Case: Nagpur Improvement Trust &amp; Another Vs. Vithal Rao &amp; Others

2. The petitioner was a tenant of some fields in village Binakhi in Patwari Circle No. 10, Nagpur. He had applied to the Agricultural Lands Tribunal under a local act for fixing the purchase price of the said fields. On May 3, 1962, a notice was issued under S. 39 of the Nagpur Improvement Trust Act, 1936 - hereinafter referred to as the Improvement Act. Section 39 of this Act deals with the preparation, publication and transmission of notice as to improvement schemes and supply of documents to applicants.      3. On November 17, 1961 the Improvement Trust applied for sanction of its scheme by the Government, and on January 9, 1965, the Government sanctioned the scheme under S. 45 of the Improvement Act. On February 28, 1966 proceedings were started before the Land Acquisition Officer and on June 12, 1967 an award was passed by the Land Acquisition Officer fixing the compensation at Rs. 45,910/- for 44.19 acres of land acquired.      4. On June 15, 1967 the petitioner filed the writ petition under Articles 226 and 227 of the Constitution. In this petition the validity of the Improvement Act was challenged on various grounds, one of the grounds being that the Improvement Act was in violation of Article 14 of the Constitution inasmuch as it empowered the acquisition of lands at prices lower than those which would have been payable if they had been acquired under the Land Acquisition Act, 1894.      5. The High Court held that as the acquisition is by the State in all cases where the property is required to be acquited for the purposes of a scheme framed by the Trust and such being the position, it is not permissible without violating the guarantee under Article 14 of the Constitution for the State to acquire any property under the provisions of the Land Acquisition Act as amended by the Improvement Trust Act in so far as they relate to the basis of determination and payment of compensation. It must, therefore, be held that the provisions of paragraphs 10 (2) and 10 (3) in so far as they add a new Clause (3) (a) to Section 23 and a proviso to sub-section (2) of Section 23 of the Land Acquisition Act are ultra vires as violating the guarantee of Article 14 of the Constitution.      6. In the result the petition was allowed, the award set aside, and the matter was remanded to the Land Acquisition Officer for determination of compensation according to the law and in the light of the decision by the High Court.      As the case was important, the High Court granted a certificate under Article 132 (1) and Art. 131 (1) (c) of the Constitution.

Reasoning: It would be seen that the effect of the modifications in two respects is tremendous. First, the owner whose land is acquired under the Improvement Act is paid compensation not according to the market value of the land but the market value according to the use to which the land was put at the date with reference to which the market value is to be determined in that clause. In other words, if the land is being used for agricultural purposes, even though it has a potential value as a building site, the potential value is to be ignored. The second respect in which the owner suffers if the land is acquired under the Improvement Act is that he does not get a solatium of 15% which he would have got if the land had been acquired under the Land Acquisition Act. It is true that he has some minor advantages which have been pointed out by the learned counsel but they have no comparison in value to the loss suffered by virtue of the market value being determined according to the use to which the land was being but or the loss of 15 % of the market value of the landIt seems to us that it is quite clear, especially in view of S. 17A as inserted by para 6 of the Schedule, that the Acquisition will be by the Government and it is only on payment of the cost of acquisition to the government that the lands vest in the Trust. It is true that the acquisition is for the Trust and may be at its instance, but nevertheless the acquisition is by the GovernmentIf this is so, then it is quite clear that the Government can acquire for a housing accommodation scheme either under the Land Acquisition Act or under the Improvement Act. If this is so, it enables the State Government to discriminate between one owner equally situated from another owner15. This Court held in Nandeshwar Prasad v. U. P. Govt., AIR 1964 SC 1217   that the fact that the lands could be acquired for a scheme under the Kanpur Urban Development Act (U. P. Act VI of 1945) did not prevent the Government from acquiring the lands for the same purposes under the Land Acquisition Act (as amended by the Kanpur Act). We may mention that the Kanpur Act amended the Land Acquisition Act by the Schedule for the purpose of acquisition of land for the Board in a similar manner as in the Nagpur Improvement Trust ActA similar point was abandoned in P. Vajravelu Mudaliar v. Special Deputy Collector, Madras (1965) 1 SCR 614     at p. 619 = (AIR 1965 SC 1017  ) by Mr. Viswanatha Sastri in view of the above decision of this Court in Kanpur caseIt would not be disputed that different principles of compensation cannot be formulated for lands acquired on the basis that the owner is old or young, healthy or ill, tall or short, or whether the owner has inherited the property or built it with his own efforts, or whether the owner is a politician or an advocate. Why is this sort of classification not sustainable ? Because the object being to compulsory acquire for a public purpose, the object is equally achieved whether the land belongs to one type of owner or another typeAll three objects are public purposes and as far as the owner is concerned it does not matter to him whether it is one public purpose or the other. Article 14 confers an individual right and in order to justify a classification there should be something which justifies a different treatment to this individual right. It seems to us that ordinarily a classification based on the public purpose is not permissible under Article 14 for the purpose of determining compensation. The position is different when the owner of the land himself is the recipient of benefits from an improvement scheme, and the benefit to him is taken into consideration in fixing compensation. Can classification be made on the basis of the authority acquiring the land ? In other words can different principles of compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government ? It seems to us that the answer is in the negative because as