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PETITIONER: STATE OF MAHARASHTRA & ANR.

       Vs.

RESPONDENT: BASANTIBAI MOHANLAL KHETAN & ORS.

DATE OF JUDGMENT13/03/1986

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) THAKKAR, M.P. (J)

CITATION:  1986 AIR 1466            1986 SCR  (1) 707  1986 SCC  (2) 516        1986 SCALE  (1)404  CITATOR INFO :  R          1988 SC1989  (12)  F          1990 SC 153  (11)

ACT:      Maharashtra   Housing   and   Development   Act,   1976 (Maharashtra Act  XXVIII of  1977), sub-sections  3 &  4  of section 44,  Constitutional validity  of - Whether infringes the provisions  of Articles  14, 19,  21, 31 and 300A of the Constitution -  Whether provisions  of section 44(3) and (4) are protected by Article 31(c) of the Constitution.

HEADNOTE:      One Mohanlal Fakirchand Khetan was the owner of a piece of land  measuring 3.98.60 hectares bearing Survey No. 28 at village Bhushi  in Maval  Taluka  of  Pune  District  having purchased it under the sale deed dated January 18, 1966. The said land  is, however, situated within the municipal limits of Lonavala town. Mohanlal Fakirchand Khetan died on May 18, 1976 leaving  behind him  his widow,  respondent No.  1, and children respondents  Nos. 2 to 5, as his heirs. In order to provide  housing   accommodation  to   economically   weaker sections and  to persons  belonging to  low income group and middle  income  group  residing  within  Lonavala  municipal limits and  at the  request of  the Maharashtra  Housing and Area Development  Authority, a  notice was  published by the State Government  under the  proviso to section 41(1) of the Maharashtra Housing  and Development Act, 1976 in Government Gazette dated  August 30,  1979 inviting  objections to  the proposed acquisition  of  lands  including  the  land  which originally belonged  to Mohanlal Fakirchand Khetan. Pursuant to the  said notice  Chandrakant Mohanlal Khetan, respondent No. 3  herein lodged his protest on September 6, 1979. After considering the  various objections  received from different people  including   the  objections   filed  by  Chandrakant Mohanlal Khetan  on behalf  of himself  and  the  other  co- owners, the  State  Government  published  the  notification under sub-section  (1) of  section 41  in its  Gazette dated July 3,  1980. On  the publication  of the said notificction the land  of Mohanlal  Fakirchand Khetan vested in the State Government free  from all encumbrances. On December 12, 1980 a notice was 708

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issued under section 42(1) of the Act, to the holders of the lands to  surrender and deliver possession of their lands to the Collector,  Pune within  a period of 30 days. In January 1981,  the  legal  representatives  of  Mohanlal  Fakirchand Khetan objected  to the notice on the ground that Survey No. 28 of village Bhushi that is, the land belonging to them had not actually  been notified in the notification published in the Gazette  as it  had been shown as lying in village Maval and not  in village  Bhushi. On  discovering the error which had crept  into the  notification, on May 15, 1981 the State Government published  a  corrigendum  making  the  requisite correction and thereafter issued a fresh notice on September 15, 1981  to the  heirs of  Mohanlal  Fakirchand  Khetan  to deliver possession  of the  land bearing  Survey No.  28  of village Bhushi  situated  within  the  Municipal  limits  of Lonavala. The  widow and  children  of  Mohanlal  Fakirchand Khetan, respondents herein filed a writ petition in the High Court of  Bombay questioning  the  validity  of  proceedings leading up  to the issue of notification under section 41(1) of the  Act  and  also  the  notification.  The  High  Court negatived all  the contentions  raised by the respondents in the writ  petition  except  the  constitutionality  of  sub- section (3)  and (4) of section 44 of the Act. It found that sub-section 3  and sub-section  4 of  section 44  of the Act were unreasonable  and discriminatory  and  therefore  ultra vires Article 14 of the Constitution. It found that the said provisions  were   not  protected  by  Article  31C  of  the Constitution and  further held  that the impugned provisions of  the   legislation  were  otherwise  unfair,  unjust  and unreasonable. The High Court also found that the deprivation of the  property under sections 41 and 42 of the Act had not been done  by authority  of law.  The High Court accordingly allowed the  writ petition. Aggrieved by the decision of the High Court  the State  of Maharashtra  and  the  Maharashtra Housing and  Area  Development  Authority  have  filed  this appeal by special leave.      Allowing the appeal the Court, ^      HELD :  1. Sub-sections  3 and  4  of  the  Maharashtra Housing  and  Development  Act,  1976  are  constitutionally valid. [730 F-G]      2.1 Every  Act  carries  with  it  the  presumption  of constitutionality and  unless a  party aggrieved  in a  writ petition is  able to  discharge the  said burden  by placing adequate 709 material, the  Court should  not strike  down a  legislative provision particularly  by the  application of  Article  14. [726 A-C]      In the instant case, sub-sections 3 and 4 of section 44 of the Act cannot be said to be discriminatory and violative of Article  14 of  the Constitution,  merely because  in the case of lands in municipal area all the methods of valuation under the Land Acquisition Act, are not made available. [726 B-C]      2.2 The  Act is not introduced for the benefit of areas like  Bombay   Corporation  area   and   areas   under   the jurisdiction of  other corporations and municipalities only. It is  enacted for  the whole State more than 90 per cent of which constitutes  rural area.  The potentialities of a land in a  municiple area  are far higher than the potentialities of land in a rural area. There is also no occasion under the Act for the State Government to treat one piece of land in a municipal area  in one way and another piece of land in that area differently.  All lands  in a municipal area have to be

