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PETITIONER: LAXMI CHAND

       Vs.

RESPONDENT: INDORE IMPROVEMENT TRUST, INDORE AND ORS.

DATE OF JUDGMENT24/02/1975

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. MATHEW, KUTTYIL KURIEN KRISHNAIYER, V.R.

CITATION:  1975 AIR 1303            1975 SCR  (3) 686  1975 SCC  (1) 565

ACT: Madhya  Pradesh Town Improvement Trust Act  1960--Whether  a housing scheme can contain features of industrial and  other non-housing  scheme--Malafide acquisition in the absence  of any  provision whether tribunal can award interest from  the date  of taking possession of the property till the date  of determination of compensation.

HEADNOTE: The  petitioner  owned certain land.  There was  an  earlier attempt to acquire the land of the petitioner by sanctioning a  housing accommodation scheme by- the  Indore  Improvement Trust  under the Madhya Pradesh Town Improvement Trust  Act, 1960.   The  said  scheme  was,  however,  cancelled.    The petitioner  wanted  to  develop  his.  land  for  industrial purposes and, therefore, obtained No Objection  Certificates from  various  Government Departments as well  as  from  the Trust.    The  petitioner  got  his  land   converted   from agricultural  purpose to industrial purpose subject  to  the limitation that the construction work had to be approved  by the  Trust.   The Trust, however, refused the  No  Objection Certificate for development of the land on individual  basis on the ground that a scheme was being approved for the  land in question and other neighbouring lands.  The Trust  framed a  scheme  which included the land of the  petitioner  also. The  Trust served a notice to acquire the petitioner’s  land for the purpose of the scheme.  The petitioner submitted his objection  stating  that the land was being  developed  into industrial  area  and several small  scale  industries  were functioning there and, as such, development was alreadyin progress.    Thereafter,  the  Trust  published   a   notice acquiring the said land. Before  the Trust  could  take possession of the petitioner’s land the petitionerfiled a Writ Petition in this Court.               It was contended on behalf of the  petitioners               :               (1)   The  Housing  Accommodation  Scheme   is               invalid because it does not specify the  class               of  inhabitants  for whom the  same  has  been               made.               (2)  The scheme being a Housing  Accommodation

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             Scheme  it is for residential occupation  only               and  it is not competent to include plans  for               industrial purposes.               (3) Section 31 of the Act does not empower the               Trust   to  frame  a  scheme  for   industrial               purposes at all.               (4)  There  is no application of the  mind  in               terms of section 45 in making the Scheme.               (5)  The  acquisition  of  the  land  for  the               purpose of the           Scheme is malafide.               (6)  Since  the  Act makes  no  provision  for               payment of interest from the date of  delivery               of  possession of the land to the  Trust  till               the  determination  of  compensation  by   the               Tribunal, acquisition of the land is violative               of article 31(2) of the Constitution. Petitioner has not challenged vires of any provisions of the Act. HELD  : (1) Section 31 of the Act permits combining  two  or more  schemes  or supplementing some special features  of  a particular  scheme  in another scheme.  There is no  bar  in framing  a  housing accommodation scheme with  some  of  the features  of  industrial scheme.   A  housing  accommodation scheme need not necessarily be residential scheme only.   It can  admit of providing housing accommodation for any  other purpose  or object.  There is nothing in section 31  or  any other provision of the Act disabling the Trust from  framing scheme for industrial purpose. [690E-G] 687 (2)Section  45 requires that while framing the scheme  the inherent utility, efficiency and adequacy of the scheme  and the objections and representations of the persons have to be taken  into consideration.’ The scheme in question was  open for inspection.  There was no ambiguity or vagueness of  the scheme  or  its  purpose.   Where  factual  satisfaction  is evident  formal recitals being omitted may not  matter.   At any rate, section 52 (2) Puts a final seat of imprimatur  on the  scheme  after  publication  of  the  sanction  of   the Government. [691C-D) (3)  Acquisition is not malafide.. No oblique motive can  be inputed  to the Trust in making the impugned scheme.   There is  no allegation of mala fide against the State  Government whose  sanction  was a, pre-requisite for  the  acquisition. The order of acquisition cannot, therefore. be characterised as I malafide. [691G-H] (4)  It  is  true that there is no  provision  for  awarding interest  unlike  under  the Land Acquisition  Act.   It  is submitted by the respondents that there is no bar under  the Act  against awarding interest by the Tribunal.  It  is  not possible to hold that the compensation Tribunal which is  at par  with an arbitrator will be entitled to  award  interest without  any express provision in the Act.   The  petitioner is, therefore. right in their contention- that this Act does not  provide for awarding interest from the date  of  taking possession  of the property to the date of determination  of compensation.   However,  it is not possible  to  quash  the acquisition  in the absence of a challenge to the  vires  of the  provisions of the Act.  The law being valid the  attack will  revaperate upon the quantum of compensation  pure  and simple.   It is sufficient to point out that the quantum  of compensation cannot be challenged under Article 31(2) of the Constitution. [692D; 694C-G]

