LAXMI CHAND A

INDORE IMPROVEMENT TRUST, LNDORE AND ORS.

February 24, 1975

[K. K. MATHEW, V. K. KRISHNA IYER AND P. K. GOSWAMI, JJ.]

Madhya Pradesh Town lmprovemellt Trust Act 1960-W/Sether a ltousing B scheme can contain features of industrial and other 1zon-housi11g scheme-Malafide acquisition i11 the absence of any prol'ision whether tribunal can award fot, rest from the date of taking possession of t/1e property till the date of determination of 1compe11satio11.

The petitioner owned certain land. There was an earlier attempt to acquire the land of the petitioner by sanctioning a housing accommodation scheme by the Indore Improvfatent Trust under the Madhya Pradesh Town Improvement Trust C Act, 1960. The said scheme was, however, cancelled. The petitioner wanted to develop his land for industrial purposes and, therefore, obtained No Obji:ction Certificates from various Government Departments as well as from the Trust.

The petitioner got his land converted from agricultural purpose to industrial purpose subject to the limitation that the construction work had to be approv1:d by the Trust. The Trust, however, refused the No Obj'ection Certificate for development of the land on individual basis on the 2round that a scheme was being ' approved for the land in question and other neighbouring lands. The Trust framed a scheme which included the land of the Detitioner also. The Trust served a notice D to acquire the petitioner's land for the purpose of the scheme. The petitioner f submitted his objection stating that the land was being developed into industrial i area and several small scale industries were functioning there and, as such, deve- ~, lopment was alPady in progress. Thereafter, the Trust published a notice acquiring the said land.

Before the Trust could take possession of the petitioner's land the !letitioner filed a Writ Petition in this Court.

It was contended on behalf af the petitioners :

(1) The Housing Accommodation Scheme is invalid because it does not specify the class of inhabitants for whom the same has been made. -

(2) The scheme being a Housing Accommodation Scheme it is for residential oc:upation only and it is not competent to include plans for industrial purposes.

( 3) Section 31 of the Act does not empower the Trust to frame a F scheme for industrial purposes at all. ( 4) There is no application of the mind in terms of section 45 in :making the Scheme.

(5) Thi; acquisition of the land for the purpose of the Scheme is malafide. ( 6) Since the Act rr.akes no provision for payment of interest from the date of delivery of possession of the land to the Trust till the G determination of compensation by the Tribunal, acquisition of the land is violative of article 31 (2) of the Constitution.

Petitioner has not challenged vires of any provisions of the Act.

HELD : ( 1) Section 31 of the Act permits combining two or more schemes or supplementing some special features of a particular scheme in another scheme.

There is no bar in framing a housing accommodation cheme with somi: of the features of industrial scheme.

A housing accommodation scheme need not H necessarily be residential scheme only. It can admit of providing housing accommodation for any other purpose or object. There is nothing in section 31 or anv other provision o~ the Act disabling the Trust from framing schf:me for industrial purpose.

[690£-G]

L,\XMI CHAND v. INDORE IMPROVEMENT TRUST (Goswami, J.) 687

(2) Section 45 requires that while framini: the scheme the inherent utility, efficiency and adequacy of the scheme and the objections and representations of the perwns have to be taken into consideration. The scheme in question was open for inspection. There was no ambiguity or vagueness of the scheme or its purpose.

Where factual satisfaction is evident formal recitals being omitted may not matter.

At any rate, section 52 (2) puts a final seal of imprimatur on the scheme after publication of the sanction of the Government. [69 lC-D]

(3) Acquisition is not malafide .. No oblique motive can be inputed to the Trust in ma:ldng the impugned scheme. There is no allegation of malafide against the S:";~ G0vernment whose sanction was a pre-requisite for the acquisition.

The order of acquisition cannot, therefore. be characterised as ma/afide.

[6910-H]

(4) It is true that there is no provision for awarding interest unlike under the Land Acquisition .Act. It is submitted by the respondents that there is no bar under the Act against awarding interest by the Tribunal. It is not possible to hold that the compensation Tribunal which is at par with an arbitrator will be entitled to award interest without any express provision in the Act.

