1. This group of writ petitions challenges the constitutional validity of sections 14 and 17 of the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 ("Slum Act", for brevity). In Mumbai city, otherwise known as the commercial capital of India, more than half the population resides in slums. While ordinarily we look at proliferation of slums as merely in terms of encroachments and unauthorised constructions, the draft National Slum Policy formulated by the Government of India in the Department of Urban Development and Poverty Alleviation recognises that slums are an integral part of urban areas and contribute significantly to their economy both through their labour market contributions and informal production activities. The draft policy, therefore, endorses an upgrading and improvement approach in all slums. The policy further acknowledges that cities without slums should be the goal and objective of all urban planning for social and economic development.
2. Long before formulation of the draft National Slum Policy, the Legislature in the State of Maharashtra enacted the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 to make better provision for the improvement and clearance of slum areas in the State and their redevelopment and for the protection of occupiers from eviction and distress warrants and for matters connected with the said purposes. Originally, the perspective was that a slum area is or may be source of danger to the health, safety or convenience of the public of that area or of its neighbourhood, the reason of the area having inadequate or basic amenities or being in insanitary, squalid and over-crowded and, therefore, unfit for human inhabitation. The Act, therefore, empowers the Competent Authority to declare such area to be a slum area. A person aggrieved by such declaration may file an appeal to the Slum Tribunal within 30 days after the date of such declaration in the official gazette.
3. After such declaration of an area as "slum area", where the Competent Authority is satisfied that a slum area is capable of being improved at a reasonable expense so as not to be source of danger to the health, safety or convenience of the public of that area, it could call upon the owner/s and every mortgagee of the properties in that area or any part thereof, to submit their objections or suggestions, if any, to the Competent Authority to carry out necessary improvement works in the slum area and thereafter the Competent Authority may proceed to carry out the improvement work such as laying of water mains, sewers, storm water drains, provision of urinals, latrines, community bath and water taps, widening of existing roads, lanes, etc. and constructing new roads/lanes, etc. providing parks, playgrounds, welfare and community centres, schools, dispensaries, etc. and demolition of obstructive or dilapidated buildings for the purpose of such improvement, the Competent Authority could call upon the occupiers in any area to vacate their premises, if possible, after offering alternative sites.
Under section 5C, the Competent Authority could even call upon the owners of the buildings/lands in the area to execute works of improvement either within or outside the buildings or the area so as to make the buildings or the area fit for human habitation or free from such danger. If the owners of the buildings or the lands fail to execute the works of improvement as required by the Competent Authority within the time limits specified in the notice, the Competent Authority may do the improvement work with the costs to be paid by the owners of the buildings or the lands.
4. While the above scheme of slum improvement is contained in Chapter III of the Slum Act, Chapter IV contains provisions for slum clearance and redevelopment. Where upon a report from any of its officers or other information in its possession, the Competent Authority is satisfied in respect of any slum area that the most satisfactory method of dealing with the conditions in the area is the demolition of all the buildings in the area, it may declare such area as the clearance area after making an attempt to provide alternative accommodation as enacted in section 11 of the Slum Act. After such clearance order becomes operative, the owner of the land is at liberty to redevelop the land in accordance with the plans approved by the Competent Authority subject to such restrictions and conditions as may be imposed by the Competent Authority including the condition regarding time limit for completion of the redevelopment project. This is the provision contained in section 12(10) of the Slum Act.
If the owner of the land does not redevelop the land or makes redevelopment in contravention of the approved plans or commits breach of the terms and conditions of redevelopment including the time limit for completion, the Competent Authority may itself determine to redevelop the land at its own costs. However, such determination can be made only after giving a reasonable opportunity of hearing to the owner.
5. While the Slum Act, as originally enacted, only contained the aforesaid provisions for improvement, clearance and redevelopment of an individual slum area, the Legislature introduced the concept of slum rehabilitation scheme by adding Chapter IA in the year 1996. An authority called "Slum Rehabilitation Authority" has been constituted under the Slum Act for preparing the General Slum Rehabilitation Scheme for such area/s as may be specified in the government notification constituting the Slum Rehabilitation Authority (hereinafter referred to as "SRA"). The State Government or SRA with previous sanction of the State Government shall prepare a General Rehabilitation Scheme for rehabilitation of slums and hutment colonies in that area after inviting objections and suggestions, laying down the parameters for declaration of any area as slum rehabilitation area and the manner in which rehabilitation of such area shall be carried out including provision for obligatory participation of the landholders and occupants of the area declared as slum rehabilitation area in the implementation of the slum rehabilitation scheme and also provision for transit accommodation pending development of the slum rehabilitation area and allotment of rehabilitation tenements to the occupants of such area free of cost. While the scheme would give an option to the landholders and occupants to undertake development of slum rehabilitation areas by themselves or through a developer on the terms and conditions of such development, the option is also given to SRA for taking up such development in the event of non-participation of the landholders or occupants. Such scheme could also provide for incentives to be made available to the developer for development of the slum rehabilitation area under such scheme.
6. In short, while Chapter II empowers the Competent Authority to declare an area as a slum area, Chapter III empowers the Competent Authority to undertake the improvement works, Chapter IV empowers the Competent Authority to declare any slum clearance area from which all the buildings unfit for human habitation or dangerous or injurious to health would be demolished, and while permitting the owner of the land to redevelop the area, in the event of failure of the owner to undertake such redevelopment or failure to comply with the terms and conditions of the scheme, the Competent Authority is given powers to undertake the redevelopment of the area on its own.
So also the newly inserted Chapter IA while allowing the owners and occupants of the slum areas to undertake the slum rehabilitation scheme, also authorizes SRA to undertake and implement the rehabilitation scheme by itself. The Competent Authority or SRA would not be in a position to exercise the above powers of carrying out improvement works or redevelopment of slum area or undertake and implement the slum rehabilitation scheme, if the land in the slum area or adjoining land or land surrounded by slum area continues to belong to and remain with the owner/mortgagee of the land. Chapter V of the Slum Act, therefore, makes provision for compulsory acquisition of such lands. Section 14 confers powers upon the State Government to acquire the land after following the procedure laid down therein. Section 14 confers powers on the Collector to take over possession of such land. Sections 16 to 21 provide for payment of compensation for compulsory acquisition of the land under the Slum Act. The amount of compensation may be determined by the agreement between the State Government/Collector and the person having any interest in the land. Where no such agreement can be reached, the amount payable as compensation shall be "an amount equal to sixty 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 notice for acquisition of the land under section 14". The principles for calculation of the net average monthly income are set out in the First Schedule to the Slum Act. The determination of compensation has to be made after giving an opportunity of hearing to the owner of the land. Right of appeal has also been conferred upon the owner/person interested in the land to prefer an appeal to the Tribunal against the order of determination of compensation.