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JUDGMENT: ORIGINAL APPELLATE JURISDICTION : Writ Petitions Nos. 517 of 1972 & 240 of 1973. Petition under Article 32 of the Constitution of India. D.  V. Patel (In WP.  No. 240/73), S. P. Phadnis and  S.  K. Gambhir, for the Petitioners (In both the Petitions). I. N. Shroff, for the Respondent No. 1 (In WP.  No. 517/72). S. M. Jain, for the Respondents Nos. 1-2 (In WP.  No. 2401 The Judgment of the Court was delivered by Goswami,  J. This judgment will govern Writ  Petitions  Nos. 517 of 1972 and 240 of 1973. The applications are directed against what is described as a Housing  Accommodation  Scheme  sanctioned  by  the   Indore Improvement  Trust  (briefly  the Trust)  under  the  Madhya Pradesh  Town Improvement Trust Act 1960 (briefly the  Act). Brief  facts of Writ Petition No. 517 of 1972 may  alone  be sufficient.   There  was an earlier attempt to  acquire  the land of the petitioner by sanctioning a scheme in July  1961 but  the  same was cancelled some time, in  September  1962. The  petitioner  personally wanted to develop his  land  for industrial  purposes and with that end in view  obtained  No Objection  Certificates from various Government  Departments as well as from the Trust.  The petitioner also succeeded in converting his patta from agricultural purpose to industrial purpose,  subject,  inter alia, to the limitation  that  the construction  work  on  the land shall  be  carried  out  in accordance with the plans sanctioned by the same 688 Improvement   Trust  (Annexure  ’G’)  Later,   however   the petitioner found from a letter of the.  Trust of October 26, 1964,  that  a scheme was being approved for  his  land  and other  neighbouring  lands and, therefore,  the,  Trust  was unable,   to  issue  the,  No  Objection   Certificate   for development  of  his land on individual  basis.   The  Trust framed  a Scheme No. 62 under section 46(1) of the  Act  and published  a  notice to that effect in the  Gazette  and  in local newspapers in 1965.  The Scheme includes the, land  of the  petitioner.  The representations which  the  Petitioner made against the Scheme were of no avail.  The Trust  served a notice dated February 10, 1965, upon the petitioner  under section 48(1) of the, Act proposing to acquire his land  for the  purpose  of the Scheme.  The petitioner  submitted  his objections on April 15, 1965, stating, inter alia, that  the land  was being developed into industrial area  and  several small  scale industries were functioning there and  as  such development  was  already in progress.  It was  also  stated that  the  land  having been put to the  use  of  industrial purposes  could  not  be re-converted for  the  purposes  of housing accommodation’.  It was further stated that the land was  mortgaged to the State Bank for about Rs. 2  lakhs  and the  compensation that would be required to be paid  by  the Trust would be necessarily higher than in the case of  other suitable  vacant lands.  The Petitioner was given a  hearing but  ultimately  the representations were ,  rejected.   The Trust  duly applied to the State Government for sanction  of the  Scheme  which  was accorded on April  19,  1968,  under section 51 of the Act.  The Trust published a notice’  dated July 12, 1968, under section 68(1) of the Act declaring  its intention  to  acquire the land.  The petitioner  filed  his objections   under  section  68(2)  against   the   proposed acquisition  of  the land but these were  rejected  and  the Trust obtained sanction of the State Government  (respondent No. 2) to acquire the land under section 70 of the Act,  and the  Notification was duly published on September 27,  1968. Therefore   the  Trust  published  a  Notification  in   the