The petitioner is. therefore. ri2ht in their contention that this Act does not provide for awarding interest from the date of taking possession of the property to the date of determination of compensation.

However, it is not possible to quash the acquisition in the absence of a challen2e to the iires of the provisions of the Act. The law being valid the attack will revaperate upon the quantum of compensation pure and simple. It is sufficient to point out that the quantum of compensation cannot be challenged undflr Article 31 (2) of the Constitution.

[ 69~D; 694C-G]

ORIGINAL APPELLATE JURISDICTION: Writ Petitions Nos. 517 of 1972 & 240 of 1973.

Petition under Article 32 of the Constitution of India.

D. V. Patel (In WP. No. 240/73), S. P. Phadnis and S. K.

Gambltir, for the Petitioners (In both the Petitions).

I. N. Shroff, for the Respondent No. 1 (In WP. No. 517/72).

S. M. JaJ.n, for the Respondents Nos. 1-2 (In WP. No. 240/

~-3). .

The Judgment of the Court was delivered by

GOSWAMI, J. This judgment will govern Writ Petitions Nos. 517 of 1972 and 240 of 1973.

The applications are directed against what is described as a Housing Accommodation Scheme sanctioned by the Indore Improvement Trust (briefly the Trust) under tbe Madhya Pradesh Town Improvement Trust Al:t 1960 (briefly the Act). Brief facts of Writ Petition No. 517 of 1972 may alone be sufficient. There was an

erlicr attempt to acquire the land of the petitioner by sanctioning

a scheme in July 1961 but the same was cancelled some time in September 1962.

The petitioner personally wanted to develop his land for industrial purposes and with that end in view obtained No Objeclion Certificates from various Government Departments as well

as from the Trust.

The petitioner also succeeded in converting his patta from agricultural purpose to industrial purpose, subject. inter ali:1, to the lirnita lion that the construction work on the land shall be carried out in accordance with the plans sanctioned by fne . same

Improvement Trust (Annexure 'G'). Later, however, the petitioner found from a ktter of the Trust of October 26~ 1964,. that a scheme was being approved for his land a~ other ne1ghbun?g lands. and, therefore the Trust was unable to issue the No Ob1ection Certificate for deveiopment of his land on individual basis. The Trus~ framed a Scheme No, 62 under section 46(1_) of the Act and published a notice to that effect in the Gazette and in local newspapers in January

1965. The Scheme includes the land of the petitioner. The repre~ sentations which the petitioner made against the Scheme were of no avail.

The Trnst served a notice dated February 10, 1965, upon the petitio11er under section 48 (1) of the Act proposing to acquire his land for the purpose of the Scheme.

The petitioner submitted his objections on April 15, 1965, stating, inter alia, that the land was being developed into industrial area and several small scale industries were functioning there an!d as such development was already i~ progr-ess.

It was also stated that the land having been put to the use of industrial purposes could not be re-converted foi: the purposes of housing accommddation'. It was further stated that

the land was mortgaged to the State Bank for about Rs. 2 lakhs and the compensation that would be required to be paid by the Trust would be necessarily higher than in the case of other suitable vacant lands. The petitioner was given a hearing but ultimately the representations were rejected. Tue Trust duly applied to the State Government for sanction of the Scheme which was accorded on April 19, 1968, under section 51 of the Act. The Trust published a notice dated July 12, 1968, under section 68(1) of the Act focla ring its intention to acquire the land. The petitioner filed his ohjections under section 68(2) against the proposed acquisition of the land but these were rejected and the Trust obt~ sanction .of the

Stat; e Government (respondent No. 2) to '-<acquire the land under section 70 of the Act,. and the Notifiction was duly published on September 27, 1968.

Therefore the Trust published a Notification in the Government Gazette dated September 8, 1972, acquiring the said land and under section 71 (2) of the Act the land vested absolutely with the Trust free from encumbrances from the date of the

ublication. Before the Trust could take possession of the petitioner's land, he filed the writ application under article 32 of the Constitution and obtained Rule Nisi and interim stay of disposse!.sion was granted pending disposal of the matter.

