural land or such allotment has been cancelled ; (b)  he  does  not hold a verified claim in respect  of  any other kind of property, that is to say, for any  substantial rural building and Provided  further  that  where any such person  is  given  a rehabilitation grant under rule 97-A, he shall not be  given a rehabilitation grant under this Rule 97-A provided:- "  Any  person who has been allotted two standard  acres  or less of agricultural land in the State of Punjab or  Patiala and   East  Punjab  States  Union  under  any   notification specified  in  Section  10  of  the  Act  may  be  given   a rehabilitation  grant  at the rate of Rs. 450  per  standard acre of the area allotted to him. Provided that- (a)  he has not accepted such allotment of the  agricultural land or such allotment has been cancelled; (b)  he  does not hold a verified claim in respect  ,of  any other  kind  of  property, that is to  say,  for  any  urban property or for any substantial rural building ". By  Rule  57 which has already been quoted,  houses  of  all grades  were allotted to persons who were  allotted  certain areas of land and provision was made for building sites  and payment of building grants where no houses were available in the  villages.   These rules made under Act 44 of  1954  and those  set  out in Land Resettlement Manual  by  Mr.  Tarlok Singh show that every one was allotted or was given building sites and money for the purpose of houses in rural areas. The rule in regard to filing of claims for houses valued  at Rs. 10,000 or more where allotment of land was up to 4 acres and Rs. 20,000 or more where allotment of land was in excess of  4  acres  was also in  pursuance  of  an  Inter-Dominion Agreement between the 17 130 two  Governments  which  has received  recognition  in  Art. 31(5)(b)(iii).  Thus it appears that rules made in regard to fixing of the value of the houses for claim of Rs. 10,000 in one  case and Rs. 20,000 in the other was a policy  decision arising  out  of  an agreement at a meeting  of  the  Inter- Dominion  Commission  with regard to evaluation  of  evacuee property.  Rules which have been framed are only restatement of what was contained in the notifications of May 27,  1950, and September 13, 1950, which themselves were the result  of decisions  arrived  at the meetings  of  the  Inter-Dominion Commission. Under  Art. 14 of the Constitution the State shall not  deny to  any  person  equality  before  the  law  or  the   equal protection of the laws within the territories of India.   By judicial  decisions the doctrine of classification has  been incorporated in the equality clause, but the  classification cannot  be  arbitrary  but must be  based  upon  differences pertinent to the subject in respect of the purpose for which it  is made.  There must be a reasonable nexus  between  the classification  and the object sought to be  achieved.   The object  of the impugned provisions, read with  the  relevant Acts, is to rehabilitate the evacuees on an equitable basis. To  implement the scheme of rehabilitation the  evacuee  law

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

has classified evacuees under different categories.  Broadly speaking,  the  main division is between  persons  who  were residing  in  Pakistan in rural areas  with  agriculture  as their avocation and those persons who were residing in urban areas  in  Pakistan.   Persons from rural  areas  have  been divided  into  two  categories, namely,  persons  who  owned agricultural land with a building as part of the holding and persons  who  held  agricultural land  with  an  independent building  which cannot be described as part of the  holding. Separate treatment is given to rural areas and urban  areas. In  the rural areas, land with a building is treated as  one unit, but when the building is of a substantial value it  is put in a different category and separately compensated  for. This  classification has certainly a reasonable relation  to the  object of rehabilitation, for it cannot be denied  that the  three  categories require separate treatments  for  the purpose of 131 resettlement   on   new  lands  and  for  the   payment   of compensation. It cannot be seriously disputed that a house in a rural area and  that in an urban area cannot be treated alike, but  the real  grievance  of  the petitioners is in  respect  of  the distinction between houses in rural areas.  As to what is  a substantial  building has to be ascertained and a line  must be  drawn somewhere.  Here the question arises  whether  the classification  has  been made arbitrarily and  without  any sound  basis.   It  may perhaps appear odd  to  say  that  a property worth Rs. 9,999 in one case or a property worth Rs. 19,999  in  another  would be a  building  of  unsubstantial character or that the extent of the land, namely, four acres in  one  case  and  above four acres  in  another  have  any relevant  bearing  on the substantiality  of  the  building. This perhaps may lend support to the plea of  discrimination but an unprecedented situation bad to be faced and provision made  for  the rehabilitation of such a  vast  multitude  of humanity  who  had  been uprooted from  their  homes.   This necessitated  an  equitable treatment for them  all  and  an equal distribution of the available evacuee properties  left in  India.  In order to lighten the heavy burden  undertaken an  Inter-Dominion adjustment became necessary and  the  two Dominions  entered into an agreement presumably based  upon the  relevant  circumstances in regard to the  treatment  of rural   house   property.    The   reasonableness   of   the classification  must therefore be judged after taking  these surrounding circumstances and the conditions then prevailing into consideration.  The basis of the classification must be judged by the fact that compensation is given in every case. Rules  57  and  97-A framed under Act 44 of  1954  afford  a reasonable justification for the classification. Under the Rules every displaced person who has settled in  a rural area is allotted a house in addition to such land;  if no  house is available in the same village the  allottee  is given a site and a building grant.  But where his claim  for a house is rejected he is given 132 a  rehabilitation grant.  But under the impugned  provisions separate  compensation is given for a rural house  of  value above a prescribed limit.  It will, therefore, be seen  that the classification is not arbitrary but is based upon  sound principles  and on equitable considerations.  A  distinction between  a  rural house which is part of a holding  and  one which is not a part of a holding but an independent unit  is made and different principles of rehabilitation are  applied to  meet  different  situations.   The  hardship  which  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

division  into  two  categories must  cause  is  diluted  by providing to the claimant falling- on the wrong side of  the line a rural house or a rehabilitation grant. The attack on the ground of want of intelligible differentia must  fail.  Appendix XI of Land Resettlement Manual by  Mr. Tarlok  Singh  illustrates the principles  of  allotment  of rural  evacuee  houses and the elaborate system  of  marking which  was done in order to either give houses to  allottees of land or to give them building sites with subsidy to build houses  and finally in r. 97 and r. 97-A of the  rules  made under  Act  44  of 1954 detailed provisions  were  made  for rehabilitation grants including grants to those allottees of agricultural  land whose claim for rural property  had  been rejected  or who had refused to take land allotted to  them. Similarly  r.  57 which has been quoted above shows  that  a provision has been made for giving sites as well as  subsidy for  building houses.  It cannot be said therefore that  the rules   suffer   from  any  infirmity  on  the   ground   of discrimination. In  the  result this petition fails and  is  dismissed  with costs of. Petition dismissed. 133