Case: Municipal Corporation Of The City Ofahmedabad &amp; Ors Vs. State Of Gujarat &amp; Ors

= (AIR 1969 SC 634 ), this court observed:"Specification of principles means laying down general guiding rules applicable to all person 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 specification of principle." At a later stage the court again observed at page 362:"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 current 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." The Land Acquisition Act makes market value at a certain date the basis for the determination of compensation. But there is no one sure way of applying the principle. As is well known when set-back is imposed by the line of the street, the land actually acquired by the Corporation may be in some cases a few sq. yards or even a few sq. inches. Then again the land acquired may be of no significant use to anybody except to the Corporation as a part of the street. The land acquired may be wedge-shaped, sometimes irregular in contour and often shapeless. If the principle of a willing seller and a willing buyer is applied there can possibly be no market at all for the property acquired. It is not suggested that in every case of acquisition of land for the street this principle will break down. But having regard to the fact that in the course of widening the street the Corporation may have to acquire very irregular, shapeless and small pieces of land for the purposes of the street, a host of principles may have to be employed to determine the compensation. We asked learned counsel for the respondents what one general principle of determination of compensation in such cases could have been appropriately specified. We did not get any satisfactory reply. It appears to us that this very difficulty in specifying any known rule of compensation is responsible for the wording of section 216 and section 389 of the Act which, in our opinion gets over the difficulty by providing full indemnification for the loss or deprivation suffered by the owner of the building or other interests in the property. We have referred to the provisions with regard to appeals. The first appeal lies to the Judge of the Small Cause Court and a second appeal to the District Judge. The involvement of Civil Courts in finally determining compensation imports judicial norms. Since full indemnification in accordance with judicial norms is the goal set by the Act it is implicit in such a provision that the rules for determination of compensation shall be appropriate to the property acquired and such as will achieve the goal of full indemnity against loss. In other words, the Act provides for compensation to be determined in accordance with judicial principles by the employment of appropriate methods of valuation so that the person who is deprived of property is fully indemnified against the loss. This, by itself, in our opinion, is a specification of a principle for the determination of compensation. 17. As regards the manner of determination of compensation, it is provided in section 390 of the Corporations Act. Under that section the Commissioner or such other officer as may be authorised by him shall hold such enquiry as he thinks fit and determine the amount of compensation to be paid Either the Commissioner or an Officer authorised by him has to hold an appropriate enquiry before determining the amount of compensation. Since, as already seen, there is an appeal from such determination to the Judge of the Small Cause Court under S. 391 and a second appeal to the District Court under section 411 it is clear that the enquiry must be made on broad judicial lines. Any arbitrary determination is bound to be set aside in appeal because the Judges in appeal will be chiefly concerned to see whether the enquiry is made in accordance with normal judicial procedures for evaluating the loss by the application of methods of valuation appropriate to the particular acquisition before them. Since no limitations are placed on the powers of the Appellate Judges in determining the loss in a just and appropriate manner it is expended that the Commissioner or his authorised officer, who holds the enquiry in the first instance, will be guided by principle which meet with the approval of the Appellate authorities. In our opinion therefore, the manner of the determination of compensation is also specified by the act. 18. It is conceded before us that if this Court holds that the Corporations Act has provided for the payment of compensation and also specified the principle on which and the manner in which compensation is to be determined, it would not be possible to say that the Act is either in violation of the provisions of section 299 of the Government of India Act, 1935 of Article 31 of the Constitution. 19. Since the High Court had not considered the challenge to the validity of section 212 and the allied sections of the Act on the ground of infringement of fundamental rights under Article 14 and partially under Article 19 of the Constitution, and the learned counsel for both sides agree that the cases should be remanded to the High Court for disposal after considering the points raised in that regard, we send down the cases accordingly for disposal.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]14. We are in agreement with the view of the High Court that the Corporations Act does provide for the payment of compensation for the property acquired. We have only to refer to section 216 and section 389 of the Act for this purpose. Section 216 (1) clearly lays down that compensation shall be paid by the Commissioner to the owner of any building or land required for public street under sections 211, 212, 213 and 214 for any loss which such owner may sustain in consequence of his building or land being so acquired, and for any expense incurred by such owner in consequence of the order made by the Commissioner. Then section 389 (1) provides that compensation assessed in the manner prescribed by or under the Act shall be paid to any person who sustains damage in consequence of the exercise of such power, namely, "(f) acquiring any building or land required for a public street under section 216."The two sections read together make it clear that full indemnification in terms of money for the loss caused is to be made to the owner