Th~ , following are the common submissions made on behalf of the petitioners :-

1. The Housing Accommodation Scheme ls invalid because It. does not specify tile class of inhabitants for whom the same has been made.

2. Th~ , Scheme_ being a Housing Accommodation 11 Scheme, 1r: 1s. for residential oc.cupation only , and it is not competent to include plans for industrial purposes.

LAXMI CHAND v. INDORE IMPROVEMENT TRUST (Goswami, J.) 68 9

3. Section 3 J of the Act does not empower the Trust to frame a s::heme for industrial purposes at all. l

4. There is no application of the mind in terms of section 45 in making the Scheme.

5. The acquisition of the land for the purpose of the Scheme is ma/a fide.

6. Since the Act makes no provision for payment of interest from the date of delivery of possession of the land to the Trust to the determination of compensation by the Tribunal acquisition of the land is violative of Article 31(2) of the Constitution.

At the very outset it should be pointed out that the Petitioners have not challenged the vires of any provisions of the Act.

In order to appreciate the first three submissions, which may be taken up together, we may note a few relevant provisions of the

Act.

Chapter IV of the Act describes the contents of improvement schemes.

Section 30 provides that "an "improvement scheme may provide for all or any of the following matters, namely- * * * •

(i) the provision for accommodation for any class of

E inhabitants : "

Section 31 may be set out in full :

31. "Types of improvement schemes.-

An improvement scheme shall be of one of.the following types or _may combine any two or more of such types or of special features thereof, that is to say- ( a) a general improvement scheme;

(b) a re-building scheme;

(c) a re-housing scheme; t d) a street scheme; ( e) a deferred street scheme;

(f) a development scheme;

(g) a housing accommodation scheme;

(h) a town expansion scheme;

(i) a drainage or drainage including scheme; and

(j) a playground, stadium and scheme."

sewage disposal .

- recreation ground

Section 38. 'Housing accommodation scheme .. -

Whenever the Trust is of opinion that it is expedient and for the public advantage to provide housing accommodation for any class of the inhabitants within the Trnst area, the Trust may frame a housing accommodation scheme for such purpose." Section 39. "Town expansion scheme.- ( 1) Whenever the Trust is of opinion that it is expedient and for the public advantage to control and provide for the future improvement or expansion of a town to which this Act is applicable, the Trust may frame a town expansion si:heme for such town.

* *

(3) Such scheme shall show the methods in which it is proposed to lay out the area to be developed and the purposes for which the particular areas are to be utilised."

y * * * It is submitted on behalf of the petitioners, that the impugned scheme is not a housing accommodation scheme under setion 38 but a scheme purely for industrial purposes. It is pointoo out that ther.:: is no refere11ce in the Scheme to the class of inhabitants within the Tru5t area for whose accommodatiorl the Scheme has been framed under section 38.

Since it is a housing accommodation scheme it cannot include plans for industrial purposes.

The argument fails to take count of section 31 which pirmits in t.:rms for combining two or more schemes or supplementing some

speci~1l features of a particular scheme in another scheme. In other words section 31 envisages composite schemes.

Section 39 which provides for a town expansion scheme authorises under sub-section

(3) to.: indicate the method of layout as well as the purposes for which particular areas under the scheme may be utilised. This section goes to show that there is no legal bar in framing a housing accommodation, scheme with some of the features of a town expansion scheme which will even indicate the purposes for which particular areas may be utilised. There is nothing in the Act to ban industrial purposes from consideration under section: 39 (3). The fac:t that a scheme is described merely as a housing accommodation scheme does not prevent the adaptation of the scheme to the incidental require ..

ments which may be overlapping in another scheme.

We are also no: satisfi~ that housing aocommodationr scheme must lll!cessarily be a residential scheme only and that it cannot admit of providing housing accommodation for any other purpose or object.