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valued in  only one  way that  is in accordance with section 44(3) and  (4) of  the Act and all lands in rural areas have also to  be valued only in one way and that is in accordance with the provisions of the Land Acquisition Act, 1894. There could have  been two  different Acts one for municipal areas and another  for rural areas, each providing for a different method of  valuation of  land. Such  a classification  would have been  un-exceptionable having  regard to the object and purposes  of   the  two  Acts  and  the  difference  in  the potentialities of  the two  types of  lands. The  method  of capitalization is  also one  of the recognised methods which is adopted  for  the  purpose  of  valuation  of  properties acquired under  the Land  Acquisition Act, 1894. All methods of valuation  adopted under that Act are intended to achieve the same  purpose, namely, determination of the market value of the  land acquired. It is difficult to say whether any of them is  superior to  the other in the context of Article 14 of  the   Constitution  and  to  hold  that  there  will  be discrimination, if  any of them is not allowed to be availed of for purposes of valuation. [723 G-H; 724 A-E]      State of  Gujarat v.  Shri Shantilal  Mangaldas & Ors., [1969] 3  S.C.R. 341;  Parkash Amichand  Shah  v.  State  of Gujarat  &  Ors.,  [1986]  1  S.C.C.  581;  Raja  Vyricherla Narayana Gajapatiraju  v. The  Revenue  Divisional  Officer, [1939] 66 IA 104 = 710 A.I.R. 1939  PC 98; Rustam Cavasjee Cooper v. Union of India [1970] 3  S.C.R. 530;  Union of  India & Anr. v. Smt. Shanti Devi &  Ors., [1983]  4 S.C.C. 542; Special Land Acquisition Officer, Davangere  v. P.  Veerabhadrappa &  Ors., [1984]  2 S.C.C. 120;  Oriental Gas  Co. Ltd. & Ors., v. State of West Bengal [1979]  1 S.C.R.  617 and  Government  of  Bombay  v. Morwanji Muncherji Cama, 10 Bom. LR 907 referred to.      2.3  Even   granting  for  purposes  of  argument  that subsections 3  & 4 of section 44 are violative of Article 14 of  the   Constitution,  the  said  provisions  receive  the protection of Article 31C of the Constitution. [726 C-D]      3.1 Article  31C does  not say that an Act there should be a  declaration by  the  appropriate  legislature  to  the effect that  it is  being  enacted  to  achieve  the  object contained in Article 39(b). In order to ascertain whether it is protected by Article 31C, the Court has to satisfy itself about the character of the legislation by studying all parts of it. The question whether an Act is intended to secure the objects contained  in Article  39(b) or  not does not depend upon the  declaration by  the legislature but depends on its contents. [727 B-D]      3.2 The  Maharashtra Housing  and Development Act, 1976 makes  provision   for  acquisition  of  private  lands  for providing sites for building houses or housing accommodation to the  community. The  title to  the lands  of the  private holders  which   are  acquired  first  vests  in  the  State Government.  Later   on  the  land  is  developed  and  then distributed amongst  the people  as  house  sites.  It  also provides for  reserving land  for providing public amenities without which  people cannot  live there. Community centres, shopping complex,  parks, roads,  drains, play  grounds, are all necessary for civic life and these amenities are enjoyed by all.  That is  also a  kind of  distribution  within  the meaning of  Article 39(b)  of the  Constitution. The  Act is brought into  force to  implement  the  directive  principle contained in  Article 39(b)  and hence  even if there is any infraction of Article 14 it is cured by Article 31C which is clearly attracted to the case. [727 E-F; 729 A-B]      Sanjeev Coke  Manufacturing Company  v.  Bharat  Coking

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Coal Ltd.  &  Anr.,  [1983]  1  S.C.R.  1000;  His  Holiness Kesavananda Bharati  Sripadagalavaru  v.  State  of  Kerala, [1973] Supp. S.C.R. 711 1; Minerva  Mills Ltd.  & Ors.  v. Union  of India  &  Ors., [1981] 1  S.C.R. 206  and State  of Karnataka & Anr. etc. v. Shri Ranganatha  Reddy &  Anr. etc.,  [1978]  1  S.C.R.  641 referred to.      4. The  Maharashtra Housing  and Development  Act, 1976 does not  infringe Article 300A of the Constitution. Article 300A was  not in  force when the Act was enacted. Article 31 (1) of  the Constitution  which  was  couched  in  the  same language was  however in  force. Article 31C gave protection to the  Act even  if it  infringed Article 31. In this case, sub-section 3  and 4  of section  44 of  the Act  cannot  be struck down  on the  ground that  they are  neither just nor fair or  reasonable. Nothing  contrary has  been done by the authorities. Certain  vacant lands  lying inside a municipal area are  being acquired for providing housing accommodation after paying  an amount which is computed in accordance with a method  considered to be a fair one by Courts. The purpose for which  the lands  are acquired  is a public purpose. The owners are  given opportunity  to make their representations before the notification is issued. All the requirements of a valid exercise  of the  power of  eminent domain even in the sense in  which it  is understood  in the  United States  of America where  property rights  are given greater protection than what  is  required  to  be  done  in  our  country  are fulfilled by the Act. [729 B-F]      5. Land ceiling laws, laws providing for acquisition of land for  providing  housing  accommodation,  laws  imposing ceiling on  urban property  etc. cannot  be struck  down  by invoking  Article   21  of   the  Constitution.  Article  21 essentially deals with personal liberty. It has little to do with the  right to  own property as such. This is not a case where the  deprivation of property would lead to deprivation of life  or liberty or livelihood. On the other hand land is being acquired  to improve the living conditions of a larger number  of   people.  To   rely  upon   Article  21  of  the Constitution for  striking down  the provisions  of the  Act amounts to  a clear  misapplication of  the  great  doctrine enshrined in Article 21. [730 A-C]      6. Some  problems presenting difficulty of valuation in the application  of clause  5 of  First Schedule  to section 44(1) of  the Act  in regard  to  valuation  of  open  lands situated in  a city  like  Bombay  or  lands  with  building potentialities situated  within the limits of big towns, are easily surmountable 712 problems of valuation in relation to individual lands and do not  reflect   on  the  constitutionality  of  the  impugned provision. The  concerned  authorities  entrusted  with  the function of  making evaluation  will doubtless  resolve such problems as  are likely to arise appropriately in accordance with law. [730 D-E]      Basanti  Bhai  Mohanlal  Khetan  &  Ors.  v.  State  of Maharashtra A.I.R. 1984 Bombay 366 reversed.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1177 of 1984.      From the  Judgment and  order dated  8.11.1983  of  the Bombay High Court in W.P. No. 4192 of 1981.