7. The petitioners in this group of petitions, who are owners of lands which came to be declared as slum areas under section 4 of the Slum Act between the years 1977 and 1998, have challenged the notices for acquisition of the lands issued under section 14 of the Slum Act between the years 1997 and 2007 and the final notifications issued between the years 2000 and 2007. The petitioners have also challenged constitutional validity of the provisions of section 14 under which the notices and notifications for acquisition of their lands were issued. The petitioners have further challenged the constitutional validity of the provisions of section 17 of the Slum Act providing for determination of compensation.
8. The challenges raised by Dr. Virendra Tulzapurkar, learned counsel for the petitioners, may first be broadly set out to indicate the canvas for the debate.
I. The acquisition of slum lands i.e. land which are notified as slums cannot be made under the provisions of Sections 14 and 17 of the Slum Act, because these provisions are only applicable to the lands adjoining or surrounding the slums and not the lands covered by slums themselves.
II. In the alternative, it is submitted that Section 14 of the Slum Act confers unfettered powers on the executive to take action. The provisions are therefore arbitrary in the absence of the following safeguards:-
(A) there is no provision for hearing;
(B) there is no requirement for the authority to pass a reasoned order, and
(C) no appeal is provided to any judicial or quasi judicial authority.
III. Over and above the contentions based on the facts of specified cases, Dr. Tulzapurkar has also submitted that the principles for compensation provided in section 17 read with the Schedule to the Act are completely arbitrary as compared to the principles for compensation contained in the provisions of the Land Acquisition Act, 1894. It is submitted that compensation for slum lands also must be computed on the basis of the principles contained in Sections 23 and 24 of the Land Acquisition Act, 1894.
IV. Dr. Tulzapurkar for the petitioners has also referred to the following figures of compensation to buttress his challenge to constitutional validity of Section 17 of the Slum Act on the ground that the compensation being offered to the owners of the lands under the said provision is illusory:
9. Now we will take up each of these challenges and consider the elaborate submissions made by learned counsel for the parties.
Contention-I: Are sections 14 and 17 applicable to slum lands
10. Section 14 before amendment read as under:-
14. Power of State Government to acquire land. (1) Where on any representation from the Competent Authority it appears to the State Government that, in order to enable the Authority to execute any work of improvement in relation to any slum area or any building in such area or to redevelop any clearance area, it is necessary that any land within adjoining or surrounded by any such area should be acquired, the State Government may acquire the land by publishing in the Official Gazette, a notice to the effect that the State Government has decided to acquire the land in pursuance of this section:
.... .... .....
Section 14 after amendment reads as under:-
14. Power of State Government to acquire land. (1) Where on any representation from the Competent Authority it appears to the State Government that, in order to enable the Authority to execute any work of improvement or to redevelop any slum area or any structure in such area, it is necessary that such area, or any land within adjoining or surrounded by any such area should be acquired, the State Government may acquire the land by publishing in the Official Gazette, a notice to the effect that the State Government has decided to acquire the land in pursuance of this section:
..... ..... .....
11. It is submitted that on a plain reading of Section 14 of the Act, it is clear that the power of acquisition can be exercised only in regard to lands which are within the adjoining area and surrounding lands, but the power of acquisition is not available in regard to lands which are declared as slum areas and such lands which are declared as slum areas under the Act have to be acquired under the provisions of the Land Acquisition Act, 1894 under which the compensation is to be paid on the basis of the market value and in addition thereto solatium and interest is also to be paid.
It is submitted by Counsel for the petitioner that before amendment in 2011 the section used the words " any land within adjoining or surrounded by any such area should be acquired". Counsel has submitted that this would mean that the land "within adjoining area" could only be acquired, and not the slum area itself.
12. Learned Counsel for petitioners submit that this interpretation of Section 14 has been accepted by this Court in Anil Gulabdas Shah Vs. State of Maharashtra & Ors : 2010 (112) Bom. LR. 4864. Further Section 14 has now been amended in 2011 and the amended section now expressly empowers acquisition of even slum areas under the provisions of Section 14 of the Slum Act-which establishes beyond doubt that prior to such amendment, there was no power to acquire slum areas under Section 14 of the Slum Act and the same was unavailable. Hence all the matters and notifications under Section 14 of the Slum Act prior to amendment may be struck down as without any authority of law.
13. Learned counsel for the respondents submit that the amendment to section 14 made in 2011 is merely clarificatory in nature and was possibly necessitated by the discordant note in Anil Shah's case not following the Akhtar Rizvi's case. The amendment was thus not prospective. The Respondents rely on Zile Singh v Haryana : (2004) 8 SCC 1 paragraph 13 and 14 page 8. Reliance is also placed on the Central Act-"The Slum Areas (Improvement & Clearance) Act, 1956 on which the Maharashtra Act is based.
14. Having heard the learned counsel for the parties, we find that the Maharashtra Slum Act is based on a Central Act, the Slum Areas (Improvement and Clearance) Act, 1956, (the Central Act) Clause 3 of the Statement of Objects & Reasons of the Maharashtra Act reads as under:-
(3) Slum dwellers are also harassed by eviction by landlords. Provision is necessary to prevent such eviction.
Section 12 of the Central Act reads as under:-
12. Power of Central Government to acquire land. (1) Where on any representation from the competent authority it appears to the Central Government that in order to enable the authority to execute any work of improvement in relation to any building in a slum area or to re-develop any clearance area it is necessary that land within, adjoining or surrounded by any such area should be acquired, the Central Government may acquire the land by publishing in the Official Gazette a notice to the effect that the Central Government has decided to acquire the land in pursuance of this section:
Provided that ....
15. Section 12 of the Central Act which is virtually in pari materia with the impugned Section 14 of the Maharashtra Act contains a comma between the words "within" and "adjoining" which clearly shows that the intention of the legislature could never have been to restrict the Government's power to acquire only land adjoining a slum. It is also necessary to note that the constitutional validity of the Central Act has been upheld by the Supreme Court in Jyoti Pershad v/s Union Territory of Delhi : AIR 1961 SC 1602.
16. In Akhtar Hasan Rizvi v/s. The Additional Collector (enc.) and Controller of slums & ors., decided on 3 October 2000, a Division Bench of this Court, speaking through Chief Justice B.P. Singh (as His Lordship then was) dealt with the identical contention that under Section 14(1) of the Slum Act, only that land can be acquired which is adjoining or surrounded by the slum area but not the slum area itself (or, in other words, the land over which the slum exists). This Court observed:-
The words "within adjoining" do not convey any sense, unless a comma (,) is inserted between the words 'within' and 'adjoining'. Apparently, there may be a printing error, and that is the reason why the comma is not found in the text of the Slum Act. So read, it would mean that any land which is within, adjoining or surrounded by any such area may be acquired under Section 14(1) of the Slum Act. If the section is read to mean what Counsel for the petitioner says it means, then the entire Act would become unworkable.