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Government  Gazette dated September 8, 1972,  acquiring  the said land and under section 71(2) of the Act the land vested absolutely  with the Trust free from encumbrances  from  the date  of  the  publication.  Before  the  Trust  could  take possession  of  the  petitioner’s land, he  filed  the  writ application  under  article  32  of  the  Constitution   and obtained  Rule  Nisi and interim stay of  dispossession  was granted pending disposal of the matter. The  following are the common submissions made on behalf  of the petitioners :-               1.   The  Housing  Accommodation  Scheme’   is               invalid because it does not specify the  class               of  inhabitants  for whom the  same  has  been               made.               2.  The Scheme being a  Housing  Accommodation               Scheme, it is for residential occupation  only               and  it is not competent to include plans  for               industrial purposes. 689 3. Section 31 of the Act does not empower the Trust to frame a scheme for industrial purposes at all. 4.  There is no application of the mind in terms of  section 45 in making the Scheme. 5. The acquisition of the land for the purpose of the Scheme is mala fide. 6. Since the Act makes no provision for payment of  interest from  the date of delivery of possession of the land to  the Trust to the, determination of compensation by the  Tribunal acquisition of the land is violative of Article 31(2) of the Constitution. At  the  very  outset  it should be  pointed  out  that  the Petitioners have not challenged the, vires of any provisions of the Act. In  order to appreciate the first three  submissions,  which may  be  taken  up  together, we may  note  a  few  relevant provisions of the Net. Chapter IV of the Act describes the contents of  improvement schemes.   Section 30 provides that "an  improvement  scheme may provide for all or any of the following matters, namely-         *            *              *             * (i)the   provision  for  accommodation  for  any  class   of inhabitants : " Section 31 may be set out in full 31. "Types of improvement schemes.- An improvement scheme shall be of one of the following types  or  may combine any two or more of such types  or  of special features thereof, that is to say- (a)  a general improvement scheme; (b)  a re-building scheme; (c)  a re-housing scheme; (d)  a street scheme; (e)  a deferred street scheme; (f)  a development scheme; (g)  a housing accommodation scheme; (h)  a town expansion scheme; (i)a  drainage  or  drainage  including  sewage   disposal scheme; and (j) a playground, stadium and recreation ground scheme." 690 Section 38.  "Housing accommodation scheme.- Whenever  the Trust is of opinion that it is  expedient  and for  the public advantage to provide  housing  accommodation for any class of the inhabitants within the Trust area,  the Trust  may  frame a housing accommodation  scheme  for  such purpose."

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Section 39.  "Town expansion scheme.- (1)  Whenever the Trust is of opinion that it  is  expedient and for the public advantage to control and provide for  the future improvement or expansion of a town to which this  Act is  applicable, the Trust may frame a town expansion  scheme for such town.          *    *     *      *     *     *     * (3)  Such  scheme  shall show the methods  in  which  it  is proposed  to  lay  out  the area to  be  developed  and  the purposes   for  which  the  particular  areas  are   to   be utilised.".          *     *      *      *      *     *     * It  is  submitted  on behalf of the  petitioners,  that  the impugned scheme is not a housing accommodation scheme  under section 38 but a scheme purely for industrial purposes.   It is  pointed out that there is no reference in the Scheme  to the  class  of inhabitants within the Trust area  for  whose accommodation  the Scheme has been framed under section  38. Since it is a housing accommodation scheme it cannot include plans for industrial purposes. The argument fails to take count of section 31 which permits in terms for combining two or more schemes or  supplementing some  special  features of a particular  scheme  in  another scheme.   In  other  words section  31  envisages  composite schemes.   Section  39 which provides for a  town  expansion scheme  authorises  under sub-section (3)  to  indicate  the method  of  layout  as  well  as  the  purposes  for   which particular  areas  under the scheme may be  utilised.   This section goes to show that there is no legal bar in framing a housing  accomodation scheme with some of the features of  a town expansion scheme which will even indicate the  purposes for  which  particular  areas may  be  utilised.   There  is nothing   in  the  Act  to  ban  industrial  purposes   from consideration  under section 39(3).  The fact that a  scheme is  described merely as a housing accommodation scheme  does not  prevent the adaptation of the scheme to the  incidental requirements which may be overlapping in another scheme.  We are  also  not satisfied that housing  acoommodation  scheme must  necessarily be a residential scheme only and  that  it cannot  admit  of providing housing  accommodation  for  any other purpose or object.  The Madhya Pradesh High Court took the  same view in Beni Prasad Tandon and Others v.  Jabalpur Improvement Trust, Jabalpur(1). Again it is difficult to appreciate how section 31  prevents the Trust from framing an industrial scheme.  We do not find anything  in section 31 or in any of the provisions  of  the Act disabling the (1) [1970] M. P. L. J. 292. 691 Trust  from  framing a scheme for industrial  purposes.   To mention only section 39, it is clear that under that section a  town  expansion  scheme may be framed  even  without  the limits  of  the  town and that would indicate  that  a  town expansion  scheme may envisage industrial expansion to  meet the  growing needs of the community.  We, therefore, do  not see  any  substance in the aforesaid  three  submissions  on behalf of the petitioners. With regard to the fourth submission of the petitioners,  it is  difficult  to  accept the  same.   Section  45  requires ’certain  matters  specified  in (a) to  (C)’therein  to  be considered   when  framing  an  improvement   scheme.    The specified matters touch on the inherent utility,  efficiency and  adequacy  of the scheme and the objections  and  repre- sentations  of  the persons affected will  be,  directed  to negative such assumptions.  The Scheme in question was  open