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    Ashok Desai,  M. Ganesh, G.B. Sathe and A.S. Bhasme for the Appellants.      S.B. Bhasme, Mrs. V.D. Khanna, A.M. Khanwalkar and Anil Kumar Gupta for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J. This appeal by special leave is filed against the judgment dated November 8, 1983 in Writ Petition No. 4192  of 1981  by which  the High  Court  declared  sub- section (3)  and  sub-section  (4)  of  section  44  of  the Maharashtra Housing  and Development  Act, 1976 (Maharashtra Act No.  XXVIII of  1977) (hereinafter  referred to  as ‘the Act’) as void and gave certain ancillary directions.      One Mohanlal Fakirchand Khetan was the owner of a piece of land  measuring 3.98.60  hectares bearing Survey No.28 at village Bhushi  in Maval  taluka  of  Pune  district  having purchased it under the sale deed dated January 18, 1966. The said land  is, however, situated within the municipal limits of Lonavala town. Mohanlal Fakirchand Khetan died on May 18, 1976 leaving  behind him  his widow,  respondent  No.1,  and children, respondents Nos. 2 to 5 as his heirs. On August 1, 1978 the  Maharashtra Housing and Area Development Authority (hereinafter referred  to  as  ‘the  authority’  established under section  3 of  the Act wrote a letter to the Municipal Council, 713 Lonavala  seeking   information  regarding   its  needs  for providing  housing   accommodation  to  economically  weaker sections and  to persons  belonging to  low income group and middle  income  group  residing  within  Lonavala  municipal limits. In  order to ascertain the demand for tenements, the Municipal Council  of Lonavala  issued two advertisements in local newspapers  on August  3, 1978  and February  10, 1979 inviting applications  for housing  accommodation  from  the general  public.   After  taking   into  consideration   the representations made  by  the  people  and  assessing  there requirements, the  municipal council  informed the authority about the  extent  of  land  needed  for  providing  housing accommodation for  the people.  The authority  in  its  turn informed the  State Government by its letter dated September 15, 1979  that an  extent of  26 hectares of land was needed initially for  providing accommodation for people within the limits of Lunavala Municipal Council and requested the State Government to  issue a notification under sub-section (1) or section 41  of the  Act. The  proposal was  processed by the Public Works  Department and  the Housing  Department of the State Government and a notice was publsied under the proviso to section  41 (1)  of the  Act in  Government Gazette dated August  30,   1979  inviting   objections  to  the  proposed acquisition. In  that  notice  it  was  mentioned  that  the Government proposed  to acquire  the land  which  originally belonged to  Mohanlal Fakirchand Khetan refer to above also. Pursuant to  the said  notice Chandrakant  Mohanlal  Khetan, respondent No.3  herein lodged  his protest  on September 6, 1979. After considering the various objections received from different  people   including  the   objections   filed   by Chandrakant Mohanlal  Khetan on  behalf of  himself and  the other  co-owners   the  State   Government   published   the notification under  sub-section (1)  of 41  in  its  Gazette dated  July   3,  1980.  On  the  publication  of  the  said notification the  land mentioned in it including the land of Mohanlal Fakirchand  Khetan vested  in the  State Government free from  all incumbrances.  On December  12, 1980 a notice was issued  under section 42(1) of the Act to the holders of the lands which had been notified under section 41(1) of the Act to  surrender and  deliver possession  to the Collector,

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Pune within  a period of 30 days. In January, 1981 the legal representatives of  Mohanlal Fakirchand  Khetan objected  to the notice  on the  ground that  Survey No.  28  of  village Bhushi, that is, the land belonging to them had not actually been notified in the notification published in the 714 Gazette as  it had  been shown as lying in village Maval and not in  village Bhushi.  On discovering  the error which had crept into  the notification,  on May  15,  1981  the  State Government published  a  corrigendum  making  the  requisite correction and thereafter issued a fresh notice on September 15, 1981  to the  heirs of  Mohanlal  Fakirchand  Khetan  to deliver possession  of the  land  bearing  Survey  No.28  of village Bhushi  situated  within  the  municipal  limits  of Lonavala. The  widow and  children  of  Mohanlal  Fakirchand Khetan,  respondents   herein,  thereafter  filed  the  writ petition out  of which  this appeal  arises on  December 17, 1981 on the file of the High Court of Bombay questioning the validity of  proceedings leading  up to  the  issue  of  the notification under  section 41(1)  of the  Act and  also the notification.      The respondents contended in the writ petition filed by them inter  alia :  (1) that  there was no material with the State Government  to form  an opinion  about  the  need  for issuing the  notification under  section 41(1)  of the  Act; (ii) that  the respondents  had not  been  heard  personally after they  had filed  the objections  under the  proviso to section 41(1)  of the  Act to  the proposal  of acquisition; (iii) that the land of the respondents had actually not been notified; and  (iv) that  the provisions of sub-sections (3) and (4)  of section  44 of the Act which contained the basis for the  determination of compensation payable in respect of the land  were violative  of  Article  14,  Article  19  and Article 31  of the  Constitution and  therefore the said two sub-sections and the notification were liable to be declared as void.  They also  stated that the compensation payable to them  was   illusory  in   its  quantum  and  the  procedure prescribed for the acquisition was not fair and reasonable.      The petition  was contested by the State Government and the Authority.  The High  Court negatived the contentions of the respondents namely that there was no material before the State Government  for forming  an opinion about the need for issuing the  notification under  section 41(1)  of the  Act, that the respondents had not been given adequate opportunity to submit  their objections  to the  notification under  the proviso to  section 41(1)  of the  Act, and  that  the  land belonging to them had not been included in the notification. The High  Court found  that  the  correspondence  which  had preceded  the   issue  of   the  notification   between  the Government, the Authority, 715 Municipal Council, Lonavala and the representations received by the  Municipal Council,  Lonavala from the public and the proceedings of  the State  Government constituted sufficient basis for  the Gcvernment to form opinion about the need for issuing the notification under section 41(1) of the Act. The High Court  found that although the names of the respondents had not  been shown  in the record of rights after the death of Mohanlal  Fakirchand  Khetan,  respondent  No.3  who  was acting on  behalf of  all the  heirs of  Mohanlal Fakirchand Khetan had  lodged his  objections under  proviso to section 41(1) of  the Act and that he had also been personally heard by  the  Collector,  Pune  before  the  publication  of  the notification under  sub-section (1)  of section 41. The High Court, therefore,  held that  the  respondents  suffered  no