A plain reading of Section 11 would show that the area over which the slum is situate really comes within the scope of Section 11(1), and consequently under Section 14(1). Section 12 provides for the clearance order in relation to the slum area by ordering the demolition of each of the buildings specified therein, and requiring each such building to be vacated within such time as may be specified in the clearance order.
"A conjoint reading of Sections 4, 11, 12 and 14, therefore, leaves no room for doubt that the land over which the slum is situate may be acquired under the provisions of the Slum Act. In fact, without acquiring the slum area properly, in accordance with law, it would be impossible to give effect to any scheme under the Slum Act. We are, therefore, of the considered view that under Section 14(1), the State Government may acquire the land on which the slum exists, and the section must be so read to include any land within, adjoining or surrounded by slum area."
17. In Anil Gulabdas Shah vs. State of Maharashtra : 2011 (2) Bom. C.R. 93, another Division Bench of this Court held in para 10 that under section 14(1) of the Slum Act, the acquisition of land contemplated is not from the slum rehabilitation area, but any land within the adjoining or surrounded by any such area. Thus, the Act does not contemplate acquisition of land under section 14(1) from the slum rehabilitation area and it contemplates such acquisition only in respect of such land within the adjoining land or surrounded by any such area. It appears that the binding decision of this Court in Akhtar Hassan Rizvi's case was not brought to the notice of the Division Bench in Anil Gulabdas Shah's case.
18. We find considerable substance in the submission made by learned counsel for the respondent that it was in order to take care of discordant note in Anil Gulabdas Shah v/s. State of Maharashtra that the State Legislature introduced the amendment to section 14 of the Slum Act in the year 2011 by adding words "such area or" before words " any land within adjoining or surrounded by any such area should be acquired". The Legislature could, of course, have rested content with adding a comma after words "any land within" and before words "adjoining or surrounded by such any area". However, out of abundant caution the Legislature has added words "such area" i.e. slum area.
19. Reliance placed by the learned counsel for the petitioners upon Learned counsel for petitioners, however, relied upon the decision of the Supreme Court in Mohd. Shabir vs. State of Maharashtra : (1979) 1 SCC 569, in support of the contention that absence of any comma would indicate legislative intent as attributed by him is of no avail, as the Court relied more on the objection of the concerned Act.
20. In view of the objects of the Slum Act and in view of the decision of this Court in Akhtar Hasan Rizvi's case (supra) even prior to amendment, Section 14 of the Act has to be read as empowering the State Government to acquire land within, adjoining or surrounded by a slum area.
Contention II-Is Section 14 violative of Articles 14 and 300A
21. Learned counsel for the petitioners submitted that Section 14 of the Slum Act is violative of Article 14 and 300-A of the Constitution, because it confers arbitrary and unfettered powers on the Executive to make acquisition of the land.
Contention II(a)-No proper opportunity of hearing.
22. The first plank of the attack is that there is no proper opportunity given to the owner of the land before the Government acquires the land. It is submitted that the steps contemplated by Section 14 are as follows:
(i) a representation is made by the Competent Authority to the State.
(ii) show cause notice is issued to the owner.
(iii) objections of the owners are sent to the Government along with a report of the Collector.
(iv) order is passed by the Government acquiring the property.
It is submitted that in the aforesaid steps, no opportunity of hearing is provided-
(i) before the Competent Authority makes representation to the State Government;
(ii) by the Collector before making a report; and
(iii) by the Government before acting on the basis of the report and passing the order of acquisition.
It is also submitted that there is no provision for giving a copy of the representation made by the Competent Authority to the Government and the Collector's report which is submitted to the Government. It is also submitted that at no stage opportunity of personal hearing is provided to the owner of mortgagee of the land.
23. In Balraj Tulsidas Pillai vs. State of Maharashtra, 2004 (3) Bom. C.R. 466, a learned Single Judge of this Court (Khandeparkar R.M.S., J.) read the principles of natural justice into section 14(1) of the Slum Act in the following manner:
6. Plain reading of the above referred provisions of law from the said Act would disclose that, the powers under Section 14(1) of the said Act can be exercised by the State Government pursuant to the receipt of the representation by the competent authority expressing the need of such land so as to enable the authority to execute any work of improvement in relation to any slum area or any building in such area or to redevelop any clearance area. Needless to say that the competent authority would not be able to arrive at any such decision unless the persons who are going to be affected by the decision to acquire the land are heard in the matter. It is well settled that nobody can be deprived of his immovable property without following procedure of law an without complying with the basic principles of natural justice. Being so, even though the provisions of law contained in Section 14(1) do not provide for any prior notice to the interested parties, such a provision will have to be read in Section 14(1). That being also the requirement for compliance of basic principles of natural justice, even though there is no specific provision contained in Section 14(1) for issuance of such notice, it will be necessary either for the competent authority or the State Government to hear the interested parties before taking final decision regarding the acquisition of the land.
Again in Ramkali Sitaram Kushawaha vs. Deputy Collector (Encroachment) & Competent Authority, 2004 (3) Bom. C.R. 14, the same learned Single Judge held as under:
9. Section 14 of the said Act deals with the powers of the State Government to acquire the land. However, it empowers the Government to acquire the land only when it is found necessary to do so for the purpose specified in the said provision of law. The purpose specified in the said provision of law is either to execute any work of improvement in the slum area or any building in such area or to redevelop any clearance area. In other words, it is only when the land would be required for one of the purposes specified in section 14(1) that the acquisition of land could be justified under the said provision of law.
10. ...... The requirement of representation is not an empty formality but it is necessary to invoke powers of acquisition of land. It is pertinent to note that the acquisition under section 14(1) cannot be done without proper show cause notice in that regard to the persons concerned. Obviously, the notice should disclose the representation by the competent authority having represented about the need of the land for improvement or redevelopment, so that the addressee of the notice can effectively put forth his say in the matter. It is the constitutional requirement that nobody can be deprived of his immoveable property without following the procedure prescribed by law. The procedure to be followed for acquisition of land under section 14(1) having been incorporated in the said provision itself and it apparently discloses certain pre-requisites for exercise of such power by the State Government, it is needless to say that the acquisition of land under section 14(1) has to be in due compliance of such procedure, otherwise, the decision and consequently the acquisition would stand vitiated.