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to  inspection.  There was no ambiguity or  vagueness  about the  Scheme  or its purposes.  From even the nature  of  the representations and objections it is apparent that the Trust did  have all relevant matters in their mind in framing  the Scheme.   Indeed without actually taking into  consideration the  various matters specified in section 45 it may not  her possible to frame a scheme and finally to obtain sanction of the   Government   in   the   teeth   of   objections    and representations    against   the   same.    Where    factual satisfaction  is evident formal recitals being  omitted  may not matter.  At any rate sub-section (2) of section 52  puts a  final seal of imprimatur on the scheme after  publication of  the  sanction of the Government.   The  submission  ’Is, therefore, devoid of merit. With regard to the fifth submission, which is actually urged by  the petitioner in writ petition No. 517 of 1972, we  are not  satisfied  that  the acquisition of the  land  for  the purpose of the present Scheme is mala fide.  It is submitted that  the  Trust by formulating the present  Scheme  had  an oblique  motive to change the ownership of the land  already under  a  private scheme for development to let  it  out  to tenants  who  will  run  the  existing  enterprises  already started on the land.  We are not satisfied that any  oblique motive  can  be  attributed  to the,  Trust  in  making  the impugned  Scheme.  It is clear that the land was  originally owned  by the petitioner for agricultural purposes and  when he  obtained a patta converting it to indusrial purpose,  it was  clearly made subject to a condition  that  construction work on the land shall be carried out in accordance with the plans  sanctioned  by the Trust.  The  petitioner  had  been given  reasonable Opportunity to submit representations  and was  given  a hearing by a Committee constituted  under  the Act.   The State Government on the application of the  Trust examined  the Scheme and sanctioned the acquisition  of  the land  under  section,  70 when it  was  satisfied  that  the acquisition was in public interest.  There is no particular allegation  of mala fide against the State Government  whose sanction was a pre requisite for the acquisition.  The order of  acquisition cannot, therefore, be characterised as  mala fide and the submission fails. 692 With  regard  to the sixth and last submission there  was  a good  deal  of argument at the bar.  The  respondents  urged that this point was not specifically taken in the petitions. Under section 72(1) of the Act where any land is acquired by the  Trust it shall pay for such  acquisition  "compensation the  amount of which shall be determined in accordance  with the  provisions hereinafter contained".  Under section 73  a Tribunal  is constituted for the purpose of determining  the amount of compensation.  Section 77 provides for matters  to be   considered   for  determining   compensation,   namely, "firstly,  the market value of the land at the date  of  the publication  of the notification under sub-section  (1),  of section  68" and six other factors.  It is also provided  in the  same  section  that the Tribunal shall  not  take  into consideration  certain factors mentioned under eight  heads. Under  sub-section  (2) of section 77 "in  addition  to  the market-value  of  the land as above provided,  the  Tribunal shall  in  every case award a sum of fifteen per  centum  or such market-value in consideration of the compulsory  nature of  the acquisition".  There being no provision for  payment of  interest from the date of compulsory acquisition of  the land upto the date of payment, acquisition, it is submitted, is invalid in law. it is true that there is no provision for awarding  interest