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prejudice whatsoever on that account. The High Court further found that the description of the land of the respondents as the land bearing Survey No.28 of village Maval had been duly corrected by the issue of the corrigendum and that there was no doubt  about the  identity of the land of the respondents which  was   being  acquired.   After  rejecting  the  above contention, the  High Court  however proceeded to uphold the contention   of    the   respondents    as    regards    the constitutionality of  sub-section (3) and sub-section (4) of section 44  of the  Act. It  found that  sub-section (3) and sub-section (4)  of section  44 of the Act were unreasonable and discriminatory  and therefore  ultra vires Article 14 of the Constitution. It found that the said provisions were not protected by  Article 31C  of the  Constitution and  further held that  the impugned  provisions of  the legislation were otherwise unfair,  unjust and  unreasonable. The  High Court found that the deprivation of the property under sections 41 and 42 of the Act had not been done by authority of law. The High Court  accordingly allowed the writ petition. Aggrieved by the  decision of  the High Court the State of Maharashtra and the Authority have filed this appeal by special leave.      In the  course of  this appeal  the  parties  have  not questioned the correctness of the decision of the High Court as regards  the facts  which  had  been  found  against  the respondents.   The    arguments   were   confined   to   the constitutional validity  of  sub-sections  (3)  and  (4)  of section 44 of the Act.      Before the  Act was  enacted in  the year  1976 by  the State H 716 Legislature there were in force in the State of Maharashtra, the Bombay  Housing Board  Act,  1948,  in  the  Bombay  and Hyderabad areas  of the  State, the  Madhya Pradesh  Housing Board Act,  1950 in  the Vidarbha  area of  the  State,  the Bombay Building  Repairs and  Reconstruction Board Act, 1969 and the  Maharashtra Slum  Improvement Board  Act, 1973. All these Acts  were repealed  by section  188 of the Act and in their place,  the Act was brought into force inter alia with the object  of unifying, consolidating and amending the laws relating to  housing, repairing and reconstructing dangerous buildings and  carrying out improvement works in slum areas. The Preamble  to the  Act stated  that before  the  Act  was passed  there   were  in  existence  various  corporate  and statutory bodies  in the  State for dealing with the problem of housing,  accommodation, for repairing and reconstructing buildings in  a bad  state of  disrepair  and  presenting  a dangerous  possibility   of  collapse,   for  carrying   out improvemental works  in slum  areas, and for advancing loans for construction  of houses.  It took  note of the fact that the programmes  undertaken by these bodies were more or less complementary and  there was  considerable over  lapping  in their working  or functioning  and hence  it was  considered necessary  and   expedient  to   co-ordinate   the   housing programmes for  an orderly development of the urban areas in the State.  It was felt that it was necessary to provide for a more comprehensive and co-ordinated approach to the entire problem of  housing development  in a  balanced manner, with sufficient attention  to ecology,  pollution,  over-crowding and amenities  required for  leading a wholesome civic life, and that  it was  expedient to  establish a single Corporate Authority for  the whole  State and establish new Boards for certain  areas   of  the  State  to  carry  out  the  plans, programmes and other functions of the Authority. The Act was passed by  the State Legislature for the aforesaid purposes. It received the assent of the President on April 25, 1977.

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    Chapter II of the Act provides for the establishment of the Authority  and Boards.  Section 3  of the Act authorises the  State  Government  to  establish  the  Authority  by  a notification  in  the  Official  Gazette  for  securing  the objectives and  purposes of the Act. The Authority is a body corporate having perpetual succession and a common seal with the powers  to own  property and  to  enter  into  contract. Section 18  of the  Act provides  for the  establishment  of Boards for implementing the 717 provisions of  the Act.  Four Boards are constituted for the four areas  of the  State namely,  Bombay area, Nagpur area, Aurangabad area and the Pune area. The functions, duties and powers of  the Authority  and the  Boards  are  set  out  in Chapter III  of the  Act. Section 28 which is in Chapter III of the  Act provides  that subject  to the provisions of the Town Planning  Act and the provisions of clauses (b) and (h) of sub-section  (1) of  section 12  and section  13  of  the Metropolitan  Act  it  is  the  duty  and  function  of  the Authority among  others to  prepare or  direct th  Boards to prepare and  execute proposals,  plans or  projects for  (i) housing accommodation  in the  State or  any  part  thereof, sale, including  transactions in the nature of hire-purchase of tenements in any building vested in, or belonging to, the Authority, letting  or exchange of property of the Authority (ii) development including provisions for amenities in areas within the  jurisdiction of  the Authority,  (iii) clearance and re-development of slums in urban areas, (iv) development of peripheral  areas of  existing urban  areas to  ensure an orderly  urban  overspill,  (v)  development  of  commercial centres, (vi)  development of  new towns  in accordance with the provisions  of the  Town Planning Act, (vii) development of lands  vested in  the Authority, etc. etc.. The functions of  the   Authority  as   stated  above   naturally  involve acquisition  of   land  and  disposal  of  property  of  the Authority. Chapter  V of  the Act deals with the acquisition of land  and disposal  of property of the Authority. Section 41 of  the Act  which deals  with the  power  of  the  State Government to acquire land reads thus :           "41. (1)  Where, on  any representation  from  the           Authority or  any Board  it appears  to the  State           Government that,  in order to enable the Authority           to discharge  any of  its functions or to exercise           any of  its powers  or to  carry out  any  of  its           proposals, plans or projects, it is necessary that           any land  should be acquired, the State Government           may acquire the land by publishing in the Official           Gazette a  notification to  the  effect  that  the           State Government  has decided  to acquire the land           in pursuance of this section :           Provided    that,     before    publishing    such           notification,  the   State  Government  shall,  by           notice published in 718           the Official  Gazette and served in the prescribed           manner, call  upon the  owner  of,  or  any  other           person who, in the opinion of that Government, may           be interested  in, such land to show cause, why it           should not  be acquired, and after considering the           cause, if  any, shown  by the  owner or  any other           person  interested   in  the   land,   the   State           Government may pass such order as it thinks fit.           (2)  The  acquisition  of  land  for  any  purpose           mentioned in sub-section (1) shall be deemed to be           a public purpose.