24. In Om Sai Darshan Co-operative Housing Society v/s State of Maharashtra [2007 (1) BCR 476 (at para 9), it was held by this Court that "...on publication of slum rehabilitation scheme under sub-Section (1) of Section 3B certain provisions of the Slum Act which are incorporated in the said Section will apply to any area declared as a slum rehabilitation area. The Section provides that Chapters II and III of the slum Act will not apply to such area".
25. The substantive part of sub-section (1) of Section 14 before and after amendment is already quoted in paragraph 11 hereinabove. Section 14 in entirety as it stood prior to amendment of 2012 (vide Maharashtra Act No. 11 of 2012 in force from 19 June 2012) including the proviso laying down the procedure for acquisition reads as under:
14. Power of State Government to acquire land. (1) Where on any representation from the Competent Authority it appears to the State Government that, in order to enable the Authority to execute any work of improvement in relation to any slum area or any building in such area or to redevelop any clearance area, it is necessary that any land within adjoining or surrounded by any such area should be acquired, the State Government may acquire the land by publishing in the Official Gazette, a notice to the effect that the State Government has decided to acquire the land in pursuance of this section:
Provided that, before publishing such notice, the State Government, or as the case may be, the Collector [Competent Authority] may call upon by notice the owner of, or any other person who, in its or his opinion may be interested in, such land to show cause in writing why the land should not be acquired with reasons therefore, to the Collector [Competent Authority] within the period specified in the notice; and the Collector [Competent Authority] shall, with all reasonable dispatch, forward any objections so submitted together with his report in respect thereof to the State Government and on considering the report and the objections, if any, the State Government may pass such order as it deems fit.
(1A) The acquisition of land for any purpose mentioned in sub-section (1) shall be deemed to be a public purpose.
(2) When a notice as aforesaid is published in the Official Gazette, the land shall on and from the date on which the notice is so published vest absolutely in the State Government free from all encumbrances.
26. It is clear that acquisition of land under Section 14(1) of the Act is to be preceded by a show cause notice to the owner/mortgagee of the land with an opportunity to respond to such show cause notice. The section itself, thus, provides for an opportunity of hearing to the owner/mortgagee of the land. We are not impressed by the contention of the learned counsel for the petitioners that such opportunity of hearing must include supplying the owner/mortgagee of the land with a copy of the representation made by the Competent Authority to the Government or copy of the Collector's report to the Government. As per the settled legal position, principles of natural justice are not to be put in a straight jacket formula. The scope of hearing to satisfy the principles of natural justice would vary depending on the legislative provisions and object of the inquiry. As rightly submitted by learned counsel for respondents, persons to be affected by acquisition and redevelopment of the land are not merely land owners, but also numerous persons residing in sub-human conditions in a slum area. The Legislature, in its wisdom, has therefore not provided for the kind of inquiry which may be provided in a disciplinary proceeding. The object of acquisition of land is not to punish the land lower but to enable large masses residing in sub-human conditions in a slum area to come out from such conditions and to be provided with decent housing.
27. It is true that, as observed in the judgment of the learned Single Judge of this Court in Ramkali Sitaram Kushawaha vs. Deputy Collector (Encroachment) & Competent Authority (supra), a show cause notice under Section 14(1) should disclose the representation made by the competent authority about need of the land for improvement or redevelopment. But this would not mean that the representation made by the competent authority to the Government must be supplied to the owner/mortgagee of the land alongwith the show cause notice. If show cause notice indicates the representation made by the competent authority about the need of the land for improvement or redevelopment and the owner/mortgagee of the land is given an opportunity to show cause why the land should not be acquired for the aforesaid purpose, that would be sufficient compliance with principles of natural justice. For the same reasons, hearing before the Collector or supplying land owner with a copy of the Collector's report to the Government cannot be considered as prerequisites to the exercise of the power by the Government under section 14(1) of the Act.
28. Mr. E.P. Bharucha, learned Senior counsel appearing for the State Government and Additional Collector (Encroachment) and Controller of Slums, Mumbai Suburban Districts, Deputy Collector (Encroachment & Removal) as well as competent authorities under the Slum Act has submitted that the acquisition of a slum area to carry out works of improvement or redevelopment partakes of legislative character which necessarily excludes a personal hearing as such acquisition affects a large number of persons. In Laxmi Khandsari v/s State of U.P. [(1981) 2 SCC 600 at paragraph 79] the Supreme Court while dealing with a notification restricting the use of power crushers for sugar cane prior to a notified date held that since "the notification is impressed with a legislative character, the question of hearing does not arise. It may be true that despite the fact that there is no necessity of hearing, the Government could have evolved some method of giving a very short notice to the Association and taking its views. But the omission to do so would not vitiate the notification impugned. It is well settled that possibility of an alternative scheme which might have been but has not been designed, would not be sufficient to make a restriction unreasonable".
29. Numerous persons residing in sub-human conditions in a slum area are going to benefit by the acquisition and redevelopment of the land. After issuance of notice to land owner and after filing his reply, if the land owner were held to be entitled to personal hearing before the Collector or the Government, the slum dwellers would also claim personal hearing in support of the notice for acquisition of the land for redevelopment and rehabilitation of the slum dwellers. Giving a personal hearing to each of such a large number of concerned persons would in fact delay and, therefore, frustrates the object of the Act viz. to improve, clear and redevelop slum areas. Keeping in mind the intended goal of the Act, the Legislature in its wisdom has, therefore, not provided and could not have provided for personal hearing when it comes to acquisition of slum land. A personal hearing is not a necessary requirement of the principles of natural justice in every case. In Section 14 the express provisions of giving of notice, inviting objections and consideration of those objections by the Government by necessary intendment indicates that the Legislature did not intend to provide for personal hearing.
30. In Carborandum Universal Ltd. v/s Central Board of Direct Taxes : 1989 Supp (2) SCC 462 (para 6), the Supreme Court held that a "Personal hearing in every situation is not necessary and there can be compliance of the requirements of natural justice of hearing when a right to represent is given and the decision is made on a consideration thereof."
31. We may now briefly refer to decisions relied upon by Dr. Tulzapurkar for the petitioners.
Dr. Tulzapurkar relied upon the decision of the Supreme Court in Biecco Lawrie Ltd. vs. State of West Bengal : (2009) 10 SCC 32. In para 24 of the said decision, the Supreme Court observed as under:-
24. .... One of the essential ingredients of fair hearing is that a person should be served with a proper notice, i.e., a person has a right to notice. Notice should be clear and precise so as to give the other party adequate information of the case he has to meet and make an effective defence. Denial of notice and opportunity to respond result in making the administrative decision as vitiated.
25. The adequacy of notice is a relative term and must be decided with reference to each case. But generally a notice to be adequate must contain the following:
(a) time, place and nature of hearing;
(b) legal authority under which hearing is to be held;
(c) statement of specific charges which a person has to meet.
