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PETITIONER: STATE OF GUJARAT

       Vs.

RESPONDENT: SHRI SHANTILAL MANGALDAS & ORS.

DATE OF JUDGMENT: 13/01/1969

BENCH: HIDAYATULLAH, M. (CJ) BENCH: HIDAYATULLAH, M. (CJ) SHAH, J.C. RAMASWAMI, V. MITTER, G.K. GROVER, A.N.

CITATION:  1969 AIR  634            1969 SCR  (3) 341  1969 SCC  (1) 509  CITATOR INFO :  APL        1970 SC 564  (97,98,99,100,155,194,199,200)  RF         1972 SC1730  (16)  RF         1973 SC1461  (601,605,709,710,1175,1185,175  R          1978 SC 215  (15,74)  RF         1979 SC 248  (10,15)  R          1980 SC 326  (17)  RF         1980 SC1955  (30)  E          1981 SC1597  (1,3,6,7,8)  O          1984 SC1178  (17)  E&R        1986 SC 468  (4,21,25,TO 31,37)  RF         1986 SC1466  (11)

ACT: Bombay  Town  Planning  Act (27 of 1955),  ss.  53  and  67- Compensation at market value on a date many years before the date  of extinction of owners’ title If violative  of  Art. 31(2) of Constitution after Fourth Amendment-Acquisition for town planning-If protected by Art. 31(5) (b) (ii).

HEADNOTE: By   a  resolution  dated  April  18,  1927,   the   Borough Municipality of Ahmedabad declared its intention of making a town-planning  scheme  under 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  In 1955,  the 1915-Act was repealed by the Bombay Town Planning Act,  1955 which  received the assent of President on August  1,  1955, and  came into force on April 1, 1957.  By s. 90(2)  of  the 1955 Act, the proceedings preparing a scheme commenced under the repealed Act was continued.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 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 therein

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free from all encumbrances.  By cl. (b), 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.   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 of 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 alia that if the  owner of the original 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  Plan- ning  Officer informed the first respondent that Rs.  25,411 were awarded 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  ’Me High Court declared ss. 53 and 67 of the Act ultra vires and declared the town planning scheme invalid as a corollary. In  appeal to this Court’ on the questions, (1) 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 HELD : (1) Section 53 (a) of the Act is a law for compulsory acquisition  of  land; it cannot be said  that  because  the object  of  the  Act is to promote public  health  it  falls within  the  exception of Art. 31(5)(b)(ii)  .The  principal objects of town planning legislation no doubt are to provide for  planned and controlled development and use of  land  in urban  areas with special regard to requirements  of  better living   conditions  and  sanitation;  but  acquisition   of property  for  such purposes could not be  made  under  laws coming within the purview of Art. 31(5)(b)(ii) without pay- ment of compensation. [34 F], of Dy.  Commissioner and Collector, Kamrup v. Durga Nath Sarma, [1968] 1 S.C.R. 561, followed. (2)The  legislature specified in the 1955 Act,  principles for  determination  of  compensation.   The  principles  for determination   of  compensation  cannot  be  said   to   be irrelevant, nor can the compensation determined, be said  to be illusory.  Being a principle relating to compensation,  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 D] (a)It  was not necessary to provide for  compensation  for the entire land ofwhich a person is deprived, because, the concept that the lands vest inthe local authority  when the  intention to make a scheme is notified is  against  the plain intendment of the Act.  A part of the plot or even the 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.

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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 unless 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  owner of the land. [356B, F-H] (b)The   Act  specifies  the  principles  on   which   the compensation  is to be determined and given.   Specification of  principles  means  laying  down  general  guiding  rules applicable to all persons or transactions governed  thereby. 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  for  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 operationof     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 either fixed the amount of the  compensation or  specified  the principles on which, and  the  manner  in which,  the  compensation was to be  determined  and  given. ’Ibis  Court in Bela Banerjee’s case [1954] S.C.R.  558  and Subodh   Gopals   case,  [1954]  S.C.R.   587,   held   that ’compensation’  meant  a ’just equivalent’.  But  after  the Fourth Amendment Act; adequacy of compensation fixed by  the Legislature or awarded according to the principles specified by the legislature for determination is not justiciable.  It does  not mean, however, that something fixed or  determined by the application of specified principles 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.                             343 But compensation fixed or determined on principles specified by  the Legislature cannot be permitted to be challenged  on the  indefinite  plea  that  it is  not  a  ’just  or  fair’ equiv alent.   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 declaration that adequacy of compensation provided is not justiciable. [366 A-D] Observations contra in P. Vajravelu Mudaliar v. The  Special Deputy Collector, Madras, [1965] 1 S.C.R. 614, obiter. Union  of India v. Metal Corporation of India Ltd. [1967]  1 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

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violates Art. 19(1)(f). [370 H] Smt.  Sitabati Debi 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 operates harshly.  If the  scheme  came into  force within a reasonable time from the-date on  which the  declaration  of  intention  to  make  the  scheme   was notified,  it  could  not  be  contended  that  fixation  of compensation  according  to  s. 67, would  make  the  scheme invalid.  The fact that considerable time elapsed cannot  be a ground for declaring the section ultra vires. [371 B] (f)If  s.  71  read with s. 67 lays down  a  principle  of valuation, it cannot bestruck  down  on the  ground  that, because of the exigencies of the scheme,it    is    not possible  to allot a reconstituted plot to an owner of  land covered by the scheme. [371 D] (g)The  method  of determining compensation  in  respect  of lands  which  are  subject to the town  planning  scheme  is prescribed in the Town Planning Act and 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 Vajravelu, Mudaliar’s case, where the State Government could resort to one of two methods-the Land Acquisition Act,  1894 or  the  Land Acquisition (Madras Amendment)  Act,  1961,and therefore  arbitrarily,  in  the  present  case,  the  local authority  can  only  act under the Town  Planning  Act  for purposes  of town planning, and therefore does  not  violate Art. 14. [372 D-E, H] Taylor v. Taylor, [1875] 1 Ch.  D. 426, applied.

JUDGMENT: 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 N.S.  Bindra,  S.  K. Dholakia and S.P.  Nayar,  for  the appellant. M. C. Chagla and I. 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(1) and the obiter pronouncement of some  opinions  there.   That  case was  heard  with  N.  B. Jeejeebhoy’s  case(2).  One was a post Constitution  (Fourth Amendment) case and the other a pre-constitution 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 necessary for the ultimate  conclusion. Because of the close proximity of the decisions I 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

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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(1)  must  be treated  as  obiter  and  not binding  on  us.  I am also of the opinion  that  the  Metal Corporation case(s) was wrongly decided and should be  over- ruled. 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 of  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] S.C.R.636. (3)[1967] 1 S.C.R. 255.                             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 yards  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  1, 1957.  By s. 90(2) making of any scheme  commenced under  the  repealed Act was to be continued  and  the  pro- visions  of the 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 had 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

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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               346               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 Act 27 of 1955 and the scheme was also sanctioned.  But by s. 90 of the Act  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 town planning legislation  are to provide for planned 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 dwellings  was generally subject to little supervision or control by  local authorities, and the new, 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. 11 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 designating the use of the               land,    for   the   purposes-such   as    (1)               residential,  (2) industries  (3)  commercial,               and (4) agricultural;                                    347               (b)proposals  for designation of  land  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

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             for  the purpose of the Union, any State,  any               local   authority  or  any   other   authority               established by law 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, 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 III of, Bombay Act 27 of 1955 relates to the  making of the Town Planning Scheme.  Chapter IV deals with the  de- claration  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.  VIII 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,  con- struction, diversion, extension, alteration, improvement and 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 draft scheme is published after, 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 town planning 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 be  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