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         (3) Where a notification as aforesaid is published           in the  Official Gazette,  the land  shall, on and           from the  date on  which the  notification  is  so           published, vest absolutely in the State Government           free from all encumbrances."      Section 42  of the  Act  confers  power  on  the  State Government to require the person in possession of land which is vested  under sub-section (3) of section 41 of the Act to surrender  or   deliver  possession  thereof  to  the  State Government. Section 43 of the Act provides that every person having any  interest in any land acquired under Chapter V of the  Act  would  be  entitled  to  receive  from  the  State Government an amount as provided by the provisions contained in Chapter  V, Sections  44 to  49  of  the  Act  deal  with acquisition of  lands in municipal areas and section 50 deal with acquisition  of lands in rural areas. The land situated in  any  area  within  the  jurisdiction  of  any  Municipal Corporation or Municipal Council is considered as land lying in  a  municipal  area  for  purposes  of  determination  of compensation and  the land  outside the  jurisdiction  of  a Municipal Corporation  or a  Municipal Council is treated as land in  a rural area for the said purpose. Section 44 which is material  for purposes  of this  case which lays down the basis for  determination of  the amount  for acquisition  of lands in municipal areas read thus :           "44. (1) Where any land including any building.           hereon is acquired and vested in the State           Government under this Chapter and such land is           situated in any area within the jurisdiction of           any 719           Municipal Corporatlon  or Municipal Council, the A           State ch  acquisition an  amount  which  shall  be           determined in  accordance with  the provisions  of           this section.           (2) Where the amount has been determined with th           concurrence of  the Authority by agreement between           the State  Government and the person to whom it is           payable,  it  shall  be  determined  and  paid  in           accordance with such agreement.           (3) Where  no such  agreement can  be reached, the           amount payable  in respect  of any  land  acquired           shall be  an amount equal to one hundred times the           net average  monthly income  actually derived from           such land,  during the  period of five consecutive           years   immediately    preceding   the   date   of           publication of  the notification  referred  to  in           section 41  as  may  be  determined  by  the  Land           Acquisition Officer.           (4) The  net average monthly income referred to in           sub-section (3)  shall be calculated in the manner           and in  accordance with  the principles set out in           the First Schedule.           (5) The  Land  Acquisition  Officer  shall,  after           holding  an  inquiry  in  the  prescribed  manner,           determine in  accordance with  the  provisions  of           sub-section (4)  the net  average  monthly  income           actually  derived   from  the   land.   The   Land           Acquisition Officer shall then publish a notice in           a conspicuous  place on  the land  and serve it in           the prescribed  manner calling  upon the  owner of           the land  and every  person interested  therein to           intimate to  him, before  a date  specified in the           notice, whether such owner or person agrees to the           net average  monthly income  actually derived from

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         the land  as determined  by the  Land  Acquisition           Officer. If  such owner  or person does not agree,           he may  intimate to  the Land  Acquisition Officer           before the specified date what amount he claims to           be such net average monthly income. 720           (6) Any  person, who  does not  agree to  the  net           average monthly  income as  determined by the Land           Acquisition Officer  under sub-section (5) and the           amount for  acquisition to  be paid  on that basis           and claims  a sum  in excess  of that  amount  may           prefer an  appeal to  the Tribunal,  within thirty           days  from   the  date  specified  in  the  notice           referred to in sub-section (5).           (7) On  appeal, the  Tribunal shall, after hearing           the appellant,  determine the  net average monthly           income and the amount to be paid on that basis and           its determination  shall be final and shall not be           questioned in any court.      Section 45  of the  Act provides  for apportionment  of amount payable  on  acquisition  amongst  different  persons claiming interest  in the amount of compensation. Section 46 of the Act lays down the procedure for payment of amount for acquisition or  for depositing of same in the Court. Section 47 - of the Act lays down the powers of the Land Acquisition Officer in  relation to  determination  of  the  amount  for acquisition and  section 48  of the Act provides for payment of interest  on that  amount at the rates specified therein, by the  State Government.  The Land  Acquisition Officer  is appointed by the State Government under the powers conferred by section  49 of  the Act.  Section 50  of  the  Act  which contains  the   provisions  relating   to  the   basis   for determination of  amount for  acquisition of  lands in rural areas and  the procedure  to be  followed in that case reads thus :           "50. (1)  Where any  land (including  any building           thereon) is  acquired  and  vested  in  the  State           Government under  this Chapter  and such  land  is           situated in  any area  outside the jurisdiction of           any Municipal Corporation or Municipal Council (in           this Chapter  referred to  as ’a rural area’), the           State Government shall pay for such acquisition an           amount, which  shall be  determined in  accordance           with the provisions of this section.           (2) Where the amount has been determined, with the           concurrence of the Authority, by agreement between 721           the State  Government and the person to whom it is           payable  it   shall  be  determined  and  paid  in           accordance with such agreement.           (3) Where  no such  agreement can  be reached, the           State Government  shall  refer  the  case  to  the           Collector, who  shall  determine  the  amount  for           acquisition in  accordance with the principles for           determining compensation  laid down  in  the  Land           Acquisition Act,  1894, and the provisions of that           Act (including  provisions for  reference to Court           and appeal)  shall apply  thereto mutatis mutandis           as if  the land has been acquired and compensation           had to  be determined,  apportioned and paid under           the  provisions   of  that  Act,  subject  to  the           modifications that  reference in section 23 and 24           of that  Act to  the date  of publication  of  the           notification under section 4, sub-section (1) were           reference to  the date  on which  the notice under