26. However in State of Karnataka v. Mangalore University Non-Teaching Employee's Association [(2002) 3 SCC 302] the requirement of notice will not be insisted upon as a mere technical formality when the party concerned clearly knows the case against him and is not thereby prejudiced in any manner in putting up an effective defence, then violation of the principle of natural justice cannot be insisted upon.
31. A proper hearing must always take in its ambit a fair opportunity to those who are parties in the controversy for correcting or contradicting anything that is prejudicial to their view. Lord Denning has observed the following in Kanda v. Government of Malaya, 1962 AC 322 (p.337):
If the right to be heard is to be a real right which is worth anything, it must carry with it a right in the accused man to know the case which is made against him. He must know what evidence has been given and what statements have been made affecting him and then he must be given a fair opportunity to correct or contradict him.
32. Thus every person before the administrative authority exercising adjudicatory powers has the right to know the evidence to be used and this was firmly established in the case of Dhakeshwari Cotton Mills Ltd. v. Commissioner of Income Tax [AIR 1955 SC 65].
33. It is, however, very well accepted principle that supply of the adverse material need not be, unless the law otherwise provides, in its original form and it is sufficient if the summary of the contents of the material is supplied provided it is not misleading. Thus, what is essential is substantial fairness and this may be in many situations be adequately addressed and achieved by telling the affected party the substance of the case that he has to meet, without precisely discussing the precise evidence or the sources of information.
32. The above observations were made in a case where the respondent was charge-sheeted for major misconduct, namely, instigation, insubordination and using of abusive and filthy languages against his superiors and dilatory tactics. The Court held that the Enquiry Officer had sent due notice and postponed the date of hearing various times with an intention to permit the respondent to present his case, but the respondent did not present himself except on three days and ultimately the Enquiry Officer conducted the inquiry ex parte. The Court, however, made the following observations:
41. Assuming but not admitting that there has been a denial of the principles of natural justice to the respondent to the extent that he did not know the specifications of the charges leveled, was denied a right to engage a lawyer and not furnished with the copies of the documents and list of witnesses to be relied upon by the management, even then, we are of the firm opinion that observance of the principles of natural justice to the respondent would be a useless formality which is an exception to the rationale underlying the principles of natural justice.
42. In S.L. Kapoor v. Jagmohan, [(1980) 4 SCC 379], this Court under similar circumstances dealing with the denial of the principles of natural justice held that:
It is yet another exception to the application of the principles of natural justice. Where on the admitted or undisputed facts only one conclusion is possible and under the law only one penalty is permissible, the court may not insist on the observance of the principles of natural justice because it would be futile to order its observance'.
33. In Natwar Singh vs. Director of Enforcement: (2010) 3 SCC, 255, the Supreme Court observed as under:
26. Even in the application of the doctrine of fair play there must be real flexibility. There must also have been caused some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter to be dealt with and so forth. Can the Courts supplement the statutory procedures with requirements over and above those specified In order to ensure a fair hearing, Courts can insist and require additional steps as long a such steps would not frustrate the apparent purpose of the legislation.
27. In Lloyd vs. McMahon: 1987 AC 625, Lord Bridge observed:
My Lords, the so-called rules of natural justice are not engraved on tablets of stone. To use the phrase which better expresses the underlying concept, what the requirements of fairness demand when any body, domestic, administrative or judicial, has to make a decision which will affect the rights of individuals depends on the character of the decision-making body, the kind of decision it has to make and the statutory or other framework in which it operates. In particular, it is well-established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness.
28. As Lord Reid said in Wiseman Vs. Boardman, 1971 AC 297:
For a long time the courts have, without objection from Parliament, supplemented Procedure laid down in legislation where they have found that to be necessary for this purpose.
29. It is thus clear that the extent of applicability of principles of natural justice depends upon the nature of inquiry, the consequences that may visit a person after such inquiry from out of the decision pursuant to such inquiry.
34. Learned counsel for the petitioners also relied upon the observations made by the Supreme Court in paragraphs 30 to 35 of the above decision in support of the contention that all material relied upon by the decision making authority must be brought to the notice of the petitioners. The noticee is always entitled to satisfy an authority that those very documents upon which reliance has been placed do not make out even a prima facie case.
However, the observations in the said decision regarding duty of adequate disclosure were made in the context of the complaint made against the appellants for violation of the Foreign Exchange Management Act, 1999. The proceedings under the Act exposed the appellants not only to civil consequences but also to penal consequences and the proceedings required the adjudicating authority to form the opinion whether an inquiry shall be held into the allegations made in the complaint.
35. Dr. Tulzapurkar also relied upon the decision of the Supreme Court in Nagarjuna Construction Company Ltd. vs. Government of Andhra Pradesh : (2008) 16 SCC 276. In paras 26 and 31, the Supreme Court observed as under:
26. Additionally, it is noticed the High Court has relied on certain records which purportedly contain the inspection notes of the sites from where the appellants had excavated the material. It is to be noted that for the first time before the High Court these records were produced. Since there was no reference to the so called inspection notes at any point of time the question of the appellant pleading prejudice because of non-supply of the same does not arise. The High Court observed that since the appellant had not demanded for the inspection notes during hearing of the revision there was no question of any prejudice. The approach is clearly wrong. At no point of time, not even at the time of hearing of revision petition or in the revisional order there is any reference to the so called inspection notes. Added to that, the High Court did not consider the effect of the stand taken by the Government earlier.
31. The basic principles of natural justice seem to have been disregarded by the State Government while revising the order. It acted on materials which were not supplied to the appellants. Additionally the High Court for the first time made reference to the report/inspection notes which was not even referred to by the State Government while exercising revisional power.
36. That was a case of breach of principle of natural justice as there was no opportunity provided. We are not concerned with such situation here. The basic principle of natural justice has to be tested on the basis of the order so passed by the judicial or quasi judicial authority. We are here concerned with the constitutional validity of the provisions by which State/Competent Authorities are authorized to acquire the property and grant the reasonable compensation. This judgment, therefore, is also of no assistance.
37. Dr. Tulzapurkar for the petitioners placed strong reliance on the following observations of the Supreme Court in State of Punjab vs. Gurdial Singh : (1980) 2 SCC 471 (para 16):
16. The fourth point about the use of emergency power is well taken. Without referring to supportive case-law, it is fundamental that compulsory taking of a man's property is a serious matter and the smaller the man the more serious the matter. Hearing him before depriving him is both reasonable and preemptive of arbitrariness, and denial of this administrative fairness is constitutional anathema except for good reasons. Save in real urgency where public interest does not brook even the minimum time needed to give a hearing land acquisition authorities should not, having regard to Arts. 14 (and 19), burke an enquiry under Sec. 17 of the Act. Here a slumbering process, pending for years and suddenly exciting itself into immediate forcible taking, makes a travesty of emergency power.
