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PETITIONER: SARDARMAL LALWANI

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH & ORS.

DATE OF JUDGMENT11/12/1972

BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) SHELAT, J.M. RAY, A.N. PALEKAR, D.G. DUA, I.D. BEG, M. HAMEEDULLAH DWIVEDI, S.N.

CITATION:  1973 AIR 1383            1973 SCR  (3)  52  1973 SCC  (1) 599

ACT: Land  Acquisition  Act,  1894 amended  by  Land  Acquisition (Madhya  Pradesh Amendment) Act 5 of  1959-Compensation  for land  in  Bhopal area to be an basis of market value  as  on October  1, 1955-Date found irrelevant-Section 3 Part  C  of Act 5 of 1959, making provision for compensation in  Bhopal, area  are  discriminatory  and  violative  of  Art.  14   of Constitution.

HEADNOTE: The  petitioner’s land situated in Bhopal area Was  acquired under  the  provisions of the Land Acquisition Act  1894  as amended  by the Land Acquisition (Madhya Pradesh  Amendment) Act  5 of 1959.  The acquisition proceedings were  commenced in  1962 and the Land Acquisition Officer gave his award  in 1963.  By virtue of Section 3 of the 1959 Act the award  was given  on  the basis of the market value of the land  as  on October, 1, 1955 plus 25% extra compensation, and not on the basis  of the market value of the land on or about the  date of  acquisition.   In  a  petition  under  Art.  32  of  the Constitution, the petitioner contended that the impugned Act violated  Art.  14  of  the Constitution  as  there  was  no rational classification on the basis of which the prices  of Bhopal  area  had not been determined by  the  principle  by which the market prices of other places would be determined. HELD  : The States Reorganisation Commission in  its  report submitted  on  September  30,  1955  had  recommended   that Jabalpur  should be the capital of the new State  of  Madhya Pradesh.   Bhopal was made the capital on November 1,  1956. There was no material to show that on October 1, 1955 it was known  that Bhopal may be the capital of the State  or  that there was speculation in land because of this fact.  In the light of the judgment of this Court in Vithal Rao’s case  s. 3 Part C of the impugned Act must be held to be violative of Art. 14 and the petition must be allowed. [56D] Satish  Kumar  v.  State of M. P. ,  A.I.R.  1961  M.P.  880 referred to.

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Nagpur Improvement Trust v. Vithal Rao, [1973] 3 S.C.R. 39, applied.

JUDGMENT: ORIGINAL JURISDICTION : Writ Petition No. 646 of 1970. (Under  Article  32  of the Constitution of  India  for  the enforcement of fundamental rights.) S.   Banerjee and P. K. Ghosh, for the petitioner. Y.   S.  Dharmadhikari and I. N. Shroff, for respondent  No. 1. Naunit Lal, for Advocate-General, Assam (Intervener). Santosh  Chatterjee  and  G. S.  Chatterjee,  for  Advocate- General, Orissa (Intervener). 53 O.   P. Rana, for Advocate-General, U.P. (Intervener). A.   V. Rangam and A. Subhashi, for Advocate-General,  Tamil Nadu (Intervener). The Judgment of the Court was delivered by Sikri, C.J. This petition was heard along with Civil Appeals Nos.  2139-2140  of 1968.  The facts are different  but  the principles  of law to be applied are the same which we  have laid down in our judgment in Civil Appeal No. 2139 of 1968. The  facts  in this petition are that the  Land  Acquisition Act,  1894  was  amended by  the  Land  Acquisition  (Madhya Pradesh  Amendment) Act 1959 (Madhya Pradesh Act V of  1959) hereinafter referred to as the impugned Act. By  section 3 of the impugned Act the Land Acquisition  Act, 1894,  in  its application to Bhopal area,  was  amended  as follows; 1.After  clause (g) of Sec. 3 of it he Act of 1894 a  new clause was added defining "Bhopal area". 2.A  new  section  S.  17A,  was  inserted  in  the  Land Acquisition Act, 1894, giving to the Government the power to issue  a  direction  to  the Collector that it  is  urgently               necessary  to acquire immediate possession  of               any building site situated in Bhopal area, and               providing  that  upon  the  issue  of  such  a               direction  the provisions of Sec. 17 would  in               all respects apply in the case of such site as               they  apply  in the case of  waste  or  arable               land. 3.A  new  proviso was added to the first clause  of  Sec. 23(1).  The proviso runs thus "Provided that when the market-value of any land situate  in Bhopal area, in respect of which the date of publication  of the notification aforesaid is after the commencement of  the Land Acquisition (Madhya Pradesh Amendment) Act, 1957 (21 of               1958), is in excess of its market-value as  on               the 1st day of October, 1955, the market-value               thereof shall be deemed to be its market-value               as on the 1st day of October, 1955." 4.-A new sub-section (3) was inserted in S. 23 enjoining the  Court to award a further sum not exceeding twenty  five per  cent  of the market-value of the land acquired  and  an additional sum provided under sub-sec. (2), as the Court may think  fit,  "in consideration of the  appreciation  in  the price of the land concerned by reason of the location of the capital  at  ’Bhopal, regard being had to the  situation  of such land." 54 The  notification to acquire the land in question  under  s. 4(1) of the Land Acquisition Act, 1894, was published in the Madhya   Pradesh   Rajpatra,   dated   October   3,    1962.