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unlike under the Land Acquisition Act, 1894 (see sections 28 and 34 of that Act).  It is, however, submitted on behalf of the  respondents that there is no bar under the Act  against awarding  interest by the Tribunal even though there  is  no enabling express provision to that effect under the Act.  It is  stated  that  the Tribunal under  section  78  exercises powers for summoning witnesses and enforcing attendance etc. in  the same manner as provided in the case of civil  courts under  the  Code of Civil Procedure.  Under section  147  an appeal  from  the Tribunal lies to the High Court  in  cases where  the value of the claim exceeds Rs. 500/- and  in  any other  case  to  the  District  Judge.   It  is,  therefore, submitted  that  the Tribunal is empowered even as  a  civil court  to  award  interest under section  34  of  the  Civil Procedure  Code.   Section 34 of the Civil  Procedure  Code, however,  authorises  the court to award interest  from  the date of the suit to the date of the decree and thereafter to the date of payment.  Section 34, therefore, would not  come to  the aid of the Tribunal to award interest from the  date of  delivery  of  possession  of the land  to  the  date  of determination of compensation. The  respondents relied upon the decision of this  Court  in Satinder  Singh and Others v. Amrao Singh and  Others(1)  In this  case this Court had to deal with section 5(e)  of  the East   Punjab  Acquisition  and  Requisition  of   Immovable Property  (Temporary Powers) Act, 1948 (briefly  the  Punjab Act)  which provided that an Arbitrator in making his  award shall  have  regard to the provisions of  sub-section(1)  of section  23 of the Land Acquisition Act 1894 so far  as  the same  can be made applicable.  The submission in  that  case was  that  since  sub-section (1) of  section  23  is  alone mentioned,  sub-section  (2)  of  section  23  is  impliedly excluded and necessarily also section 28 and (1) [1961] 3 S. C. R. 676.  693 section  34  stand excluded.  The argument,  therefore,  was that die Tribunal was not empowered to award interest  under the Punjab Act.  Repelling the said argument this Court held as follows:--               "It  would be legitimate to hold that  by  the               application   of   S.  23(1)  in   terms   the               provisions  of  S.  23(2)  are  by   necessary               implication excluded.  If the Legislature  has               provided that only one part of s. 23 should be               applied  it would be reasonable to  hold  that               the other part of s. 23 was not intended to be               applied;  but  we do not see how it  would  be               reasonable to hold that by the application  of               S.   23(1)  the  principles   underlying   the               provisions of ss. 28 and 34 are also excluded.               Therefore,  it  is necessary to  examine  this               question  on  general grounds  and  principles               without assuming that the application of these               general  considerations is excluded by any  of               the provisions of the Act".               This Court finally held as follows               "The  power  to award  interest  on  equitable               grounds  or under any other provisions of  the               law is expressly saved by the proviso to S.  I               (of  the  Interest  Act  1839)......  we  have               already   seen  that  the  right  to   receive               interest  in lieu of possession  of  immovable               property  taken away either by private  treaty               or  by  compulsory  acquisition  is  generally               regarded by judicial decisions as an equitable