38. That was a case where a piece of land was selected as the best suitable place for building a Mandi. Hence, notification under section 4 and declaration under section 6 of the Land Acquisition Act was issued and even foundation stone of the building was laid. But the very next year, the proceedings were de-notified and instead notifications for acquiring the land of respondent nos. 1 to 21 were issued. The aggrieved respondents approached the High Court alleging malafides on the ground that fresh notifications were issued as a result of influence wielded by a Minister (respondent no. 22) who was related to the owner of the land which was initially sought to be acquired. The High Court struck down the impugned notifications on the ground of malafides, but after several years the State once again sought to acquire the land of respondent nos. 1 to 21 by invoking emergency power under section 17 of the Land Acquisition Act. The High Court for the second time also struck down the said action. The State Government then challenged this decision of the High Court before the Supreme Court. Respondent no. 22, despite service of notice, did not enter appearance before the High Court nor did he respond to the notice issued by the Supreme Court giving him a fresh chance to deny the allegations made against him. Only counter-affidavit was filed on behalf of the State. It was in this factual background that the Supreme Court made the following observations:
The indefensible resort to Sec. 17 is evidence of the length to which the executive would go to come to terms with men wielding political power. No reason exists for us to grant leave in the case where factually the High Court has found improper attempt to take a citizen's land.
39. Having examined the statutory provisions, decisions cited at the bar and the rival submissions, we have no hesitation in coming to the conclusion that provisions of Section 14(1) of the Maharashtra Slum Act cannot be said to be arbitrary or violative of the provisions of Article 14 of the Constitution. Provisions of Section 14(1) of the Slum Act do provide for an opportunity of hearing to be given to the owner/mortgagee of the land before notification for acquisition is issued under Section 14(1).
Contention II(b)-No requirement of passing a reasoned order
40. It is contended by learned counsel for the petitioners that there is no provision for passing a reasoned order by the Government.
41. Dr. Tulzapurkar for the petitioners has placed heavy reliance on the following observations of the Supreme Court in Union of India vs. Mohan Lal Capoor : (1973) 2 SCC 836 (para 28):
28. ..... Reasons are the links 'between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject matter for a decision whether it is purely administrative or quasi-judicial. They should reveal a rational nexus between the facts considered and the conclusions reached. Only in this way can opinions or decisions recorded be shown to be manifestly just and reasonable.
42. In the above case, the Court was considering the provisions of Regulation 5(5) of the Indian Administrative Service (Appointment by Promotion) Regulation, 1955 imposing mandatory duty upon the selection committee in the following terms:
If in the process of selection, review or revision it is proposed to supersede any member of the State Civil Police Service the Committee shall record its reasons for the proposed supersession.
The Court held that mandatory provisions of Regulation 5(5) were not complied with by the selection committee because stating in each case that the record of the officer concerned was not such as to justify his appointment "at this stage in preference to those selected" was a confusion and not as reason in support of the decision to supersede him. True, that it is not expected that the selection committee should give anything approaching the judgment of a Court, but it must at least state, as briefly as it may, why it came to the conclusion that the officer concerned was found to be not suitable for inclusion in the select list.
43. Reliance was also placed on Asst. Commissioner vs. Shukla & Bros: (2010) 4 SCC 785, in support of the contention that recording of reasons in dispensation of justice is a must. There cannot be any dispute with regard to this proposition. However, unreasoned order may have to be tested on the merits of the matter by the Court and/or the Appellate Court. Therefore, mere absence of a provision to give reason by itself cannot be the justification to declare validly enacted provision as unconstitutional.
44. Dr. Tulzapurkar also relied upon a decision in Ravi Yashwant Bhoir vs. District Collector, Raigad : (2012) 4 SCC 407 (paras 42 to 46). Again, the Court reiterated the above principles and reiterated the following observations in Krishna Swami vs. Union of India : (1992) 4 SCC 605 (para 47):
47. Reasons are the links between the material, the foundation for their erection and the actual conclusions. They would also demonstrate how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusions reached. Lest it would be arbitrary, unfair and unjust, violating Article 14 or unfair procedure offending Article 21.
The Court also quoted from the decision in Sant Lal Gupta v. Modern Coop. Group Housing Society Ltd : (2010) 13 SCC 336:
The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected.
The Court in terms held that emphasis on recording reasons is that if the decision reveals the 'inscrutable face of the sphinx', it can by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Hence, spelling out reasons for the orders is considered as one of the solitary requirements of natural justice.
45. We are of the view that since the reasons for acquisition of the land are already indicated in the show cause notice and the impugned notification also refers to the purpose of acquisition of land, the notification is not required to contain detailed reasons for acquisition, unlike a judicial order.
46. We also find considerable substance in the following submissions made by the learned counsel for the respondents:-
(i) There is a clear distinction between (a) existence of the reasons which support an administrative action (b) recording of the reasons in the order itself (c) communication of the reasons to the petitioner and (d) sufficiency of reasons to arrive at the decision. The petitioner is mixing these four concepts.
In many cases if the highest Authority of the State Government after careful perusal of the representation submitted by the Competent Authority, the land owner's objections and the District Collector's Report, takes the decision for acquisition, then the reasons in support of the decision can be located in acceptance of the report, and the contemporary correspondence etc. It may not be necessary in such circumstances to actually record the reasons or to communicate the recording of the reasons to the petitioner.
(ii) Whether a notification for acquisition impugned in a particular case is supported by valid reasons cannot be a ground for challenging the constitutional validity of the legislative provisions conferring such power of acquisition.
Contention II(c)-Absence of provision for appeal
47. The third plank of the petitioner's attack to the constitutional validity of Section 14 is that there is no provision for appeal against notification for acquisition.
48. We do not find any substance in the above contention. A legislative provision conferring power of acquisition cannot be considered as constitutionally invalid or arbitrary merely because there is no provision for appeal. Absence of an Appeal provision in the section would not render it constitutionality invalid. The Supreme Court in A.P. v/s N. Ramanaiah : (2009) 7 SCC 165 (para 33) has restated the well settled legal proposition that no appeal lies to a higher authority as a matter of right unless provided for by law. In Sarwan Singh v/s State of Punjab : (1975) 1 SCC 284 (para 7), while dealing with a case involving land acquisition, the Supreme Court held that denial of the right of appeal available in the case of acquisition did not make that particular section ultra vires Article 14 of the Constitution. Further, the Supreme Court has held that the right of appeal was a creature of statute and mere denial or even taking away of such a right under the law could not be considered an infringement of a person's fundamental right.