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Notification under s. 6(1) of the said Act was published  in the  Madhya  Pradesh  Rajpatra  datead  November  23,  1962. Thereafter,  the  notice  under S. 9(1)  was  published  for general information and notices under s. 9(3) were issued to the  individual  interested parties.  Ultimately,  the  Land Acquisition  Officer gave his award in the Land  Acquisition Case No. 51/LA/62 on March 25, 1969.  The award was given on the basis of market value of :the land as on October 1, 1955 plus  25%  extra compensation, and not on the basis  of  the market   value  of  the  land  on  or  about  the  date   of acquisition, by virtue of the provisions of S. 3 of the Land Acquisition (M.P. Amendment) Act, 1959. It  is  alleged inter alia that Bhopal was made  Capital  of Madhya Pradesh on November 1, 1956.  We were referred to the report of the States Reorganisation Commission, 1956. "486.   The new State, which can appropriately be  described as  Madhya  Pradesh will be a compact unit.  It  will  bring almost  the whole of Bundalkhand and Baghelkhand  under  one administration.   Jabalpur  will be situated  at  a  central place in this unit and has or will soon have some  important facilities like water supply and availability of  electrical power.  It will, in our opinion, be a suitable capital." This report was submitted on September 30, 955.  It is quite clear  from  this para that on the date of  the  report  the proposed  capital  was Jabalpur and there could thus  be  no speculation  in  land in Bhopal before the  announcement  of Bhopal as capital. In view of these facts, it is submitted in ground (viii)  of the petition that "the impugned Act violates Art. 14 of  the Constitution  as there is no rational classification on  the basis  of  which  the prices of Bhopal area  have  not  been determined  by the principle by which the market  prices  of other places would be determined." It is further  submitted that  "there  can  be no  rational  basis  to  differentiate between  Bhopal  and other areas for award  of  compensation merely because Bhopal was made Capital.  The theory that  in view of Capital, there was speculative prices at Bhopal  and the  prices  at any given time might not  reflect  the  real price,  is  neither  rational nor reasonable."  It  is  also alleged that the date, October 1, 1955, is an arbitrary date for the purpose of fixing the market value. The only reply given to this ground is contained in para  21 of  the counter affidavit on behalf of the State wherein  it is stated 55 "With  reference to ground (viii), of the petition, I  deny- that  the Amendment Act infringes any- fundamental right  of the  petitioner  and  in particular Article  14  of  of  the Constitution." The  learned Advocate General was unable to point out to  us any  material  to  show that there was  any  expectation  or speculation  on or about the 1st October, 1955  that  Bhopal would  be the Capital of Madhya Pradesh.  If this  fact  had been established, it may have been reasonable to have  fixed the date for the purpose of determining the market value  as 1st October 1955. But  this  does not mean that for all time to come  for  any land  acquired  by  the State for a  capital,  the  date  of announcement of the Capital would be the relevant date.   In this  case, the acquisition was in 1962 and prices may  have risen  not only because of speculative dealings but  because of general increase in prices throughout the State. In Satish Kumar v. State of M.P.(1) the Madhya Pradesh  High Court  upheld  the validity of the impugned  Act.  The  High Court justified the basis to differentiate the land  located

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in Bhopal area thus : "In  support of this difference, it has been averred in  the return filed by the, State that in the reorganisation of the States, which was a political exigency, the  fixation of the Capital at Bhopal was "an accident" not due to any  economic or industrial reasons; that when it     was    decided    to locate the Capital of the State in the  underdeveloped town, there was heavy speculation in     land  prices;  and  that, therefore, these artificially inflated  prices could not  be taken as a proper basis for   fixing  the real  market-value of the property.    The amendments themselves indicate  that it was    because  of the location of the Capital at  Bhopal that they  had  to be made. Now, it cannot  be  denied  that whenever a capital or a big industry is located in a town or even  in  a city, land values are suddenly pushed  up  G  by prospective  sellers  and the increase in  them  during  the interregnum between the date when it is known that the  town will become more important and the date of   acquisition  of land may not represent its real value.  The prospect   of acquisition of vast areas of private    lands in connection, with a capital or industrial project    in town always gives rise to speculative dealings in    lands  in the town.  When such speculative dealings (1)  A.I.R. 1961 M.P. 280. 56 occur  it is not unreasonable and improper to compute  the market-value of the land with reference to a date  proximate to  the  date of acquisition so as to  exclude,  speculative rise in determining the market value of the land. On  the material on record, it is impossible for us to  hold that  in  this case there has been a discrimination  in  the matter of compensation between land acquired in Bhopal  area and  other areas in the State.  The  classification  between land  in  Bhopal area and other parts of the State  is  with reason  and reasonable, and is for the purpose  of  enabling the  State to acquire land at a reasonable price  in  Bhopal for  the  construction  of the Capital.  In  our  view,  the amendments are not hit by Article 14 of the Constitution." With  respect, the High Court has not examined the  question of  the validity of the reason for fixing the relevant  date as  October 1, 1955.  There is no material on the record  to show  that on October 1, 1955, it was known that Bhopal  may be the Capital of the State or that there was speculation in land because of this fact. We  have in the judgment delivered in Nagpur movement  Trust v.  Vithal Rao(1) examined Art. 14 and its  implications  as far  as land acquisition is concerned.  In our view, in  the light of that judgment, the petition must be allowed. In the result, the petition is allowed with costs and it  is declared that section 3 part C of the impugned Act is hit by the provisions of Art. 14 of the Constitution. G.C. Petition allowed. (1) [1973] 3 S.C.R. 39. 57