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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 leveling  up of land so that the total area included in  the schem e  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. Under the Act the cost of the scheme is to be met wholly  Pr 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 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 reconstitution  of the  plots and relating to: matters specified in s. 32  i.e. the physical, legal and financial provisions of the  scheme. Only  after the objections have been heard and disposed  of, the scheme is published and becomes final.                             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  encum-               brances;               (b)all  rights in the original plots  which               have  been re-constituted shall determine  and               the re-constituted plots shall become  subject               to  the  rights settled by the  Town  Planning               Officer." The  expression "re-constituted plot" is defined in s.  2(9) as meaning a plot which is in any way altered 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  recon- stituted  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 therein 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  re-constituted,  their shapes  are  altered, portions out of plots  are  separated, lands  belonging to two or more owners are combined  into  a

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single 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 un L8Sup.C.I/69--4 350 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 provides :               "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, the contributions leviable  from               such   persons,  each  of  such  plots   being               estimated  at its market value at the date  of               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               provided 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  provisions relating to payment of compensation and  re-

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covery   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 ex- 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 com- pensation  infringes the fundamental right guaranteed  under Art.  31(2), of the Constitution.  Since the Act  authorises compulsory  transfer  of  ownership in  land  to  the  local authority for public 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  relatable  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",  and  it  is, therefore,   not  liable  to  be  taken  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 irrelevant 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  does not give for the original plot of land of the owner a recon- stituted  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 expropriated based on the  market value  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 constitutional  guarantee under Art. 31(2).  The High Court in 352 coming  to’  that  conclusion  felt  itself  bound  by   the observations  made  in  the judgments of this  Court  in  P.

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Vajravelu   Mudaliar  V.  The  Special   Deputy   Collector, Madras(1),  The State of West Bengal v. Mrs.  Bela  Banerjee and  Others(1);  N. B. Jeejeebhoy  v.  Assistant  Collector, Thana  Prant,  Thana  (3 ) ; and Union  of  India  v.  Metal Corporation of India Ltd. and Another(4).  The view taken by the High Court was that the Town Planning Act insofar as  it provides  for transfer of private rights of ownership  to  a local  authority  under  s.  53(a)  is  a  law  relating  to acquisition  of lands which attracts the protection of  Art. 31(2), and since the Act by s. 67 provides for  compensation which  is  not a just equivalent in terms of  money  of  the property  expropriated  it could not be  upheld  under  Art. 31(2) of the Constitution. Mr. Bindra appearing on behalf of the State of Gujarat  con- tends  that Bombay Act 27 of 1955 is not a law  relating  to acquisition  of lands, but it is a law dealing  with  health and  public sanitation for it is enacted with the object  of promotion of public health and on that account falls  within the terms of Art. 31(5) (ii)  of  the Constitution,  and  is exempt from the operation of cl. (2)    of     Art.      31. Alternatively,  Mr. Bindra contends that 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. Counsel  urges that the object of the Town Planning  Act  in pith and substance is to facilitate planned development,  to ensure   healthy  surroundings  to  the  people  living   in congested localities and to provide them with sanitation and other  urban facilities conducive to healthy living  and  on that account is an Act falling within Entry 6 of List If  of the  Seventh  Schedule-"Public health and  sanitation",  and Entry  20 of List III-"Economic and social  planning".   But the  competence of the Legislature to enact  legislation  on the  subject matter of the Act and for the object  intended to  be served thereby are irrelevant in determining  whether any  fundamental  right  of a person  is  infringed  by  the impugned  Act.   The  doctrine  of  pith  and  substance  is applicable  in determining whether a statute is  within  the competence of the legislative body, especially in a  federal set  up, where there is division of legislative powers :  it is  wholly  irrelevant in determining  whether  the  statute infringes any fundamental right. For  a clearer appreciation of the alternative  argument  it may  be  useful  to  set out the terms of  Art.  31  of  the Constitution   as  amended  by  the   Constitution   (Fourth Amendment) Act, 1955             "(1) No person shall be deprived of his property                 save by authority of law.      (1) [1965] 1 S.C.R. 614. (2) [1954] S.C.R. 558.      (3) [1965] 1 S.C.R. 636. (4) [1967] 1 S.C.R. 255. 353               (2)   No   property  shall   be   compulsorily               acquired  or requisitioned save for  a  public               purpose  and save by authority of a law  which               provides for compensation for the property  so               acquired or requisitioned and either fixes the               amount  of the compensation or  specifies  the               principles on which, and the manner in  which,               the  compensation  is to  be,  determined  and               given;  and  no such law shall  be  called  in               question  in any court on the ground that  the               compensation  provided  by  that  law  is  not               adequate.  I               (2A)  Where  a law does not  provide  for  the               transfer   of  the  ownership  or   right   to

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             possession of any property to the State or  to               a  corporation  owned  or  controlled  by  the               State,  it shall not be deemed to provide  for               the compulsory acquisition or,  requisitioning               of property, notwithstanding that it  deprives               any person of his property.               (3)   No such law as is referred to in  clause               (2)  made by the Legislature of a State  shall               have  effect  unless such  law,  having  been,               reserved   for   the  consideration   of   the               President, has received his assent.               (4)               (5) Nothing in  clause (2) shall affect-               (a)               (b) the provisions of any law which the  State               may hereafter make-               (ii)  for  the promotion of public  health  or               the prevention of danger to life or  property,               or               (iii)               (6) It is settled law that clauses (1) and (2) under the amended Article  guarantee different rights to owners  of  property. Clause  (1) operates as a protection against deprivation  of property  save  by  authority of law, which,  it  is  beyond question,  must be a valid law, i.e. it must be  within  the legislative  competence of the State Legislature,  and  must not  infringe  any  other  fundamental  right.   Clause  (2) guarantees   that   property  shall  not  be   acquired   or requisitioned  (except in cases provided by cl. (5)  )  save by, authority of law providing for compulsory acquisition or requisition  and further providing for compensation for  the property  so acquired or requisitioned and either fixes  the amount of compensation or specifies the principles on which, and  the  manner  in  which,  the  compensation  is  to   be determined  and  given.  If the  conditions  for  compulsory acquisition  or  requisition are fulfilled, the law  is  not liable 354 to  be  called in question before the courts on  the  ground that  the compensation provided by the law is not  adequate. Clause  (2A)  is in substance a definition clause  :  a  law which does not provide for the transfer of the ownership  or right  to  possession of any property to the State or  to  a corporation  owned or controlled by the State is not  to  be deemed   to  provide  for  the  compulsory  acquisition   or requisitioning of property, notwithstanding that it deprives any person of his property. The following principles emerge from an analysis of clauses (2)  and  (2A): compulsory acquisition or requisition may be made for  a  public  purpose  alone, and  must  be  made  by authority  of law.  Law which deprives a person of  property but does not transfer ownership of the property or right  to possession  of  the property to the State or  a  corporation owned or controlled by the State is not a law for compulsory acquisition or requisition.  The law, under the authority of which  property is compulsorily acquired, or  requisitioned, must  either fix the amount of compensation or  specify  the principles  on  which,  and the manner in  which,  the  com- pensation   is  to  be  determined  and  given.   If   these conditions  are fulfilled the validity of the law cannot  be questioned  on  the plea that it does not  provide  adequate compensation to the owner. It is common ground that a law for compulsory acquisition of property  by a local authority for public purposes is a  law