The 1vfadhya Pradesh High Court took the same view in Beni Prasad Tandon and Others v. Jabalpur Improvement Trust, Jabalpur(').

Again it is difficult to appreciate how section 31 prevents the Trust from framing an industrial scheme.

We do not find anything in _:cction 31 or in any of the provisions of the Act disabling the

(l) [1970] M. P. L. J. 292.

LAXM! CHAND v. INDORE IMPROVEMENT TRUST (Goswami, J. 691

Tti.bt from framing a scheme for industrial purposes.

To ment.ion only section 39. i\ is clear that under that secuon a town expansion scheme may be framed even without the limits of the to:vn a!ld tt.at would indicate that a town expansion scheme may env1sae mdustrial expansion to meet the growin~ needs of th~ commumty.. '!'f e, thcrefol'.:, do not see any substance m the aforesaid three subnuss1ons. on behalf of the petitioners.

With regard to the fourth submission of the petitioners, it is difficult to accept the sme. Sectio°: 45 requires certin maters specified in (a) to (c) therem to be considered when frmmg an IJ?lJ>rovemet

scheme.

The specified matters touch on the mherent utility, efficiency and adequacy of the scheme and the objections and represen'.ations of the persons affected will be directed to negative such assumptions.

The Scheme in question was open to inspection. There was no ambiguity or vagueness about the Scheme or its purposes.

From even the nature of the representations and objections it is apparent that the Trust did have all relevant matters in their mind in framing the Scheme.

Indeed without actually taking into consi:- clei"C!tion the various matters specified in section 45 it may not be po, siblc to frame a scheme and finally to obtain sanction of the

Govmmcnt in the teeth of objections and representations against the same.

Where factual satisfaction is evident formal recitals being omitted may not matter.

At any rate sub-section (2) of section 52 puts a final seal of imprimatur on the scheme after _publication of the sanction of the Government.

The submission is, therefore, devoid of merit.

With regard to the fifth submission, which is actually urged by the petitioner in writ petition No. 517 of 1972, we are not satisfied that the acquisition of the land for the purpose of the present Scheme is ma/a {; de.

It is submitted that the Trust by formulating the present Scl; cme had an oblique motive to change the ownership of the land already under a private scheme for development to let it out to tenants who will run the existing enterprises already starwd 011 the land.

We are not satisfied that any oblique motive -can be attributed to the Trust in making the impugned Scheme. It is clear that the land was originally owned by the petitioner for agri1:ulural

purpJ~(::; and when he obtained a patta converting it to indusrial purpose. t-t was clearly made subject to a condition that construction work

n the land shall be carried out in accordance with the plans sanctloned by the Trust.

The petitioner had been given reasonable

opportrntty to sub!llit representations and was given a hearing by a Committee constituted under the Act.

The State Government on the application of the Trust examined the Scheme and sanctioned the acquisition of the land under section 70 when it was satisfied that t~~ acquisition was in public interest.

There is no particular

~.l!eptton of ml.a fide against the State Government whose sanction

wa~; a J;?Te r_eqms1te for the acuisition. The order of acquisition c,:nnot. the1efore, be characterised as ma/a fide and the submission fails.

With regard to the sixth and last submission there was al good deal of argument at the bar.

The respondents urged that this point was not specifically taken ln the petitions.

Under section 72(1) of

the Act where any land is acquired by the Trust it shall pay for such acquisition "compensation the amount of which shall be determined io accordance with the provisions hereinafter contained". Under

section 73 a Tribunal is constitutd for the purpose of determining the amount of compensation.

Section 77 provides for matters to be considered for determining compensation, namely, "firstly, the market value of the land at the date of the publication of fhe notification under sub-section ( 1) of section 68" and six other fa<tors.

It is also provided in the same section that the Tribunal shall not take into consideration certain factors mentioned under eight heads. Under sub-sc;; tion (2) of section 77 "in addition to the market-value of the land as above provided, the Tribunal shall in every case award a sum of fifteen per cntum or such marke!;:.Yalue in consideration of the com pulsury nature of the acquisition". There being no provision foy payment of interest from the date of compulsory acquisition orthe land upto the date of payment, acquisition, it is submitted, is invalid in law. .