Contention II(d)-Cumulative effect of three grounds of challenge
49. Learned counsel for the petitioners have submitted that even if each of the above three planks of attack fails individually, the cumulative effect of the three grounds of challenge to the constitutional validity of Section 14 and absence of any control over the action of the executive has the effect of rendering provisions of Section 14 arbitrary and thus violative of Article 14 of Constitution of India. There is no control at all over the action of the Government which results in divesting the citizen of his rights. It is submitted that there are other provisions like Section 4, Section 12 and Section 13 of the Slum Act where reasonable opportunity is given or appeal is provided for. Where appeal is provided to the Tribunal the entire material relied upon by the authorities comes before the quasi judicial Tribunal and hence there is a check and balance on the powers exercised by the authorities under these Sections. As against this, it is submitted that Section 14 is bereft of the safeguards as a result of which the executive enjoys unfettered power.
It is submitted that the aforesaid safeguards are facets of the rule of law which is enshrined in Article 14 of Constitution of India.
50. We are not impressed by the submissions made by the learned counsel for petitioners. It is well-settled that there is always a presumption in favour of constitutionality of a statute and the burden is upon him who attacks the statute to show that there has been a clear violation of the constitutional principles. In Government of A.P. v/s. P. Laxmi Devi [(2008) 4 SCC 720 at paragraph 68] the Supreme Court held that "The court must, therefore, make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all the efforts to do so fail should the court declare a statute to be unconstitutional".
Further, the Government is presumed to act bona fide and merely because a discretionary power exists does not mean that it will be exercised discriminatorily. As was held by the Supreme Court in V.C. Shukla v/s State (Delhi Administration) : (1980) Supp SCC 249 (para 41), "It is well settled that discretionary power is not the same thing as power to discriminate nor can the constitutional validity of a law be tested on the assumption that where a discretionary power is conferred on a high authority, the same may or would be exercised in a discriminatory manner."
51. In Jyoti Pershad v/s Union Territory of Delhi [AIR 1961 SC 1602 at paragraph 13] the Supreme Court while upholding the constitutional validity of Section 19 of the Slum Areas (Improvement and Clearance) Act 1956 held that guidance may be "obtained from or afforded by the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well-known facts of which the court might take judicial notice".
52. Section 14 of the Act is in consonance with the Act's Preamble, Long title and Statement of Objects and Reasons and does not confer any naked or unguided power on the executive. The Preamble of the Act states that it is an "An act to make better provision for the improvement and clearance of slum areas in the State and their redevelopment and for the protection of occupiers from eviction and distress warrants."
The Act's Long Title viz. The Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971 also emphasizes redevelopment.
The Act's Statement of Objects and Reasons states that the purpose of the Act is "to make better provisions for the clearance of slum areas in the whole of the State and their re-development". Clause 3 of the Statement of Objects and Reasons states that the Act is based on the Central Slum Act viz. the Slum Areas (Improvement and Clearance) Act, 1956. The impugned Section 14 of the Act is in pari materia with Section 12 of the Central Act, which is already quoted in para 15 hereinabove.
53. In view of the above discussion, we have no hesitation in rejecting the petitioners' challenge to the constitutional validity of Section 14 of the Slum Act.
Contention III-Is section 17 of the Slum Act unconstitutional
54. Section 17 of the Slum Act reads as under:-
17. (1) Where any land is acquired and vested in the State Government under this Chapter, the State Government shall pay for such acquisition compensation, the amount of which shall be determined in accordance with the provisions of this section.
(2) Where the amount of compensation has been determined by agreement between the State Government or as the case may be, the Collector and the person to be compensated, it shall be determined in accordance with such agreement,
(3) Where no such agreement can be reached, the amount payable as compensation in respect of any land acquired shall be an amount equal to sixty times the net average monthly income actually derived from such land during the period of the five consecutive years immediately preceding the date of publication of the notice referred to in section 14,
(4) The net average monthly income referred to in subsection (3) shall be calculated in the manner and in accordance with the principles set out in the First Schedule;
(5) The Competent Authority shall, after holding an inquiry in the prescribed manner, determine in accordance with the provisions of sub-section (4) the net average monthly income actually derived from the land, and publish a notice in a conspicuous place on the land and serve it in the manner provided in section 36 and calling upon the owner of the land and every person interested therein, to intimate to it, before a date specified in the notice, whether such owner or person agrees to the amount so determined and if he does not so agree, what amount he claims to be the net average monthly income actually derived from the land;
(6) Any person who does not agree to the amount of the net average monthly income determined by the Competent Authority under sub-section (5), and claims a sum in excess of that amount may prefer an appeal to the Tribunal within thirty days from the date specified in the notice referred to in that sub-section.
(7) On appeal, the Tribunal shall, after hearing the appellant, determine the net average monthly income and its determination shall be final and shall not be questioned in any court of law;
(8) Where there is any building on the land in respect of which the net average monthly income has been determined, no separate compensation shall be paid in respect of such building:
Provided that, where the owner of the land and the owner of the building on such land are different, the Competent Authority shall apportion the amount of compensation between the owner of the land and the owner of the building in the same proportion as the market price of the land bears to the market price of the building on the date of the acquisition.
55. The First Schedule to the Act reads as under:
Principles for determination of the net average monthly income.
1. The Competent Authority shall first determine the gross rent actually derived by the owner of the land acquired including any building on such land during the period of five consecutive years referred to in sub-section (4) of section 17.
2. For such determination the Competent Authority 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 subsection (4) of section 17 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 Competent Authority 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 buildings, 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 said period of five years, the gross rent shall be taken to be the income which the owner would in fact have derived if the land had been leased out for rent during the said period, and for this purpose the rent actually derived from the land during a period prior or subsequent to the period during which it remained vacant or from similar land in the vicinity shall be taken into account.
56. Dr. Tulzapurkar, learned Senior counsel for petitioners raised following contentions in support of the challenge to the constitutional validity of Section 17 of the Slum Act:-
(i) It is submitted that the Slum Act confers powers on the Government to acquire property and provides for payment of compensation in Section 17. The compensation fixed therein is illusory and virtually no compensation at all. It is not the petitioner's contention that the compensation has to be equal to the market value of the property which is acquired, but it is certainly the submission of the petitioner that the compensation has to have some relation to the market value of the property that is acquired. Section 17 was enacted in the year 1971. The value of the property has gone up so much over the years that the quantum fixed in Section 17 renders the compensation illusory.
(ii) It is submitted that the Government is acquiring the property and for acquiring the property the owner of the property is required to be compensated. Such compensation must be reasonable having regard to the market value of the property. The quantum of compensation fixed in sub section (3) of Section 17 is the amount equal to 60 times the net average monthly income actually derived during the period of 5 consecutive years immediately preceding the date of publication of notice. The said quantum in the present context is totally illusory. In this connection, reliance is placed on the decisions in Rajiv Sarin Vs. State of Uttarkhand : (2011) 8 SCC 708 (para 78) and Malpe Vishwanath Acharya Vs. State of Maharashtra : AIR 1998 SC 602.