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for acquisition of property by the State within the  meaning of  that  expression  as defined in Art.  12.   The  Act,was reserved for the consideration of the President and received his  assent  on  August  1,  1955,  and  since  it  provides expressly  by S. 53(a) that on the coming into force of  the scheme  the  ownership in the lands required  by  the  local authority for public purposes shall, unless it is other-wise determined  in  such scheme, vest absolutely  in  the  local authority  free  from all encumbrances, the  clause  contem- plates  transfer of ownership by law from private owners  to the  local  authority.   The Act is,  therefore  a  law  for compulsory acquisition of land. We are also unable to agree with counsel for the State  that because the object of the Act is intended to promote  public health, it falls within the exception in Art. 31 (5)(b)(ii). The  question  is now settled by a recent judgment  of  this Court;  Deputy Commissioner & Collector, Kamrup & Others  v. Durga Nath Sharma(1) This Court held in Durga Nath  Sharma’s case(1) that the Assam Acquisition of Land for Flood Control and  Prevention of Erosion Act 6 of 1955 which provided  for the  acquisition  of  land on  payment  of  compensation  in accordance  with  the principles in s.6 of that  Act  was  a purely   exproprietary   measure,  and  being  a   law   for acquisition of land, though for prevention of danger to (1)  [1968] 1 S.C.R. 561.                             355 life  and property, was not protected by Art.  31(5)(b)(ii). It was observed at p. 574 :               "A  law authorising the abatement of a  public               menace  by  destroying  or  taking   temporary               possession of private properties if the  peril               cannot  be  abated in some other  way  can  be               regarded  as  a law for  promotion  of  public               health or prevention of danger to life or pro-               perty  within the purview of  cl.  (5)(b)(ii).               But  it is not possible to say that a law  for               permanent  acquisition of property is  such  a               law.   The object of the acquisition  may  be               the opening of a public park for the  improve-               ment  of public health or the erection  of  an               embankment  to  prevent  danger  to  life   or               property  from flood.  Whatever the object  of               the "acquisition may be, the acquired property               belongs  to the State. . .  Clause  (5)(b)(ii)               was intended to be an exception to cl. (2) and               must  be strictly construed.   Acquisition  of               property  for the opening of a public park  or               for the erection of dams and embankments  were               always  made under the Land  Acquisition  Act,               and it could not have been intended that  such               acquisition  could be made under  laws  coming               within  the purview of cl. (5)(b)(ii)  without               payment of compensation." The first contention urged by Mr. Bindra cannot,  therefore, be accepted.  But, in our judgment, the contention urged  by Mr.  Bindra for the State of Gujarat that ss. 53 and 67  of the  Act regarded as law for acquisition of land for  public purposes  do not infringe the fundamental right  under  Art. 31(2)  of  the Constitution is acceptable, because  the  Act specifies  the  principles on which compensation  is  to  be determined and given. Article 31 guarantees that the law providing for  compulsory acquisition   must  provide  for  determining   and   giving compensation  for  the property  acquired.   The  expression "compensation’  is not defined in the  Constitution.   Under

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the  Land  Acquisition Act compensation is a  ways  paid  in terms  of  money.  But that is no reason for  holding-  that compensation   which  is  guaranteed  by  Art.   31(2)   for compulsory acquisition must be paid in terms of money alone. A   law  which  provides  for  making  satisfaction  to   an expropriated  owner  by allotment of other property  may  be deemed to be a law providing for compensation.  In  ordinary parlance  the expression compensation means any thing  given to  make  things equivalent; a thing given to  or  to  make amends  for loss, recompense, remuneration or pay;  it  need not  therefore  necessarily  be  in  terms  of  money.   The phraseology  of the constitutional provision also  indicates that compensation need not necessarily be in terms of money, because  it expressly provides that the law may specify  the principles on which, and the manner in which, 356 compensation is to be determined and "given".  If it were to be in terms of money alone, the expression "paid" would have been more appropriate. The  principal  argument which found favour  with  the  High Court  in holding s. 53 ultra wires is that when a  plot  is reconstituted  and out of that plot a smaller area is  given to  the owner and the remaining area is utilised for  public purpose,  the area so utilised vests in the local  authority for  a public purpose, and since the Act does not  provide for  giving compensation which is a just equivalent  of  the land expropriated at the date of extinction of interest, the guaranteed  right  under  Art. 31(2)  is  infringed.   White adopting  that  reasoning counsel for the  first  respondent adopted  another line of approach also.   Counsel  contended that under the scheme of the Act the entire area of the land belonging  to  the owner vests in the local  authority,  and when the final scheme is framed, in lieu of the ownership of the  original plot, the owner is given a reconstituted  plot by  the  local  authority,  and  compensation  in  money  is determined  in  respect of the land appropriated  to  public purposes according to the rules contained in ss. 67 & 71  of the  Act.  Such a scheme for compensation is, it was  urged, inconsistent  with  the guarantee under Art. 31(2)  for  two reasons--(1)  that compensation for the entire land  is  not provided;  and (2) that payment of compensation in money  is not provided even in respect of land appropriated to  public use.   The second branch of the argument is not  sustainable for  reasons  already set out, and the first branch  of  the argument is wholly without substance.  Section- 53 does  not provide that the reconstituted plot is transferred or is  to be deemed to be transferred from the local authority to  the owner  of  the original plot.  In terms s. 53  provides  for statutory readjustment of the rights of the owners of the or plots of land.  When the scheme comes into force all  rights in  the original plots are extinguished  and  simultaneously therewith  ownership.  springs in the  reconstituted  plots. There  is  no  vesting of the original plots  in  the  local authority nor transfer of the rights of the local  authority in  the reconstituted plots.  A part or even the whole  plot belonging  to an owner may go to form a  reconstituted  plot which  may be allotted to another person, or may  be  appro- priated to public purposes under the scheme.  ’Me source  of the power to appropriate the whole or a part of the original plot in forming a reconstituted plot is statutory.  It  does not predicate ownership of the plot in the local  authority, and   no   process  actual  or  notional  of   transfer   is contemplated in the appropriation.  The lands covered by the scheme  are subjected by the Act to the power of  the  local authority  to  readjust titles, but no   reconstituted  plot

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vests  at  any stage in the local authority  unless  it  ’is needed  for a purpose of the authority.  Even under cl.  (a) of  s. 53 the vesting in a local authority of land  required by it is on the 357 coming  into  force of the scheme.  The concept  that  lands vest  in  the local authority when the intention to  make  a scheme  is notified is against the plain intendment  of  the Act. The  object of s. 67 is to set out the method of  adjustment of contribution against compensation receivable by an  owner of  land  By that section the difference between  the  total value of the plots included in the final scheme with all the buildings  and  works thereon allotted to a person  and  the total value of the original plot with all the buildings  and works thereon must, be estimated on the basis of the  market value at the date of the declaration of intention to make  a scheme,  and  the  difference between the two  must  be  ad- justified  towards contribution payable by the owner of  the plot included in the scheme.  In other words, s. 67 provides that  the  difference between the market value of  the  plot with all the buildings and works thereon at the date of  the declaration  of  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 alia,  that if the owner of the original 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 question that falls then to be considered is whether the scheme  of  the  Act which provides for  adjustment  of  the market  value  of  land at the date of  the  declaration  of intention  of  making a scheme against market value  of  the land  which  goes to form the reconstituted  plot,  if  any, specifies  a principle for determination of compensation  to be  given within the meaning of Art. 31(2).   Two  arguments were  urged on behalf of the first respondent-41)  that  the Act specifies no principles on which the compensation is  to be determined and given; and (2) that the scheme for  recom- pense  for loss is not a scheme providing for  compensation. It  is true that under the Act the market value of the  land at  the  date of declaration of intention to make  a  scheme determines  ’the  amount  to be adjusted, and  that  is  the guiding rule in respect of all lands covered by the scheme. The  High Court was, in our judgment, right in holding  that enactment  of  a rule determining payment or  adjustment  of price of land of which the owner was deprived by the  scheme estimated on the market value on the date of declaration  of the intention to make a scheme amounted to specification  of a  principle  of  compensation within the  meaning  of  Art. 31(2).   specification  of  principles  means  laying   down general   guiding  rules  applicable  to  all   persons   or transactions  governed thereby.  Under the Land  Acquisition Act  compensation  is  determined on the  basis  of  "market value" of the land on the date of the notification under  s. 4(1) of that Act.  That is a 358 specification of principle.  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 for 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

