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Issues Involved:
1. Whether the Madras State Housing Board Act, 1961, and the Madras Town-Planning Act, 1920, preclude the acquisition of land under the Land Acquisition (Madras Amendment) Act, 1961. 2. Whether the acquisition of land for housing schemes under the Amending Act is a colorable exercise of power. 3. Whether the Amending Act offends Articles 14, 19, and 31(2) of the Constitution. 4. Whether the Amending Act is protected under Article 31-A of the Constitution. 5. Whether the compensation provided under the Amending Act meets the requirements of Article 31(2) of the Constitution. Detailed Analysis: 1. Preclusion by Special Statutes: The petitioners argued that the Government could only acquire lands for housing schemes in conformity with the Madras State Housing Board Act, 1961, or the Madras Town-Planning Act, 1920, and not under the Amending Act. This issue was not pursued further by the petitioners in light of the Supreme Court's decisions in *Patna Improvement Trust v. Smt. Lakshmi Devi* and *Nandeshwar Prasad v. U.P. Government*. 2. Colorable Exercise of Power: The petitioners contended that the acquisition, though ostensibly for housing schemes, was intended for selling the lands and raising revenue for the State, thus constituting a colorable exercise of power. The Court found no evidence of sinister motives behind the acquisition and concluded that the lands were being acquired bona fide for developing a housing colony. 3. Violation of Articles 14, 19, and 31(2): The petitioners argued that the Amending Act violated Articles 14, 19, and 31(2) of the Constitution. The Court held that the Amending Act clearly infringed Article 14 due to unreasonable classification between lands acquired for housing schemes and other public purposes. The Act was thus deemed void for violating the principle of reasonable classification. 4. Protection under Article 31-A: The respondents argued that the Amending Act was protected under Article 31-A, as amended by the Constitution (Seventeenth Amendment) Act, 1964. The Court held that Article 31-A applies only to laws made for agrarian reform and not for acquiring property for purposes like housing schemes. Therefore, the Amending Act did not attract the protection of Article 31-A. 5. Compensation under Article 31(2): The petitioners contended that the Amending Act did not provide for "just equivalent" compensation, thus violating Article 31(2). The Court noted that the Amending Act prescribed principles for determining compensation, such as the market value at the date of notification or the average market value during the five years preceding the notification, whichever is less. The Court found these principles to be valid and not amounting to fraud on power. However, it held that excluding the potential value of the land from compensation pertains to the method of ascertaining compensation and does not constitute fraud on power. Conclusion: The Supreme Court declared the Land Acquisition (Madras Amendment) Act, 1961, void for violating Article 14 of the Constitution. The Court issued writs of mandamus restraining the respondents from proceeding with the acquisition under the Amending Act. The respondents were allowed to continue the proceedings under the Land Acquisition Act, 1894, in accordance with the law. The petitioners were awarded costs.
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