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TMI Blog1986 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 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, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 reconstructin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 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 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. 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds. 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 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 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred 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 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 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 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 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions 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 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 cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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