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operation  of the Town Planning Act a person is deprived  of his land whether in whole or in part. On  the  second branch of the argument it was urged  that  a provision  for giving the value of land, not on the date  of extinction  of interest of the owner, but on the footing  of the  value prevailing at the date of the declaration of  the intention  to make a scheme, is not a provision for  payment of compensation.  With special reference to the facts of the present  case, it was said, that whereas the declaration  of intention  to  make  a scheme was made in  1927,  the  final scheme was published in 1957, and a provision for payment of market value prevailing in the year 1927 is not a  provision for  compensation.   It is perhaps right to  say  that  com- pensation cases should not be allowed to drag on for a  long time, because then the compensation paid has no relevance to the  exact point of time when the extinction actually  takes place.   But  the validity of an Act  cannot  ordinarily  be judged in the light of the facts in a given case. In support of the argument that the value of land determined by  reference to a date far removed from the date  on  which the  tide  of the land is  extinguished,  though  determined according to a guiding rule, is not compensation, because it is  not a just equivalent of the land  expropriated,  strong reliance  was placed upon certain observations made by  this Court  in P. Vajravelu Mudaliar’s case(1) and in  the  Metal Corporation  of India Ltd.’s case(2).  If the argument  that for  compulsory acquisition of property an owner is  by  the Constitution guaranteed a "just equivalent’ of the  property of which he is deprived at the date of acquisition, the plea that  what is provided, as compensation by ss. 67 and 71  as the value to be adjusted against the amount of contribution, if  any,  infringes the guarantee of Art.  31(2),  would  be unassailable. The  argument  raised by counsel for  the  first  respondent raises  a  question of importance as to the true  effect  of Art.   31   of  the  Constitution   and   requires   careful consideration in the light of the historical development  of the  principles  governing payment of  compensation  by  the State for compulsory acquisition of property. Section 299 of the Government of India Act, 1935, insofar as it is material, provided:-               "(1)  No  person  shall  be  deprived  of  his               property save by authority of law.               (1)   [1965] 1 S.C.R. 614.               (2) [1967] 1 S.C.R. 255.               359               (2)   Neither  the  Federal  or  a  Provincial               Legislature  shall have power to make any  law               authorising  the  compulsory  acquisition  for               public purposes of any land, or any commercial               or industrial undertaking, or any interest in,               or  in any company owning, any  commercial  or               industrial   undertaking,   unless   the   law               provides  for the payment of compensation  for               the  property  acquired and either  fixes  the               amount  of the compensation, or specifies  the               principles on which, and the manner in  which,               it is to be determined." Article  31  as originally enacted in the  Constitution  was substantially  in the same terms as s. 299.  Clause  (1)  of Art. 31 was enacted verbatim in the same terms as cl. (1) of s 299.  Clause (2) of Art. 31 reproduced with some variation the principle of s. 299(2).  It was thereby enacted:               "No property, movable or immovable,  including               any interest in, or in any company owning, any

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             commercial or industrial undertaking, shall be               taken  possession  of or acquired  for  public               purposes under any law authorising the  taking               of such possession or such acquisition, unless               the law provides for compensation for the pro-               perty  taken  possession of  or  acquired  and               either  fixes the amount of the  compensation,               or specifies the principles on which, and  the               manner  in  which, the compensation is  to  be               determined and given. Shortly  after  the coming into force of  the  Constitution, disputes  were  raised  about the  validity  of  laws  which abolished  the Zamindari rights of landholders in the  State of Bihar.  In Kameshwar Singh v. State of Bihar(1) the Patna High  Court  held  that the Bihar Land  Reforms  Act,  1951, contravened  Art.  14  in  that  it  accorded   differential treatment  to  landowners  in the  matter  of  compensation. Similar  challenge  raised to the  Uttar  Pradesh  Zamindari Abolition  and Land Reforms Act, 1950, was rejected  by  the High  Court of Allahabad: Surya Pat v. State of  U.p.(2).  A group  of petitions challenging the validity of  the  Madhya Pradesh  Abolition of Proprietary Rights  (Estates,  Mahals, Alienated Lands) Act 1951 was moved in this Court: Visheswar v.  State of Madhya Pradesh(3), but before  these  petitions could  be  disposed of, the Constitution  (First  Amendment) Act,  1951,  was  enacted  with  a  view  to  eliminate  all litigation  challenging the validity of legislation for  the abolition  of  proprietary  and  intermediary  interests  in agricultural  lands  on the ground of contravention  of  the fundamental rights contained in Part HI of the Constitution. To effectuate this purpose, Art. 31A was incorporated in the (1) I.L.R. 30 Pat. 454.    (2) I.L.R. [1952] 2 All. 46. (3)  [1952] S.C.R. 1020. 360 Constitution with retrospective effect, and Art. 31B and the Ninth   ,Schedule  were  added  placing  certain  Acts   and Regulations beyond the challenge that they were inconsistent with, or took away or ,abridged any of the rights  conferred by  any provision of Part III.  But the amendments  made  by the  Constitution (First Amendment) Act were  inadequate  to deal  with questions relating to payment of compensation  to an  owner  of property (not covered by  legislation  falling within  Arts.  31A  and  31B) who  was  deprived  of  it  by compulsory acquisition. Two  cases  decided by this Court in the month  of  December 1953 require to be noticed : In Mrs. Bela Banerjee’s case(1) validity  of the West Bengal Land Development  and  Planning Act,  1948, which was enacted primarily for  acquisition  of land  for  setting migrants from East Bengal on  account  of communal disturbances, fell to be determined.   Compensation payable  for compulsory acquisition of land needed  for  the purposes  specified was under the Act was not to exceed  the market value of the land on December 31, 1946.  The Calcutta High Court declared the provisions of s. 8 ultra vires,  and this Court confirmed that decision.  It was observed by this Court  that  Entry 42 of List III of  the  Seventh  Schedule conferred  on  the Legislature the  discretionary  power  of laying down the principles which govern the determination of the amount to be given to the owner of the property acquired and  Art. 31(2) required that such principles  ’must  ensure that what is determined as payable is compensation, that is, a  just equivalent of what the owner has been deprived.   In delivering the judgment of the Court, Patanjali Sastri, C.J. observed               "While  it  is true that  the  legislature  is

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             given  the discretionary power of laying  down               the   principles  which  should   govern   the               determination of the amount to be given to the               owner  for  the  property  appropriated,  such princ iples   must   ensure   that   what   is               determined  as payable must  be  compensation,               that  is, a just equivalent of what the  owner               has  been  deprived of  Within the  limits  of               this basic requirement of full indemnification               of  the expropriated owner,  the  Constitution               allows  free play to the legislative  judgment               as   to  what  principles  should  guide   the               determination of the amount payable.   Whether               such  principles  take into  account  all  the               elements  which make up the true value of  the               property  appropriated  and  exclude   matters               which  are to be neglected, Is  a  justiciable               issue to be adjudicated by the Court." The  other  ease  decided  on  December  17  1963  but   not unanimously,  was the State of West Bengal v.  Subodh  Gopal Bose and In that case it was held by a majority of the Court (1) [1954] S.C.R. 558. (2) [1954] S.C.R. 587. 361 that  Art.  31 protects the right to  property  by  defining limitations on the power of the State to take away  property without the consent of the owner : that clauses (1) and  (2) of Art. 31 are not mutually exclusive in scope and  content, but  should be read together and understood as dealing  with the  same  subject, namely, the protection of the  right  to property by placing limitations on the power of the State to take away the property, the deprivation contemplated by  cl. (1) being no other than the acquisition or taking possession of the property referred to in cl. (2) : and that the  words "taking  of .... possession or acquisition" in Art. 3 1  (2) and the words "acquisition or requisitioning" in Entry 33 of List  1 and Entry 36 of List 11 as also the words  "acquired or  requisitioned"  in Entry 42 of List 111,  are  different expressions  connoting  the same concept  and  instances  of different  kinds  of  deprivation  of  property  within  the meaning of Art. 31 (1) of the Constitution. The result of the two decisions was to declare that cls. (1) and  (2) dealt with the States’ power of, what the  American lawyers  call,  eminent  domain; that power  could  only  be exercised by giving a just equivalent of what the owner  has been deprived; and that whether the law made in exercise  of power under Entry 42 of List III laid down principles  which took into account the elements which made up the true  value of  the  property appropriated, and  excluded  such  matters which are to be neglected, was a justiciable issue. The  power  to  legislate  for  compulsory  acquisition   of property  was  originally distributed under  three  entries. Entry  33 List I"Acquisition or requisitioning  of  property for  the  purposes  of  the Union"; Entry  36  of  List  II- "Acquisition  or requisitioning of property, except for  the purposes of the Union, subject to the pro- visions of  Entry 42  of  List 111"; and Entry 42 of List  III-"Principles  on which  compensation for property acquired  or  requisitioned for the purposes of the Union or of a State or for any other public  purpose  is to be determined, and the form  and  the manner  in which such compensation is to be given".  By  cl. (2)  of  Art.  31 exercise of the  power  to  legislate  for compulsory  acquisition  of  property  was  subject  to  the condition that the law for Compulsory acquisition for public purposes  either  fixed the amount of  the  compensation  or