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             right;  and  so, the proviso to s.  1  of  the               Interest Act saves the said right". The  Court in that case, therefore, awarded interest to  the claimants. The  petitioners on the other hand drew our attention  to  a decision  of this court in the Godhra Electricity  Co.  Ltd. and  another v. The State of Gujarat and another  (1)  where one  of  us  Mathew  J., speaking  for  the  Court  held  as follows:-               "There  can be no doubt about the  correctness               of  the general rule under which  a  purchaser               who takes possession is charged with  interest               on his purchase money from that time until  it               is  paid.   This  rule  has  been  applied  to               compulsory  purposes  (see Satinder  Singh  v.               Amrao  Singh)  (supra).  But the  question  is               whether the arbitrator has power under the Act               to  award interest on the purchase price.   In               Toronto  City Corpn. v. Toronto Rly.   Corpn.,               [1925] AC 177 at pp. 193-194 the Privy Council               held  that  the  general rule  under  which  a               purchaser who takes possession is charged with               interest on his purchase money from that  time               until it is paid was well established, and bad               on. many occasions been applied to  compulsory               purchases  but the duty of the arbitrators  in               that case was not to determine all the  rights               of  the  company, but only  to  ascertain  the               actual value of certain property at a  certain               time and that it was a truism to say that such               value  could not include interest upon it  and               that the liability for interest lay outside of               the’ arbitration for its enforcement". (1) A. T. R. 1975 (January) S. C. 32. 694 Although  in  the Godhra Electricity Co’s case  (supra)  the Court  has  noticed the decision in  Satinder  Singh’s  case (supra),  it may be observed that the Court’s  attention  in the  latter  case  was not drawn to ,section 5  (g)  of  the Punjab Act to the following effect :               "Save  as provided in this section and in  any               rules  thereunder, nothing in any law for  the               time being in force shall apply to arbitration               under this section". And the Court, therefore, in that case rendered the decision "without  .assuming  that the application of  these  general considerations is excluded by any, of the provisions of  the Act".   In view of the Godhra Electricity Co’s case  (supra) it is not possible to hold that the Cornpensation  Tribunal, which  is  at par with an Arbitrator, will be  entitled  ,to award  interest  without any express provision in  the  Act. This is particularly so since under the Act the Tribunal  is en-titled to take into consideration some given factors  and to  peremptorily ignore certain other specified  factors  in determining the compensation. it has also been empowered  to grant  solatium  as similarly provided for  under  the  Land Acquisition  Act.   In  the,  entire  scheme  of  the  self- contained  Act, in absence of a provision to  authorise  the Tribunal to award interest, it is not possible to hold  that it  can  award  interest  on  the  amount  of   compensation determined by the Tribunal subsequent to the acquisition ,of the  land.  The petitioners are, therefore, right  in  their contention  that  this  Act does not  provide  for  awarding interest from the date of taking possession of the  property to  the date of determination of cornpensation,  which  will

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always  be on a later date under the provisions of  the  Act (see sections 72 and 73). The petitioners, however, have an indirect object.  They are not  interested  in the interest as such but want  the  land back  and  will  not  be  satisfied  unless  the  order   of acquisition  is quashed.  Unfortunately, however, it is  not possible  for this Court to quash the acquisition  in  these cases  in  absence  of  a challenge  of  the  vires  of  the provisions  of  the Act.  Presumption  of  constitutionality will  forbid casting an evil eye on the Act in absence of  a clear  challenge.  The Act must be assumed to be  valid  for the  purpose of these petitions and we wilt proceed on  that basis.   Then  law being valid the attack  will  reverberate upon  the quantum of compensation, pure and simple.   It  is sufficient  to  point out that the quantum  of  compensation which  may be determined according to the provisions of  the Act  for acquisition of the land cannot be challenged  under article  31(2)  of the Constitution.  In that  view  of  the matter this submission of the learned counsel also fails. ln  Writ  Petition No. 240 of 1973, Mr.  Patel  additionally urged  that publication of the notice of the Scheme Was  not made  in  accordance  with section 46(2) of  the  Act  which requires  weekly  publication  in  the  Gazette  for   three consecutive weeks.  Apart from the fact, in this case,  that the  petitioner was well aware of the Scheme  and  submitted objections and representations, section 52(2) appears to  be conclusive on the question.  That sub-section provides  that the  publication of a notification by the  State  Government sanctioning the scheme shall be 695 conclusive evidence that the scheme has been duly framed and sanctioned.   In  view  of this,  ticklish  skirmishes  over publication  on  technical  grounds at a  distant  date  are completely out of place.  The submission is devoid of merit. In the result both the Writ Petitions fail and are dismissed with no order as to costs. We  should observe that Mr. Shroff pointed out that in  view of  the  decision of the Supreme Court in  Satinder  Singh’s case (supra) and another decision of the Madhya Pradesh High Court  in  Lakhanlal and others v. Town  Improvement  Trust, Jabalpur  and  others,(1)  the  Tribunal  has  been   always awarding interest in acquisition cases under the Act and  he undertakes on behalf of the respondents, irrespective of our decision, to pay interest to the petitioners at 6% per annum from the date of actual delivery of possession upto the date of payment of the compensation. P.H.P.                          Petitions dismissed. (1) [1970] M. P. L. J. 316. 696