far as the owner is concerned it does not matter to him whether the land is acquired by one authority or the otherIt is equally immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired. If the existence of two Acts would enable the State to give one owner different treatment from another equally situated the owner who is discriminated against, can claim the protection of Art. 1419. It was said that if this is the true position the State would find it impossible to clear slums, to do various other laudable things. If this argument were to be accepted it would be totally destructive of the protection given by Art. 14. It would enable the State to have one law for acquiring lands for hospital, one law for acquiring lands for schools, one law acquiring lands for clearing slums, another for acquiring lands for Government building one for acquiring lands in New Delhi and another for acquiring lands in Old Delhi. It was said that in many cases, the value of the land has increased not because of any effort by the owner but because of the general development of the city in which the land is situated. There is no doubt that this is so, but Art. 14 prohibits the expropriation of the unearned increment of one owner while leaving his neighbour untouched. This neighbour could sell his land and reap the unearned increment. If the object of the legislation is to tax unearned increment it should be done throughout the State. The State cannot achieve this object piecemeal by compulsory acquisition of land of some owners leaving others alone.If the object is to clear slums it cannot be done at the expense of the owners whose lands are acquired, unless as we have said the owners are directly benefited by the Scheme.If the object is to build hospitals it cannot be done at the expense of the owners of the land which is acquired. The hospital, schools etc. must be built at the expense of the whole community20. It will not be denied that a statute cannot tax some owners of land leaving untaxed others equally situated. If the owners of the land cannot be taxed differently how can some owners be indirectly taxed by way of compulsory acquisition ? It is urged that if this were the law it will tie the hands of the State in undertaking social reforms. We do not agree. There is nothing in the Constitution which debars the State from bettering the lot of millions of our citizens. For instance there is nothing to bar the State from taxing unearned increment if the object is to deny owners the full benefit of increase of value due to development of a town. It seems to us, as we have already said, that to accede to the contentions of the appellant and the States would be destructive of the protection afforded by Art. 14 of the Constitution. The States would only have to constitute separate acquiring bodies for each city, or Division or indeed to achieve one special public purpose and lay down different principles of compensationIn Balammal v. State of Madras, (1969) 1 SCR 90   = (AIR 1968 SC 1425  ) in which the facts are substantially similar, the Board constituted under the Madras City Improvement Trust Act, (Madras Act 16 of 1945) was authorised by virtue of Sec. 71, with the previous sanction of the Government, to acquire land under the provisions of the Land Acquisition Act, 1894 for carrying out any of the purposes of the Act which included Town Expansion Scheme (This S. 71 is equivalent to Sec. 59 of the Improvement Act). For the purpose of acquiring land for the Board under the Land Acquisition Act, 1894, S. 73 provided inter alia, that the said Act shall be subjected to the modifications specified in the Schedule (This Section 73 corresponds to S. 61 of the Improvement Act). The Schedule to the Act provided for modification in the Land Acquisition Act for certain specific purposes. The Madras Act of 1945 as replaced by the Madras City Improvement Trust Act (Madras Act 37 of 1950) made an important change inasmuch as the result was that by the change persons whose lands were compulsorily acquired under the Madras Act 37 of 1950 were deprived of the right to the solatium which would be awardable if the lands were acquired under the Land Acquisition Act. In this connection this Court observed :"But, in our judgment, counsel for the owners is right in contending that sub-cl. (2) of cl. 6 of the Schedule to Act 37 of 1950, in so far as it deprived the owners of the lands of the statutory addition to the market-value of the lands under S. 23 (2) of the Land Acquisition Act is violative of the equality clause of the Constitution, and is on that account void. If the State had acquired the lands for improvement of the town under the Land Acquisition Act, the acquiring authority was bound to award in addition to the market-value 15% solatium under S. 23 (2) of the Land Acquisition Act. But by acquiring the lands under the Land Acquisition Act as modified by the Schedule to the Madras City Improvement Trust Act 37 of 1950 for the Improvement Trust which is also a public purpose the owners are, it is claimed, deprived of the right to that statutory addition. An owner of land is ordinarily entitled to receive the solatium in addition to the market-value for compulsory acquisition of his land, if it is acquired under the Land Acquisition Act, but not if it is acquired under the Madras City Improvement Trust Act. A clear case of discrimination which infringes the guarantee of equal protection of the law arises, and the provision which is more prejudicial the owners of the lands which are compulsory acquired must on the decisions of this Court, be deemed invalid"After reviewing some earlier cases, the Court held :"We, therefore, hold that cl. 6 sub-cl. (2) of the Schedule read with S. 73 of Madras Act 37 of 1950 which deprives the owners of the statutory right to solatium at the rate of 15 % on the market-value of the lands, is invalid, and the owners of the lands are entitled to the statutory solatium under S. 23 (2) of the Land Acquisition Act in consideration of compulsory acquisition of their land"The learned counsel was not able to satisfy us that the above case was distinguishable. We are of the opinion that the case was rightly decided and must govern this case.In this view of the matter, it is not necessary to refer to all the cases referred to us at the Bar. We may mention that Mr. Tarkunde also placed reliance on Art. 31-A (1) (a) of the ConstitutionIt is now well-settled that Article 31-A (1) (a) has relevance to agrarian reforms and development. It has nothing to do with acquisition of land for building of a capital of a State.