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         the proviso  to sub-section  (1) of  section 41 of           this Act  is published,  and the references to the           time or date of the publication of the declaration           under section 6 of that Act were references to the           date of  publication of  the notification refer to           in sub-section  (3) of  section 41  of this Act in           the Official Gazette.           Explanation -  In this  section, "Collector" means           the Collector  of  a  District  and  includes  any           officer   specially   appointed   by   the   State           Government or  by the  Commissioner to perform the           functions  of   a   Collector   under   the   Land           Acquisition Act, 1894".      Wherever the  amount payable  on acquisition is settled by agreement  there is  no distinction  between a  land in a municipal area  or a  land in  a rural  area. The  point  of distinction which  is alleged  to be  discriminatory between the two  types of  land lies in the method of computation of the amount  payable on  acquisition where there is no agree- ment. Whereas  in the  case of  the land situated in a rural areas section  50 of  the Act provides that the valuation of the land  shall be  made in  accordance with  the provisions contained  in   section  23  and  section  24  of  the  Land Acquisition Act, 1894 in 722 the case of the land situated in a municipal area the amount payable has to be calculated according to sub-section (3) of section 44  of the  Act. Section  44(3) of  the Act provides that the said amount shall be equal to one hundred times the net average  monthly income  actually derived from such land during the  period of  five  consecutive  years  immediately preceding  the  date  of  publication  of  the  notification referred to in section 41 of the Act as may be determined by the Land  Acquisition  Officer.  Under  sub-section  (4)  of section 44  of  the  Act  the  net  average  monthly  income referred to  in sub-section (3) of section 44 is required to be calculated  in the  manner and  in  accordance  with  the principles set  out in  the First  Schedule to  the Act. The First Schedule to the Act reads thus :                        FIRST SCHEDULE             (See sub-section (1) of section 44)           Principles for  determination of  the net  average           monthly income :-           1.  The   land  Acquisition  Officer  shall  first           determine the  gross rent  actually derived by the           owner of  land acquired, including any building on           such land,  during the  period of five consecutive           years referred  to in  sub-section (3)  of section           44.           2. For  such determination,  the Land  Acquisition           Officer may  hold any local inquiry and obtain, if           necessary, certified  copies of  extracts from the           property  tax   assessment  books   of  the  local           authority concerned  showing the  rental value  of           such land.           3. The  net average  monthly income referred to in           sub-section (3)  of section  44 shall be sixty per           cent, of  the average  monthly  gross  rent  which           shall be one-sixtieth of the gross rent during the           five consecutive  years as  determined by the Land           Acquisition Officer under paragraph 1.           4. Forty  per cent,  of the  gross monthly  rental           referred to above shall not be taken into 723           consideration  in   determining  the  net  average

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         monthly income  but shall  be deducted  in lieu of           the expenditure  which the owner of the land would           normally incur  for payment of any property tax to           the  local   authority,  for  collection  charges,           income tax  or bad  debts as  well as for works of           repair and maintenance of the building, if any, on           the land.           5. Where  the land or any portion thereof has been           unoccupied, or  the owner  has not been in receipt           of any  rent for the occupation of the land during           the whole  or any  part of the said period of five           years, the  gross rent  shall be  taken to  be the           income which  the owner would in fact have derived           if the  land had  been leased  out for rent during           the said  period, and  for this  purpose the  rent           actually derived  from the  land during  a  period           prior or  subsequent to the period during which it           remained  vacant  or  from  similar  land  in  the           vicinity shall be taken into account."      The High  Court does  not say  that the  amount payable under sub-sections  (3) and (4) of section 44 of the Act for the land  situated in municipal area is illusory. It however says that  the method  of capitalization  set out in section 44(3) and  (4) of  the Act  being the only method out of the several  methods   of  valuing   the  land  under  the  Land Acquisition Act,  1894 the owner of land in a municipal area is placed  in a  less advantageous  position and  is  denied equality of treatment. In order to appreciate this ground of objection,  it   is  necessary   to  examine   whether   the classification of  the land  under the  Act into the land in municipal area  and the  land in  rural area for purposes of determining the  amount payable on acquisition is bad. It is not denied  that the land in municipal area commands various advantages which  are not  available in  the case of land in rural areas.  The Act  is not  introduced for the benefit of areas like  Bombay  Corporation  Area  and  area  under  the jurisdiction of  other Corporations and municipalities only. It is  enacted for  the whole State more than 90 per cent of which constitutes  rural area.  The potentialities of a land in a  municipal area  are far higher than the potentialities of land in a rural area. There is also no occasion under the Act for the State Government to treat one piece of land in a 724 municipal area  in one way and another piece of land in that area differently.  All lands  in a Municipal area have to be valued in  only one  way that  is in accordance with section 44(3) and  (4) of  the Act and all lands in rural areas have also to  be valued only in one way and that is in accordance with the  provisions of  the Land  Acquisition, 1894.  There could have  been two  different Acts one for municipal areas and another  for rural areas, each providing for a different method of  valuation of  land. Such  a classification  would have been  unexceptionable having  regard to  the object and purposes  of   the  two  Acts  and  the  difference  in  the potentialities of  the two types of lands. It may be noticed that in State of Gujarat v. Shri Shantilal Mangaldas & Ors., [19691 3 S.C.R. 341 this Court has upheld the classification of land  under the  same Act  for purposes  of valuation  at different stages  of town planning. This view is adopted and followed in  Prakash Amichand  Shah v.  State of  Gujarat  6 Ors.,  [1986]   1  S.C.C.   581,  recently.  The  method  of capitalization is  also one  of the recognised methods which is adopted  for  the  purpose  of  valuation  of  properties acquired under  the Land  Acquisition Act, 1894. All methods of valuation  adopted under  the Act are intended to achieve