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specified  the principles on which, and the manner in  which the  compensation  was  to be  determined  and  given.   The expression  "compensation" according to this Court  in  Mrs. Bela  Banerjee’s  case(1) meant a just  equivalent  or  full indemnification   of   the  expropriated  owner,   and   the expression  "deprived"  had the same connotation  as  taking possession  of or acquisition.  According to  Subadh  Gopals CaSe(2)  the law providing for acquisition or extinction  of interest of private owners in properties (1) [1954] S.C.R. 558. (2) [1954] S.C.R. 587, 362 not  governed by Art. 31A and Art. 31B read with  the  Ninth Schedule,  was  liable  to be struck  down  unless  the  law provided for payment to the expropriated owner  compensation which was a just equivalent. The  two cases raised more problems than they  solved.   The Court  did not indicate the meaning of the expression  "just equivalent",  nor the date with reference to which the  just equivalent  was referable.  It was also not  stated  whether compensation  was  to be the ’market  value"  determined  on principles set out in the Land Acquisition Act inclusive  of the potential value as decided by the Judicial Committee  in Raja   Vyricherla  Narayana  Gajapatiraju  v.  The   Revenue Divisional  Officer(1),  or  the  value  of  mere   existing advantages,  apart from the potentialities was to be  given. It was easier to state what was not a "just equivalent" than to define what the "just equivalent" was.  The decisions did not indicate the limits on the power of the State to fix  by law  the amount of compensation, which by the express  words used in Art. 31(2) the Legislature possessed.  But according to  the  judgment  in  Mrs.  Bela  Banerjee’s  case(2)   the principles  specified  by the  Legislature  for  determining compensation  were  open to judicial review.  The  Court  in effect  decided that a statute was liable to be struck  down as  infringing a guaranteed fundamental right on the  ground that the compensation provided thereby was inadequate. It  needs  to be emphasized that compensation  payable,  for compulsory deprivation of property is not by the application of  any  principles, determinable as a precise sum;  and  by calling  it just or fair equivalent, no definiteness can  be attached  thereto.   Rules  enunciated  by  the  Courts  for determining  compensation for compulsory  acquisition  under the Land Acquisition Act vary according to the nature of the land  acquired.   For properties which  are  not  marketable commodities, such as lands buildings and incorporeal rights, valuation  has  to be made on the application  of  different rules.  Principle of capitalisation of net rent at the  cur- rent  market rate on guilt-edged securities,,  principle  of reinstatement, principle of determination of original  value less depreciation determination of break-up value in certain types  of property which have outgrown their utility, and  a host   of  other  so-called  principles  are  employed   for determination  of  compensation payable for  acquisition  of lands  houses,  incorporeal  rights,  etc.  in   determining compensation payable under the Land Acquisition Act, special adaptability  to schemes of development and  potentialities, but not the urgent need of the acquirer and the  disinclina- tion of the vendor, have to be taken into account.  The Land Acquisition  Act provides for determination of  compensation by (1) L.R. 66 I.A. 104. (2) [1954] S.C.R. 558. 36 3 reference  to  the market value subject to  certain  matters

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being  taken into account and some others being excluded  as set out in ss. 23 and 24 of that Act.  The rules relating to determination  of  value in regard to the  agricultural  and non-agricultural  lands, house-sites,  buildings,  machinery and other properties, greatly vary and the value in  respect of the same item of property by the application of different rules may lead to vast disparities. Right  to  compensation,  in the view  of  this  Court,  was intended  by  the  Constitution  to be a  right  to  a  just equivalent  of the property of which a person was  deprived. But   the  just  equivalent  was  not  capable  of   precise determination  by the application of any  recognized  rules. The  decisions  of this Court in the  two  cases-Mrs.   Bela Banerjee’s  case(1)  and Subodh Gopal  Bose’s  case(2)  were therefore  likely to give rise to formidable problems,  when the  principles specified by the Legislature as well as  the amounts  determined by the application of those  principles, were  declared justiciable.  By qualifying  "equivalent"  by the   adjective   "just",   the  enquiry   was   made   more controversial;  and apart from the  practical  difficulties, the law declared by this Court also placed serious obstacles in giving effect to the directive principles of State policy incorporated in Art. 39. The  Constitution was, in that state of the law declared  by this  Court, amended by the Constitution (Fourth  Amendment) Act, 1955, which came into force on April 27, 1955.  Thereby Clause  (2) of Art. 31 was substituted by new cls.  (2)  and (2A).   Article 31A was amended with  retrospective  effect; seven  more Acts were added-to the Ninth Schedule  including the West Bengal Land Development and Planning Act, 1948,  of which s. 8 was declared ultra vires by this Court in  Subodh Gopal Bose’s case (2), and certain consequential provisions were made by substitution of an amended Art. 305 in place of the original Art. 305. The principal effect of this amendment, in so far as that is relevant  in  this  appeal,  was to  snap  the  link  which, according  to this Court, existed between cls. (1) and  (2)- that was achieved by enacting cl. (2A); greater clarity  was secured  by  enacting  in cl. (2)  that  property  shall  be compulsorily  acquired  only for a public  purpose,  and  by authority of law which provides for compensation, and either fixes the amount of compensation or specifies the principles on  which  and the manner in which, compensation  is  to  be determined  and given; and that the law for  acquisition  or requisition shall not be called in question in any court  on the  ground  that the compensation provided thereby  is  not adequate.  By the amendment made in Art. 31A certain classes of  statutes were placed with retrospective  effect  outside the purview of attack (1) [1954] S.C.R.558. (2) [1954] S.C.R. 587. 364 before  the  Courts  on the ground of  infringement  of  the fundamental  rights  under Art. 14, 19 and 31,  and  by  the addit ion of certain Acts in the Ninth Schedule a  challenge to those Acts that they infringed any fundamental rights  in Part III could not be entertained.  But the amendments  made in Art. 3 1 were not given any retrospective operation.  The result was that in cases where acquisition was made pursuant to  the  statutes  enacted before April 27,  1955,  the  law declared  in Mrs. Bela Banerjee’s case(1) and  Subodh  Gopal Bose’s case(2) continued to apply . In  State of Madras v. D. Namasivaya Mudaliar and  Others(3) this  Court  held that the Madras Lignite,  (Acquisition  of Land) Act 1953, which came into force on August 20, 1953  in