of the property or other interests affected by reason of the exercise of power under section 212. Under the latter section what is acquired for the purposes of the street is the land of the owner which falls within the regular line of the street. Several provisions are made in Chapter XIV for the widening of streets within the limits of the Corporation. With the enormous increase in traffic in the more congested parts of a growing City, Municipal authorities are constantly under pressure to widen the streets and one of the several methods prescribed in Chapter XIV is contained in section 212. The regular line of the street as prescribed under section 210 often passes through the properties or owners abutting on the streets and it is impossible to widen the streets unless are acquired. Sometimes a building or a structure or part of it stands on such land and unless that portion of the building which falls within the line is removed the acquisition of the land for the purpose of the street is not possible. Therefore, in the first instance the section requires that the Commissioner shall issue a show cause notice why the building or a part of the building which falls within the line of street should not be pulled down with a view to release the land underneath for the purposes of the street. If after hearing the owner the Commissioner is of the opinion that the building or part thereof should be pulled down, he must obtain the approval of the Standing Committee and then serve a notice on the owner to pull down the offending building or part of building within a certain time. If the owner co-operates, he will himself remove the offending structure and release the land underneath it for being absorbed in the street. If he does not, the Commissioner is empowered to pull down the offending structure at the cost of the owner. Then sub-section (4) of section 212 provides that the Commissioner shall at once take possession on behalf of the Corporation of the portion of the land within the said line (line of the public street) theretofore occupied by the said building, and such land shall thenceforward be deemed a part of the public street and shall vest as such in the Corporation. The provisions of S. 212, therefore, clearly declare that what is acquired under that section is the land lying within the line of the public street. The technical question as to whether there is acquisition of the building when the owner himself does not pull down the offending part of the structure but the Commissioner does it at the owners expense is not necessary for the disposal of the question whether the Act provides for the payment of compensation. Since every kind of loss is required to be compensated as a consequence of the order passed by the Commissioner under section 216 of the Act, the question whether the Act need have provided for compensation as on the acquisition of the building or a part of the building which is pulled down under section 212 does not survive. The owner has to be compensated for every deprivation or loss and, therefore, prima facie it must be held that the Corporations Act provides for the payment of compensation for the property acquiredAs a matter of fact in an actual enquiry for determining the amount of compensation to be paid the authority charged with the duty will have to assess, in the first instance, the value of the total loss or deprivation actually suffered. The provisos may in some rare contingencies go to reduce the amount so determined. Proviso (ii) envisages a situation where the widening of the street has so much benefited the owner that the value of the benefit even exceeds the actual loss suffered by him. In such a case instead of getting any compensation for the loss the owner might have to pay out of his own pocket. As to whether proviso (ii) prescribes any principle for determination of compensation or not is not relevant for our present purpose. Both the provisos come into play only after the compensation for loss is determined under sub-section (1) of section 216 and since that sub-section declares that full compensation must be paid for the loss or deprivation suffered by the owner it will be incorrect to say that the Act does not make provision for the payment of compensation for the property acquired. We have, therefore, no hesitation in agreeing with the High Court that the Corporations Act provides for the payment of compensation for the property acquired under section 21217. As regards the manner of determination of compensation, it is provided in section 390 of the Corporations Act. Under that section the Commissioner or such other officer as may be authorised by him shall hold such enquiry as he thinks fit and determine the amount of compensation to be paid Either the Commissioner or an Officer authorised by him has to hold an appropriate enquiry before determining the amount of compensation. Since, as already seen, there is an appeal from such determination to the Judge of the Small Cause Court under S. 391 and a second appeal to the District Court under section 411 it is clear that the enquiry must be made on broad judicial lines. Any arbitrary determination is bound to be set aside in appeal because the Judges in appeal will be chiefly concerned to see whether the enquiry is made in accordance with normal judicial procedures for evaluating the loss by the application of methods of valuation appropriate to the particular acquisition before them. Since no limitations are placed on the powers of the Appellate Judges in determining the loss in a just and appropriate manner it is expended that the Commissioner or his authorised officer, who holds the enquiry in the first instance, will be guided by principle which meet with the approval of the Appellate authorities. In our opinion therefore, the manner of the determination of compensation is also specified by the act19. Since the High Court had not considered the challenge to the validity of section 212 and the allied sections of the Act on the ground of infringement of fundamental rights under Article 14 and partially under Article 19 of the Constitution, and the learned counsel for both sides agree that the cases should be remanded to the High Court for disposal after considering the points raised in that regard, we send down the cases accordingly for disposal.