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the same  purpose, namely, determination of the market value of the  land acquired. It is difficult to say whether any of them is  superior to  the other in the context of Article 14 of the Constitution and to hold that there will be descrimi- nation, if  any of  them is not allowed to be availed of for purposes of  valuation. In  the case  of agricultural lands, the method  of capitalization  is followed by our Courts for several years  (See Raja  Vyricherla Narayana Gajapatirai v. The Revenue  Divisional Officer.  [1939] 66 I.A. 104, A.I.R. 1939 P.C.  98, Rustom  Cavasjee Cooper  v. Union  of  India, [1970] 3  S.C.R. 530,  Union of  India & Anr. v. Smt. Shanti Devi &  Ors., [1983]  4 S.C.C. 542, Special Land Acquisition Officer, Davangere  v. P.  Veerabhadrappa &  Ors., [1984]  2 S.C.C. 120 and Oriental Gas Co. Ltd. & Ors. v. State of West Bengal, [1979] 1 S.C.R. 617). No doubt, such calculation has been made  by adopting varying methods, that is, from 33-1/3 times to  8 times  the annual  net return  as  explained  in Shantidevi’s case (supra). Such variation has taken place on account of  the variation  of the  rate of interest on gilt- edge securities  as pointed out in that case. The higher the rate of  interest, the  lower would  be the number of years’ purchase adopted  by courts to determine the market value of the property acquired. 725      A reading  of the rules contained in the First Schedule to the  Act shows  that they  lay  down  fairly  appropriate principles to  be followed  in determining  the net  average monthly income.  The net  average monthly income referred to in sub-section  (3) of  section 44 of the Act is required to be determined  in accordance  with paragraph  3 of the First Schedule to the Act at sixty per cent of the average monthly gross rent  which shall  be one  sixtieth of  the gross rent during the five consticutive years as determined by the Land Acquisition Officer under paragraph 1 of the First Schedule. In paragraph  7 of its judgment the High Court observes that the Act does not give any indication as to why the amount of forty per  cent out  of the  gross rental  is required to be deducted. This is an incorrect statement. Paragraph 4 of the First Schedule  gives the reason for such deduction. It says that forty per cent of the gross monthly rental shall not be taken into  consideration in  determining  the  net  average monthly  income  but  shall  be  deducted  in  lieu  of  the expenditure which the owner of the land would normally incur for payment  of any property tax to the local authority, for collection charges,  income tax  or bad debts as well as for works of  repair and  maintenance of  the building if any on the land.  In the case of agricultural lands many times one- half of  the annual  yield is  deducted towards  cultivation charges, land  revenue, cost  of personal labour etc. before determining  the   net  annual   yield   for   purposes   of capitalization. In  the instant case the Act directs payment of 100  times the  net monthly  income, that is, 8 1/3 times the net  annual income  from  the  property  as  the  amount payable on  its acquisition which cannot be considered to be too low  having regard  to the  rate  of  interest  on  safe investments which  is prevailing  from 1976-77  onwards.  In Oriental Gas  Co’s (supra) eight times the net annual income was considered  to be  adequate compensation  by this Court. The High  Court  erred  in  relying  upon  the  decision  in Government of  Bombay v.  Morwanji Muncherji  Cama, 10  Bom. L.R. 907,  a decision  rendered at  the commencement of this century to  say that  16 2/3  years  purchase  of  unsecured annual ground  rent as the basis for determination of market value by  capitalization method  in  recent  years.  It  may incidentally be  mentioned that  even that decision does not

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lay  down   that  the   valuation  of  vacant  land  by  the application  of   the  rule   of  capitalization  is  not  a reasonable method. Paragraph 5 of the First Schedule to the 726 Act provides that method of valuation of unoccupied lands or lands where  the owner  is not in receipt of rents. The High Court while  deciding the  case before it has overlooked the principle that  every Act carries with it the presumption of constitutionality and  unless  the  petitioner  is  able  to discharge the  said burden by placing adequate material, the Court  should   not  strike  down  a  legislative  provision particularly by  the application  of Article  14. We fail to see any  hostile discrimination  in the  instant case  which will make  sub-section (3) and sub-section (4) of section 44 of the  Act violative  of Article  14  of  the  Constitution merely because  in the  case of  lands in municipal area all the methods  of valuation under the Land Acquisition Act are not made available.      Even  granting  for  purposes  of  argument  that  sub- sections (3) and (4) of section 44 are violative of Articlel 14 of  the Constitution,  we are  of the  view that the said provisions receive  the protection  of Article  31C  of  the Constitution. We  shall proceed  to test the validity of the argument keeping  aside for  the time being the observations in Sanjeev Coke Manufacturing Company. v. Bharat Coking Coal Ltd. &  Anr. [1983]  1 S.C.R.  1000. Let  us proceed  on the basis  that   after   His   Holiness   Kesavananda   Bharati Sripadagalavaru v.  State of  Kerala [1973]  Supp. S.C.R. 1. and Minerva Mills Ltd & Ors. v. Union of India & Ors. [1981] 1 S.C.R. 206, Article 31C reads as "notwithstanding anything contained in  Article 13, no law giving effect to the policy of the  State towards  securing the  principles specified in clause (b) or clause (c) of Article 39 shall be deemed to be void on  the ground  that it  is inconsistent  with or takes away or  abridges any  of the rights conferred by Article 14 or Article  19. Clause (b) of Article 39 of the Constitution which is  relevant for  our purpose  states that  the  State shall, in  particularly direct  its policy  towards securing that the  ownership and control of material resources of the community are  so distributed  as best  to  subserve  common good.  The  High  Court  rightly  observed  at  the  end  of paragraph  14   of  its   judgment  following  Sanjeev  Coke Manufacturing Company’s  case (supra)  that  the  expression ’material resources’ of the community’ would cover the lands held by private owners also. But it however erred thereafter in  reaching   the  conclusion  that  Article  31C  was  not applicable to  the case  for the reason that (i) the Act did not contain a declaration that it was 727 enacted to give effect to Article 39(b), (ii) by undertaking development of  commercial centres  while providing  housing accommodation, the  Authority was  expected to  make profits and hence  following that  the  power  to  acquire  was  not conferred with  a view to achieving the directive principles in Article  39(b), and  (iii) the  object  of  enacting  the legislation was obviously to provide wholesome civic life to the citizens  and not distribution of material resources. We are of  the view  that each  one of these reasons is invalid and erroneous. First Article 31C does not say that in an Act there should be a declaration by the appropriate legislature to the effect that it is being enacted to achieve the object contained in Article 39(b). In order to ascertain whether it is protected by Article 31C, the Court has to satisfy itself about the character of the legislation by studying all parts of it. The question whether an Act is intended to secure the