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so far as it purported to provide for award of  compensation for compulsory acquisition of land, which was not to include any rise in value between a fixed date and the date of issue of  the notification under S. 4(1) of the  Land  Acquisition Act   and  denied  compensation  for  the  value   of   non- agricultural improvements since that fixed date, was invalid as  infringing  the  guarantee  under  Art.  31(2)  of   the Constitution  before it was amended.  In N. B.  jeejeebhoy’s case(4)  this Court held that ascertainment of  compensation on  the  basis  of the value of the  lands  acquired  as  on January  1,  1948,  and  not as on the  date  on  which  the notification  under  s. 4 of the Land  Acquisition  Act  was issued under the provisions of the Land Acquisition  (Bombay Amendment) Act, 1948, was arbitrary and violated S. 29  9(2) of   the  Government  of  India  Act,  1935,   relating   to compensation.   In N. B. Jeejeebhoy’s case(4) the Court  was dealing with a pre-Constitution statute and it was held that the principle on which compensation was to be paid under  S. 299(2) of the Government of India Act, 1935, and Art. 31 (2) of  the  Constitution,  were  the  same,  and  a   different interpretation giving a more restricted meaning to S. 299(2) of the Government of India Act, 1935, could not be given. In  Union  of  India v.  Kamlabai  Harjiwandas  Pareskh  and others(5) it was again held by this Court that  compensation admissible  under  the  Requisitioning  and  Acquisition  of Immovable Property Act, 1952, enacted on March 14, 1952,  at the market value of the property at the date of  acquisition or  twice  the market value of the property at the  time  of requisitioning  of  that property under r.  75-A(1)  of  the Defence  of  India Rules, whichever was less,  was  void  as infringing Art. 31(2) of the Constitution. These  three cases were decided, following the principle  of Mrs.   Bela  Banerjee’s  case(3), in  respect  of  the  Acts enacted  before  the Constitution  (Fourth  Amendment)  Act, 1955. (1)  [1964] S.C.R. 558 (3)    [1964] 6 S.C.R. 936. (5) [1968] 1 S.C.R. 463. (2)  [1954] S.C.R. 587. (4)   [1965] 1 S.C.R. 636.                             365 Counsel  for the respondent urged that the amendment to  the Constitution has by the (Fourth Amendment) Act made no subs- tantial difference in, the concept of compensation as a just equivalent or just recompense for the property of which the owner is deprived, and any scheme or principle of payment of compensation to a person deprived of property which does not adequately  compensate  him  for the  loss  of  property  by awarding   to  him  a  just  recompense  at  the   date   of expropriation must be deemed void. Before  considering  this  part  of  the  argument,  it   is necessary  to refer to one other  Constitutional  Amendment. By  the  Constitution (Seventh Amendment) Act,  1956,  which came  into force on November 1, 1956, Entries 33 of  List  I and 36 of List II were deleted from the Seventh Schedule and Entry 42 of List III was amended and now  reads-"Acquisition and  requisitioning  of  property".   The  effect  of   that amendment   is   that   the   power   of   acquisition   and requisitioning of property falls in the concurrent list  and it  makes  no reference to the principles on  which  compen- sation   for   acquisition  or  requisitioning  is   to   be determined. Reverting to the amendment made in cl. (2) of Art. 31 by the Constitution (Fourth Amendment) Act, 1955, it is clear  that adequacy of compensation fixed by the Legislature or awarded according to the principles specified by the legislature for determination  is not justiciable. it clearly  follows  from

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the  terms  of  Art. 31 (2) as amended that  the  amount  of compensation  payable, if fixed by the Legislature,  is  not justiciable,  because  the challenge in such a  case,  apart from  a plea of abuse of legislative power, would be only  a challenge to the adequacy of compensation.  If compensation, fixed  by the Legislature-and by the use of  the  expression "compensation"  we mean what the Legislature justly  regards as  proper and fair recompense for compulsory  expropriation of property and not something which by abuse of  legislative power though called compensation is not a recompense at  all or  is  something illusory-is not justiciable, on  the  plea that   it  is  not  a  just  equivalent  of   the   property compulsorily  acquired,  is it open to the Courts  to  enter upon  an enquiry whether the principles which are  specified by the Legislature for determining compensation do not award to the expropriated owner a just equivalent ?  In our  view, such  an  enquiry  is  not open to  the  Courts  under-  the statutes   enacted  after  the amendments  made   in   the Constitution by the Constitution (Fourth Amendment) Act.  If the quantum of compensation fixed by the Legislature is  not liable  to be canvassed before the Court on the ground  that it  is not a just equivalent, the principles  specified  for determination  of  compensation  will also not  be  open  to challenge  on the plea that the compensation  determined  by the   application  of  those  principles  is  not   a   just equivalent.  The right declared by the Constitution guaran 7 Sup CI/69-5 366 tees  that compensation shall be given before a  person  is, compulsorily  expropriated  of  his property  for  a  public purpose.   What is fixed as compensation by statute,  or  by the,  application of principles specified for  determination of  compensation  is guaranteed : it does not  mean  however that  something  fixed or determined by the  application  of specified  principles which is illusory or can in  no  sense be  r egarded 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 the constitutional  guarantee. But   ,compensation  fixed  or  determined   on   principles specified  by  the Legislature can-not be  permitted  to  be challenged on the somewhat 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.   A  challenge to  a  statute  that  the principles  specified by it do not award a  just  equivalent will be in clear violation of the constitutional declaration that inadequacy of compensation provided is not justiciable. The true effect of the amended Art. 31(2) fell to be  deter- mined  for the first time before this Court in P.  Vajravelu Mudaliar’s  case  (1).  In that case lands  belonging  to  a person  were  notified for acquisition for  the  purpose  of housing  schemes and proceedings in respect of  compensation payable to him in accordance with the provisions of the Land Acquisition (Madras Amendment) Act, 1961, were pending.  The owner challenged the vires of the Land Acquisition  (Madras Amendment)  Act, 1961, on the ground that it  infringed  the fundamental  rights  under Arts. 14, 19 and  31(2)  ,of  the Constitution.   The Act made provisions which departed  from the Land Acquisition Act, 1894, in determining  compensation in three respects-’ (1) compensation was to be determined on the  basis of average market value of the land  during  five years  immediately  preceding the date of  the  notification under  S.  4(1) of the Land Acquisition Act  or  the  market

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value  on the date of the notification whichever  was  less; (2)  the  solarium  payable  to  the  owner  for  compulsory acquisition  was to be 5% of the market value; and (3)  that the   owner  was  not  to  get  any  compensation  for   the suitability of the land for use other than the use to  which it  was put on the date of publication of  the  notification i.e.  potentiality  of the land was to be  discarded.   This Court  held that in making this three-fold  modification  in the application of the Land Acquisition Act for  determining compensation  payable  the  statute  did  not  infringe  the guarantee  contained  in  Art.  31(2).   It  only  specified certain principles for determination of compensation.  Those principles may result in inadequacy of compensation, but did not constitute fraud on power and therefore the Amending (1)  [1965] 1 S.C.R. 614.                             367 Act  did  not offered Art. 31(2) of the  Constitution.   But Subba  Rao,  J.1  in delivering the judgment  of  the  Court observed :               "If  the definition of "compensation" and  the               question of justiciability are kept  distinct,               much  of the cloud raised will  be  dispelled.               Even   after  the  amendment,  provision   for               compensation or laying down of the  principles               for   determining   the  compensation   is   a               condition   for  the  making  of  a   law   of               acquisition                                 or               requisition......................   The   fact               that  Parliament  used  the  same  expressions               namely,  "compensation"  and  "principles"  as               were found in Art. 31 before the Amendment  is               a  clear  indication  that  it  accepted   the               meaning   given   by  this  Court   to   those               expression  in Mrs. Bela Banerjee’s case.   It               follows that a Legislature in making a law. of               acquisition or requisition shall provide for a               just  equivalent  of what the owner  has  been               deprived of or specify the principles for  the               purpose of ascertaining the "just  equivalent"               of what the owner has been deprived of. . .  .               It will be noticed that the law of acquisition               or  requisition  is  not  wholly  immune  from               scrutiny  by the court.  But what is  excluded               from the court’s jurisdiction is that the  law               cannot  be questioned on the ground  that  the               compensation  provided  by  that  law  is  not               adequate.  It will further be noticed that the               clause excluding the jurisdiction of the court               also  used the word "compensation"  indicating               thereby that what is excluded from the court’s               jurisdiction   is   the   adequacy   of    the               compensation  fixed by the Legislature a  more               reasonable interpretation is that neither  the               principles  prescribing the "just  equivalent"               nor the "just equivalent" can be questioned by               the court on the ground of in adequacy of  the               compensation  fixed  or  arrived  at  by   the               working of the principles."               At p. 629, he summarised the legal position as               follows               "If  the question pertains to the adequacy  of               compensation,  it is not justiciable;  if  the               compensation  fixed or the principles  evolved               for  fixing it disclose that  the  legislature               made  the law in fraud of powers in the  sense