It is true that there is no provision for awarding interest unlike under th; Land Acquisition Act, 1894 (see sections 28 and 34 of that Act). It is, however, submitted on behalf of the respondents that there is no bar un, der the Act against awarding interest by the Tribunal even though there is no enabling express provision to that effect under the Act. lt is stated that the Tribunal under section 78 exercises pc, 1ers for summoning witnesses and enforcing attendance etc. in the same

mannr as provided in the case of civil courts under the Code of Civil

Procedure. Under section 147 an appeal from the Tribunal lies to the High Court in cases where the value of the claim exceeds Rs. 500/- and in any other case to the District Judge. It is, therefore, submitted that the Tribunal is empowered even as a civil court to award interest under section 34 of the Civil Procedure Code. Section 34 of the Civil

Procedure Code, however, authorises the court to award interest from the date ol the suit to the date of the decree and thereafter to the date of payment. Section 34, therefore, would not come to the aid of the Tribunal to award interest from the date of delivery of possession of the land to the date of determination of compensation.

The respondents relied upon the decision of this Court _in Sazilui'r Si11gh and Others v. Amrao Singh and Others( 1).

I~ this cas~. t:Hs Court had to deal with section 5 ( e) of the East Pun1ab Acqms1t1011 and Requisition of Immovable Property (Temporary Powers). Act, 1948 (briefly the Punjab Act.) which provided that an Arbitrator :in making his award shall have regard to the provisions of sub-sectiou(l) of section 23 of the Land Acquisition Act 1894 so far as the same can be made applicable. The submission in that case was that since sub-section (1) of section 23 is alone mentioned, sub-section .. (2) of section 23 is impliedly excluded and necessarily also section 28 and ----------

(!) [1961] 3 S. C. R. 676.

B ,

:~11 CHAND v. INDORE IMPROVEMENT TRUST (Goswami, J.) 6 93

section 34 stand excluded. The argument, therefore, was that ihc Tribunal was not empowered to award interest under the Punjab Act. Repelling the said argument this Court held as follows :-

"It would be legitimate to hold that by the application of s. 23(1) in terms the provisions of s. 23(2) are by necessary implication excluded. If the Jtegislature has provided that only one part of s. 23 should be applied it would be reasonable to hold that the other part of s. 23 was not intended to be applied; but we do not see how it would be reasonable to hold that by the application of s. 23 (1) the principles underlying the provisions of ss. 28 and 34 are also excluded. Therefore, it is necessary to examine this question on general grounds and principles without assuming that the application of these general considerations is excluded by any of the provisions of the Act". ·

, This Court finally held as follows :-

"The power to award interest on equitable grounds or under any other provisions of the law is expressly saved by the proviso to s. 1 (of the Interest Act 1839) ...... we have already seen that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition is generally regarded by juJicial decisions as aQ equitable right; and so, the proviso to s. 1 of the Interest Act saves the said right".

The Court in that case, therefore, awarded interest to the claimants.

The petitioners on the other hand drew our attention to a decision of this court in the Godhra Hectricity Co. Ltd. and another v. The State uf Gujarat and anpther (') where one of us Mathew J., speaking for the Court held as follows :- ·

'There can be no doubt about the correctness of the

genral rule under which a purchaser who takes possession is charged with interest on his purchase money from that time until it is paid. This rule has been applied to compulsory purposes (see Satinder Singh v. A mrao Singh) (supra).

But the question is whether the arbitrator has power under the A, ct to award interest on the purchase price.

In Toronto City Corpn. v.

Tomnto Rly. Corpn., [1925] AC 177 at op. 193-194 the Privy Council held that the general rule urer which a purchaser who takes possession is char!!ed with interest on his purchase money from that time until it is paid was well etablished, and had on many occasions been apolied to comoulsory purchases but the duty of the arbitrators in that case was not to determine all the rights of the comnany. but onlv to ascer'ain the actual value of certain prooerty at a certain time and that it was a iruism to sav that ucli nlue coulrl not inclnde interest uoon it 'mr! that th<" lihiFtv frir interest fay outside of th2 arbitra.- tion for its enforcement".