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objects contained  in Article  39(b) or  not does not depend upon the  declaration by  the legislature but depends on its contents. We  have already dealt with the objects of the Act with which  we are  concerned in  this case.  It inter  alia makes  provision   for  acquisition  of  private  lands  for providing sites  for building houses or housing accomodation to the  community. The  title to  the lands  of the  private holders  which   are  acquired  first  vests  in  the  State Government.  Later   on  the  land  is  developed  and  then destributed amongst  the people  as  house  sites.  It  also provides for  reserving land  for providing public amenities without which  people cannot  live there. Community centres, shopping complexes,  parks, roads, drains, play grounds, are all necessary for civic life and there amenities are enjoyed by all.  That is  also a  kind of  distribution. In State of Karnataka &  Anr. etc.  v. Shri  Ranganatha Reddy & Anr.Etc. [1978] 1  S.C.R. 641  at pages  69 dealing with the question whether nationalisation  of bus  transport  was  covered  by Article 39(b), Justice Krishna Iyer has observed thus :                "The next question is whether nationalisation           can have nexus with distribution. Should we assign           a  narrow  or  spacious  sense  to  this  concept?           Doubtless, the latter, for reasons so apparent and           eloquent.  To   ’distribute’even  in   its  simple           dictionary meaning,  is to  ’allot, to divide into           classes or  into groups and distribution’ embraces           ’arrangement,      classification,      placement,           disposition, 728           apportionment, the way in which items, a quantity,           or the like, is divided or apportioned; the system           of dispersing  goods throughout  a community’ (See           Random House Dictionary). To classify and allocate           certain industries  or services  or  utilities  or           articles  between   the  private  and  the  public           sectors of  the national  economy is to distribute           those  resources.  Socially  conscious  economists           will   find    little   difficulty   in   treating           nationalisation of  transport  as  a  distributive           process for the goods of the community. You cannot           condemn the concept of nationalisation in our Plan           on the  score that Article 39(b) does not envelope           it. It  is a  matter  of  public  policy  left  to           legislative wisdom  whether a particular scheme of           takeover should be undertaken.           Two conclusions strike as quintessential. Part IV,           especially Article 39(b) and (c), is a furturistic           mandate  to   the  state   with   a   message   of           transformation of  the economic  and social order.           Firstly,  such   change  calls  for  collaborative           effort from  all the  legal  institutions  of  the           system: the  legislature, the  judiciary  and  the           administrative     machinery.     Secondly     and           consequentially, loyalty  to the  high purpose  of           the Constitution, viz. social and economic justice           in  the   context  of   material  went  and  utter           inequalities on a massive scale, compass the court           to ascribe expansive meaning to the pregnant words           used with  hopeful foresight,  not to circumscribe           their  connotation   into  contradiction   of  the           objectives  inspiring   the   provision.   To   be           Pharisaic   towards   the   Constitution   through           ritualistic  construction   is   to   weaken   the           socialspiritual thrust  of the  founding  fathers’           dynamic faith."

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    These observations  are noted  with approval by another Constitution Bench  in Sanjeev  Coke Manufacturing Company’s case (supra).  It is true that when public money is invested on the  development of  land, the  Authority is  expected to reimburse itself  to some extent. The Authority, however, is expected to  conduct  its  operations  as  a  public  utlity concern 729 and not as a private land development agency. The High Court erred in taking a very narrow view of the objects of the Act and  the  functions  of  the  Authority  under  it.  We  are satisfied that  the Act  is brought  into force to implement the directive principle contained in Article 39(b) and hence even if there is any infraction of Article 14 it is cured by Article 31C which is clearly attracted to the case.      We next  proceed to  consider a  contention lacking  in merit which  has unfortunately  been accepted  by  the  High Court namely  that the  Act infringes  Article 300A  of  the Constitution. Article 300A was not in force when the Act was enacted Article  31(1) of the Constitution which was couched in the  same language was however in force. Article 31C gave protection to  the Act  even if it infringed Article 31. Let us assume  that the  action of  acquiring private properties should satisfy now Article 300A also because the proceedings to acquire  the land  started  in  the  instant  case  after Article 300A  came into force. Let us also assume that a law should be  fair and  reasonable and not arbitrary and that a law should  also satisfy  the principle of fairness in order to be  effective and  let  us  also  assume  that  the  said principle of  fairness  lies  outside  Article  14.  We  are assuming all  these, without deciding these questions, since the action  can be  upheld even if all these assumptions are well-founded. What  is it  that is  being done  now  in  the instant case?  Certain vacant lands lying inside a municipal area are  being acquired  for providing housing accomodation after paying an account which is computed in accordance with a method  considered to be a fair one by courts. The purpose for which  the lands are acquired to be is a public purpose. The   owners   are   given   opportunity   to   make   their representations before  the notification  is issued. All the requirements of  a valid  exercise of  the power  of eminent domain even  in the  sense in  which it is understood in the United States  of America  where property  rights are  given greater protection  than what  is required to be done in our country are  fulfilled by  the Act. Yet the High Court, with respect, grievously erred in holding that even assuming that the provisions  of Chapter  V of  the Act are protected from challenge under  Articles 14,  19 and 31 of the Constitution due to  the applicability of Article 31C of the Constitution still the  impugned provisions of the Act are required to be struck down as the said provisions are neither just nor fair or reasonable. 730      Then in  the end we have to consider the argument based on Article  21 of  the Constitution which is urged on behalf of  the  respondents.  Article  21  essentially  deals  with personal liberty.  It has little to do with the right to own property as  such. Here  we are  not concerned  with a  case where the  deprivation of property would lead to deprivation of life  or liberty or livelihood. On the other hand land is being acquired  to improve  the living conditions of a large number  of   people.  To   rely  upon   Article  21  of  the Constitution for  striking down  the provisions  of the  Act amounts to  a clear  misapplication of  the  great  doctrine enshrined in  Article 21. We have no hesitation in rejecting

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the  argument.   Land  ceiling   laws,  law   providing  for acquisition of  land for  providing  housing  accommodation, laws imposing  ceiling on  urban property etc. cannot struck down by invoking Article 21 of the Constitution.      Before concluding  we may refer to one other point. Our attention has  been called  to the  fact that  some problems presenting difficulty  or valuation will have to be faced in the application  of clause  5 of First Schedule (See Section 44 (1)  in regard  to valuation  of open lands situated in a city like  Bombay  or  lands  with  building  potentialities situated within  the limits  of big  towns. These are easily surmountable problems of valuation in relation to individual lands and  do not  reflect on  the constitutionality  of the impugned provisions.  The  concerned  authorities  entrusted with  the  function  of  making  evaluation  will  doubtless resolve such  problems as  are likely to arise appropriately in  accordance   with  law.   Be  that   as   it   may   the constitutionality  of   the  impugned   provisions   remains unimpaired.      In the  result we  hold that  the judgment  of the High Court is  liable to  be set  aside to  the extent  that sub- sections (3) and (4) of Section 44 of the Act have been held unconstitutional and  struck down.  We wish to make it clear that the  findings recorded  against the writ petitioners on other  points   remain  unaffected   by  this  judgment.  We accodingly  allow   this  appeal,   uphold  the   provisions contained in  sub-sections (3)  and (4) of section 44 of the Act and  dismiss the writ petition filed by the respondents. There shall, however, be no order as to costs. S.R.                                        Appeals allowed. 731