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             we have explained, the question is within  the               jurisdiction of the Court." These  observations  were  however, not  necessary  for  the purpose of the decision in P. Vajravelu Mudaliar’s  case(1). The  Court  held that the Amending Act did in  fact  specify principles  for  ascertaining  the  value  of  the  property acquired  and  the  principles were not  irrelevant  in  the determination of compensation; (1)  [1865] S.C.R. 614. 368 if  there was inadequacy in the compensation awarded by  the application of those principles it was not open to  question in view of the express provision made in the last clause  of Art.  31(2).  In our judgment, the observation made  by  the Court  that  Art. 31(2) as amended means that  "neither  the principles  prescribing the ’just equivalent’ nor the  ’just equivalent’ can be questioned by the Courts on the ground of inadequacy  of the compensation fixed or arrived at  by  the working  of  the principles" needs to be clarified.   If  by that  observation  it  is intended that the  attack  on  the principles   specified  for  determining   compensation   is excluded only when it is founded on a plea of inadequacy  of compensation,  a restricted meaning is given to  Art.  31(2) which  practically  nullifies the amendment.   Whatever  may have been the meaning of the expression "compensation’ under the   unmended  article  31(2),  when  the  Parliament   has expressly enacted under the amended clause that "no such law shall be called in question in any court on the ground  that the  compensation provided by that law is not adequate",  it was intended clearly to exclude from the jurisdiction of the Court  an  enquiry that what is fixed or determined  by  the application of the principles specified as compensation does not  award to the owner a just equivalent of what he is  de- prived.   Any other view is contrary to the plain  words  of the amendment: it is also contrary to the ultimate  decision of  the  Court in P. Vajravelu Muddliar’s case(1)  that  the principles  specified by the Court which did not award  what may  be  called  a just equivalent were still  not  open  to question. In our view, Art. 31(2) as amended is clear in its  purport. If  what  is fixed or is determined by  the  application  of specified   principles   is  compensation   for   compulsory acquisition  of  property the Courts cannot  be  invited  to determine  whether it is a just equivalent of the  value  of the  property  expropriated.   In  P.  Vajravelu  Mudaliar’s case(1) the Court held that the principles laid down by  the impugned  statute  were  not open  to  question.   That  was sufficient  for the purpose of the decision of the case  and the other observations were not necessary for deciding  that case, and cannot be regarded as a binding decision. In the Metal Corporation Ltd.’s case(2) the facts Were  that the Metal Corporation of India (Acquisition of  Undertaking) Act 1965, was enacted for acquiring in the public  interest, the  undertaking of the Metal Corporation of India- The  Act provided  that  the Corporation was to vest in  the  Central Government  on the commencement of the Act; and that in  the absence  of  an  agreement between the  Government  and  the Corporation, corn- (1) [1965] 1 S.C.R. 614. (2) [1967] 1 S.C.R. 25S.                             369 pensation  payable  to the Corporation was to be  an  amount equal  to, the sum total of the value of the properties  and assets of the Corporation on the date of the commencement of the  Act  calculated in accordance with  the  provisions  of

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Paragraph   II  of  the  Schedule  to  the  Act,  less   the liabilities on the said date, calculated in accordance  with the provisions of Paragraph HI of the Schedule.  One of  the clauses laying down principles of compensation, viz., clause (b)  of Paragraph 11 was in two parts.  The first part  pro- vided  for  the  valuation  of  plant,  machinery  or  other equipment which had not been worked or used and was in  good condition, and the second part provided for the valuation of any  other  plant,  machinery  or  equipment.   The  former, according  to the Schedule, had to be valued at  the  actual cost incurred by the Corporation in acquiring them, and  the latter  at the written down value determined  in  accordance with  the  provisions  of the  Income-tax  Act,  1961.   The validity of the Act was challenged, and this Court held that the  Act contravened Art. 31(2) of the Constitution and  was therefore void.  The judgment of the Division Bench is  open to  review by this Court.  The Court after setting  out  the principles  laid down by this Court in Mrs. Bela  Banerjee’s case(2);   D.  Namasivaya  Mudaliar’s  case(3)  and  N.   B. Jeejeebhoy’s case(3) observed at p. 264 :               ".  -  - - the relevant aspect  of  the  legal               position evolved by the said decisions may  be               stated   thus  :  Under  Art.  31(2)  of   the               Constitution,  no  property shall  be  compul-               sorily  acquired  except  under  a  law  which               provides  for  compensation for  the  property               acquired  and  either  fixes  the  amount   of               compensation  or specifies the  principles  on               which,  and the manner in which,  compensation               is  to  be determined and given.   The  second               limb  of the provision says that no  such  law               shall  be called in question in any  court  on               the  ground that the compensation provided  by               the law is not adequate.  If the two concepts,               namely, "compensation" and the jurisdiction of               the  court are kept apart, the meaning of  the               provisions  is  clear.   The  law  to  justify               itself  has  to provide for the payment  of  a               "just equivalent" to the land acquired or  lay               down  principles  which  will  lead  to   that               result.   If  the  principles  laid  down  are               relevant  to the fixation of compensation  and               are   not  arbitrary,  the  adequacy  of   the               resultant  product cannot be questioned  in  a               court of law.  The validity of the principles,               judged  by  the  above  tests,  falls   within               judicial  scrutiny,  and  if  they  stand  the               tests,  the  adequacy  of  the  product  falls               outside its jurisdiction." (1)  [1954] S.C.R. 558.(3) [1965] 4 S.C.R. 6361 (2)[1964] 6 S.C.R. 936, 370 The  Court  then proceeded to hold that the  two  principles laid down in cl. (b) of Paragraph II of the Schedule to  the Act(i)  that compensation was to be equal to the cost  price in the case of unused machinery in good condition; and  (ii) written  down value as understood in the Income-tax law  was to  be the value of the used machinery, were  irrelevant  to the fixation of the-value of the machinery as on the date of acquisition. We are unable to agree with that part of the judgment.   The Parliament  had  specified the  principles  for  determining compensation  of  the  undertaking  of  the  company.    The principles   expressly  related  to  the  determination   of compensation payable in respect of unused machinery in  good