(.f) A. r. R. 1975 (January) S. C. 32.

SUPREME COURT REl:'ORTS

[1975J 3 S.C.R.

Although in the Godhra Electricity Co's case (supra) the Court

ha~; noticed the decision in Sa1u1der Sing/i's case (supra), it may b;

ob.; u.:d that the Courts attention in the latter case was not drawn to section 5 (g) of the Punjab Act to the following effr.ct :

'"Save as provided in this section an, d in any rules thereurq'1er, nothing in any law for the time being in force shall apply to arbitration under this section".

A.id thL' Court, therefore, in that case rendered the decision "without assuming that the applicatioq of these general considerations is l)XChided by an:y ot the provisions of the Act". In view cf the Godhra Electricity Co's case (supra) it is not possible to hold that the Com- :iensation Tribu01al, which is at par with an Arbitrator, will be entitled t:.i award interest without any express provision in the Act. This is particularly so since under the Act the Tribunal is entitled to take into consideration some given factors and to peremptorily ignore certain

other specified factors in determining the compensation. It has a1so been empowered to grant solatium as similarly provided for under the Land Acquisition Act. In the entire scheme of the self"contained Act, in absence of a provision to authorise the Tribunal to award interest, it is not possible to hold that it can award interest on the amo\Jmt of compensation determined by the Tribunal subsequent to the acquisition of the land. The petitioners are, therefore, right in their contention that this Act does not provide for awarding interest from the date of taking possession of the property to the date of determination of com- . pnation, which will always be bn a later date under the provisions of the Act (see sections 72 and 7 3) .

The petitioners, however, have an injirect object. They are not interested in the interest as sn:.:11 but want the land back and will not be satisfied unless the order of acquisition is quashed. Unfortunately,

however, it is not possible for this Court to quash the acquisition in these caes in absence of a challenge of the vires of the pro; isions of thL Act. Presumption of constitutionality will forbid casting an evil eye on the Act in absence of a clear challenge. The Act must be assumed to be valid for the purpose of these petitions and we will proceed on th::it basis. Then law being valid the attack will reverberate upon the quantum of compensation, pure and simple. It is sufficient to poi11t out that the quantum of compensation which may be determined

according to the provisions of the Act for acquisition of the land cannot be challenged under article 31 (2) of the Constitution. In that view of the matter this submission of the learned counsel also fails.

ln Writ Petition No. 240: of 1973, Mr. Patel additionally urged that publb; tion of the notice of the Scheme was not made in accordance with section 46 ( 2) of the Act which requires weekly publication in the Gazette for three consecutiv~. weeks. Apart from the fact, in this case. that the petitioner was well aware of the Scheme and submitted objecti<Jns and representations, section 52(2) appears to be conclusive on tlie question. That sub-section provides that the publication o[ a

~10tification by the Stte Government sanctioning the sche1:11e shall be

LAXMI CHA'.'iD v. INDORE IMPROVEMENT TRUST (Goswami, I.) 6 95

conclt1siH: evidence that the scheme has been duly framed and sane" tioned. In view of this, ticklish skirmishes over publication on technical grounds at a distant date are completely out of place. The submission is devoid of merit.

Jn the result both the Wit Petitions fail and are dismissed with no. order us to costs.

We sbould observe that Mr. Shroff pointed out th<.t in view of the decision of the Supreme Court in Satinder Singh's case (supra) ad another lkcision of the Madhya Pradesh High Court in Lakhania/ and others v. Town Improvement Trust, Jabalpur and others,(') the Tribunal has been always awarding interest in acquisition cases under the Act and he undertakes on behalf of the respondents, irrespective of our decision, to pay interest to the petitioners at 6% per annum from the date of actual deiivery of possession upto the dote of payment of the compensation.

P.H.P.

Petitions dismissed.


(!) [1970] M. P. L. J. 316.