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condition  and used machinery.  The principles were set  out avowedly for determination of compensation.  The  principles were not irrelevant to the determination of compensation and the  compensation  was not illusory.  In our  judgment,  the Metal  Corporation  of  India  Ltd.’s  case(1)  was  wrongly decided and must be overruled. Turning to the Bombay Town Planning Act, 1955, it was  clear that the Legislature has specified principles for determina- tion of compensation which has to be adjusted in determining the amount of contribution.  The principle for determination of  comsation cannot be said to be irrelevant, nor  can  the compensation  determined be regarded as illusory.   Being  a principle relating to compensation, in our judgment, it  was not  liable  to  be challenged. If what is  specified  is  a principle  for determination of compensation, the  challenge to  that principle on the ground that a ’just equivalent  of what  the owner is deprived is not provided is  excluded  by the plain words of Art. 31(2) of the Constitution. It was urged that in any event 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  is unreasonable.    This  Court  has,  however  held  in   Smt. Sitabati Debi and Anr. v. State of West Bengal(2) that a law made under cl. (2) of Art. 31 is not liable to be challenged on the ground that it imposes unreasonable restrictions upon the right to hold or dispose of property within the  meaning of  Art. 19(1) (f) of the Constitution.  In  Smt.   Sitabati Debi’s  case  (2  )  an owner of  land  whose  property  was requisitioned  under the West Bengal Land  (Requisition  and Acquisition)  Act, 1948, questioned the validity of the  Act by  a writ petition filed in the High Court of  Calcutta  on the plea that it offended Art. 19(1)(f) of the Constitution. This  Court  unanimously held that the validity of  the  Act relating to acquisi- (1) [1967] 1 S.C.R. 255. (2) [1967] 2 S.C.R. 949. 37 1 tion  and  requisition cannot be ’questioned on  the  ground that it offended Art. 19(1) (f) and cannot be decided by the criterion  under  Art.  19(5).  Again the  validity  of  the statute  cannot  depend  upon whether in  a  given  case  it operates  harshly.  If the scheme came into force  within  a reasonable  distance  of  time from the date  on  which  the declaration  of intention to make a scheme was notified,  it could  not  be  contended  that  fixation  of   compensation according  to  the scheme of s. 67 per se  made  the  scheme invalid.  The fact that considerable ’time has elapsed since the  declaration of intention to make a scheme cannot  be  a ground  for declaring the section ultra vires.  It  is  also contended  that  in  cases where no  reconstituted  plot  is allotted to a person and his land is wholly appropriated for a public purpose in a scheme, the owner would be entitled to the  value of the land as, prevailing many years before  the extinction of interest without the benefit of the steep rise in  prices which has taken Place all over the country.   But if s. 71 read with s. 67 lays down a principle of valuation, it  cannot be struck down on the ground that because of  the exigencies  of  the scheme, it is not possible  to  allot  a reconstituted  plot  to  an owner of  land  covered  by  the scheme. Our  attention  was invited to ss. 81 and 84 of  the  Bombay Town  Planning Act, 1955.  Section 81 merely  provides  that the land needed for the purpose of a town planning scheme or development  plan  shall be deemed to be land needed  for  a

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public  purpose within the meaning of the  Land  Acquisition Act, 1894.  This provision only declares what is implicit in the  scheme  of  the Act.  Section 84  only  contemplates  a special  class of cases in which the land which is  included in a town planning scheme is needed by the State  Government for  a  public  purpose  other than that  for  which  it  is included in the scheme.  In such a case the State Government may make a declaration to that effect and the provisions  of the  Land Acquisition Act, 1894, as modified’  the  Schedule apply.   We  are not concerned in this case  with  any  such notification  issued  by  the Government,  nor  has  it  any relevance to the question in issue. One  more contention which was apparently not raised on  be- half  of the first respondent before the High Court  may  be briefly referred to  Counsel contends that ss. 53 and 67  in any  event infringe Art. 14 of the Constitution and were  on that  account  void.  Counsel relies principally  upon  that part  of  the judgment in P.  Vajravelu  Mudaliar’s  case(1) which deals with the infringement of the equality clause  of the  Constitution  by  the  impugned  Madras  Act.   Counsel submits that it is always open to the State (1)  [1965] 1 S.C.R. 614. 372 Government to acquire lands for a public purpose of a  local authority and after acquiring the lands to vest them in  the local  ,authority.   If that be done, compensation  will  be payable  under  the  Land Acquisition Act,  1894,  but  says counsel, when land is acquired: 1 for a public purpose of  a local  authority  under the provisions of  the  Bombay  Town Planning Act the compensation which is payable is determined at  a’ rate prevailing many years before the date  on  which the  notification under S. 4-of the Land Acquisition Act  is issued.  The argument is based on no solid foundation.   The method of determining compensation in respect of lands which are  subject to the town-planning schemes is  prescribed  in the Town Planning Act.  There is no option under that Act to acquire  the land either under the Land Acquisition  Act  or under  the Town Planning Act.  Once the draft town  planning scheme  is  sanctioned,  the- land becomes  subject  to  the provisions  of  the Town Planning Act, and the  final  town- planning scheme being sanctioned, by statutory operation the title  of  the various owners is readjusted  and  the  lands needed  for  a public purpose vest in the  local  authority. Land  required  for any of the purposes of  a  town-planning scheme cannot be acquired, otherwise than under the Act, for it  is settled rule of interpretation of statutes that  when power  is given under a statute to do a certain thing in’  a certain  way  the thing must be done in that way or  not  at all:  Taylor  v.  Taylor().  Again it cannot  be  said  that because  it  is  possible for the State, if  so  minded,  to acquire lands for a public purpose of a local authority, the statutory effect given to a town-planning scheme results  in discrimination between persons similarly circumstanced.   In P.  Vajravelu Mudaliar’s case(2) the Court struck  down  the acquisition  on the ground that when the lands are  acquired by  the  State  Government for a housing  scheme  under  the Madras   Amending  Act,  the  claimant  gets  much   smaller compensation than the compensation he would get if the  land or  similar lands were acquired for the same public  purpose under the Land Acquisition Act, 1894.  It was held that  the discrimination between persons whose lands were acquired for housing  schemes  and those whose lands  were  acquired  for other  public  purposes  could  not  be  sustained  on   any principle  of  reasonable  classification  founded on intelligible  differenti a which had a rational relation  to

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the  object  sought  to be achieved.  One  broad  ground  of distinction between P. Vajravelu Mudaliar’s case(2) and this case  is  clear  : the acquisition was  struck  down  in  P. Vajravelu  Mudaliar’s case(2) because the  State  Government could  resort to one of the two methods  of  acquisition-the Land Acquisition Act, 1894, and the Land Acquisition (Madras Amendment) Act, 1961-and no guidance (1) [1875] 1 Ch.D. 426. (2) [1965] 1 S.C.R. 614.                             373 was given by the Legislature about the statute which  should be resorted to in a given case of acquisition for a  housing scheme.   Power  to choose could,  therefore,  be  exercised arbitrarily.  Under the Bombay Town Planning Act 1955, there is no acquisition by the State Government of land needed for a  town-planning  scheme.  When the  town  Planning,  Scheme comes  into operation the land needed by a  local  authority vests  by vitrue of s. 53(a) and’ that-vesting for  purposes of  the  guarantee  under Art. 31(2)  is  deemed  compulsory acquisition  for  a  public purpose.   To  lands  which  are subject  to  the  scheme, the provisions of ss.  53  and  67 apply,  and  the  compensation is determined  only  in  the, manner  prescribed  by  the Act.  There  are  therefore  two separate  provisions, one for acquisition by the State  Gov- ernment,  and  the other in which the statutory  vesting  of land  operates  as  acquisition for  the  purpose  of  town- planning  by the local authority.  The State Government  can acquire  the  land under the Land Acquisition Act,  and  the local  authority  only under the Bombay Town  Planning  Act. There  is no option to the local authority to resort to  one or  the  other of the alternative methods  which  result  in acquisition.  The contention that the provisions of  ss.  53 and  67 are invalid on the ground that they deny  the  equal protection  of the laws or ’equality before the laws  must,, therefore, stand rejected. The  High Court has apparently not considered the other  ar- guments  which  were advanced at the Bar, and  has  observed that   it  was  not  necessary  to  consider   those   other contentions raised in the petition.  As the petition has not been  heard  by  the  High Court in  respect  of  the  other contentions which the first respondent may choose to  raise, we set aside the order passed by the High Court declaring s. 53  read with s. 67 insofar as it authorised acquisition  of land by the local authority under a town-planning scheme, as violative  of  Art.  31(2)  of  the  Constitution,  and  the acquisition  of the first respondent’s land under  the  City Wall Improvement Town Planning Scheme No. 5 as invalid.  The appeal  is allowed.  The case is remanded to the High  Court with  a  direction  that it be dealt with  and  disposed  of according  to  law.  The order of costs passed by  the  High Court  is set aside.  There will be no order as to costs  in this Court. R.K.P.S.                           Appeal allowed. 374