57. Dr. Tulzapurkar has vehemently submitted that compensation awarded to the land owner is absolutely illusory because the market value of the same lands shown in ready reckoner is more than 100 times higher than the rate at which compensation has been awarded to the land owners.
It is further submitted that after the lands are acquired by the Government under Sections 14 and 17, lands have been allotted by the Government to co-operative societies of slum dwellers and developers for the purpose of rehabilitation scheme or redevelopment scheme and the developer gets FSI of 2.5 as distinguished from the normal FSI of 1 or 1.3. Hence, for granting such FSI the Government also gets substantial amount of premium from the developer. Hence, compensation amounts determined without taking into account the market value reflected in the ready reckoner and without taking into consideration such benefits made available to a private developer must be treated as illusory and without taking into account the relevant principles.
58. Mr. E.P. Bharucha, Senior counsel appearing for State Government has made the following submissions in relation to constitutional validity of Section 17 of the Slum Act:-
(i) The land acquisition is for housing slum dwellers who live in squalid conditions and is, therefore, a public purpose. Payment of market value of the land to the owners who have allowed the land to become a slum would defeat the very purpose of the said Act. At the same time, Section 17 of the Act does not provide for "illusory" compensation as submitted by the Petitioners.
(ii) Section 17(3) of the Act provides for payment of compensation to the owner of the land at sixty times the net average monthly income derived from the land over the five consecutive years immediately preceding the date of publication of notice referred to in section 14. Section 17(4) provides that the net average monthly income referred to in sub-section (3) shall be calculated in the manner and in accordance with the principles set out in the First Schedule to the Act. This amount is not illusory as the Schedule takes into account even situations where a land owner has not earned income from the slum and provides for the same.
59. Mr. P.K. Dhakhephalkar, learned Senior counsel appearing on behalf of SRA, Mr. Ravi Kadam, learned Senior counsel appearing for respondent no. 7 developers and Mr. A.V. Anturkar, learned counsel for the co-operative housing societies of slum dwellers, have further submitted that the petitioners cannot challenge in a Writ Petition challenging the constitutional validity of Section 17, the determination of compensation in individual cases. It is submitted that the petitioners can only challenge the principles specified by the Legislature for determination of compensation. It is also submitted that determination of compensation in individual cases cannot be challenged by comparing it with market value as specified in the Ready Reckoner prepared by the State Government for determining stamp duty payable on execution of documents for conveyance of property. Ready Reckoner is only an internal guideline for the Stamp Act authorities for fiscal purposes. Prasadnagar Co-operative Hsg. Soc. Ltd. v/s. State of Maharashtra : 2005 (2) Mh.L.J. 310 (paras 8 to 11) and Suresh V/s. Ferrani Hotels (P) Ltd : 2011 (2) Mh.L.J. 507 (para 10).
It is, therefore, submitted that the Ready Reckoner cannot be treated as reflecting the true market value for the purposes of acquisition of property. In any case, the valuation showed in the Ready Reckoner of the lands in question is only of the open land on which there is no encumbrance. Hence, the valuation in Ready Reckoner cannot be treated as valuation of land which is already encroached upon i.e. land covered by slums.
As regards the premium paid to the Government for granting additional FSI, it is submitted that it is a subsequent development. Additional FSI i.e. FSI of 2.5 as distinguished from the normal FSI of 1 or 1.3, it is a subsequent development after acquisition and, therefore, wholly irrelevant consideration for the purpose of determining value of the land. In any case, the amendment for payment of such premium to the State Government was made only in the year 2008, but in all the Writ Petitions being argued here, the acquisition and passing off the award took place much prior to the date of such amendment and, therefore, also that aspect is wholly irrelevant for the purposes of determining the value of the land.
60. The learned counsel for the respondents have also submitted that Sections 14 and 17 of the Slum Act are enacted for securing implementation of the Directive Principles of State Policy contained in Article 39(b) and (c), reads as under:
39. The State shall, in particular, direct its policy towards securing-
(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.
61. At one stage, it was also further contended that the challenges raised by the petitioners cannot be entertained in view of the provisions of Article 31C of the Constitution, which read as under:-
31C. Notwithstanding anything contained in article 13, no law giving effect to the policy of the State towards securing all or any of the principles laid down in Part IV shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14 or article 19 and no law containing a declaration that it is for giving effect to such policy shall be called in question in any court on the ground that it does not give effect to such policy:
Provided that where such law is made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent.
(underlined words struck down by Supreme Court in Keshwanand Bharti case).
62. Article 31C was for the first time inserted into the Constitution by Constitution (Twenty-fifth Amendment) Act, 1971 with effect from 20 April 1972. On the other hand, the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act was enacted in 1971 upon having received assent of the President on 3 August 1971 and published in the Official Gazette on 11 August 1971. Thus, apart from the fact that the above Act was enacted before coming into force of Article 31C, the respondents have not shown that any of the amendments to the Act were reserved for consideration of the President and that hence assent was received under Article 31C of the Constitution. In view of the above factual aspects, it is not possible to accept the argument of learned counsel for the respondents that the Slum Act of 1971 which came into force on 11 August 1971 is covered by the immunity granted by Article 3C of the Constitution which came into force from 20 April 1972.
63. We may now refer to the relevant decisions.
64. In Rajiv Sarin Vs State of Uttarakhand : (2011) 8 SCC 708, a Constitution Bench of the Supreme Court has laid down the law on the subject in the following terms:
69. With regard to claiming compensation, all modern constitutions which are invariably of democratic character provide for payment of compensation as the condition to exercise the right of expropriation. Commonwealth of Australia Act, a French Civil Code (Article 545), the 5th Amendment of the Constitution of U.S.A. and the Italian Constitution provided principles of "just terms", "just indemnity", "just compensation" as reimbursement for the property taken, have been provided for.
70...... The right to property being no more a fundamental right, a legislation enacted under the authority of law as provided in Article 300A of the Constitution is not amenable to judicial review merely for alleged violation of Part III of the Constitution.
76. The Government is empowered to acquire land by exercising its various statutory powers. Acquisition of land and thereby deprivation of property is possible and permissible in accordance with the statutory framework enacted. Acquisition is also permissible upon exercise of police power of the State. It is also possible and permissible to acquire such land by exercising the power vested under the Land Acquisition Act.
78. Article 31(2) of the Constitution has since been repealed by the Constitution (44th Amendment) Act 1978. It is to be noted that Article 300A was inserted by the Constitution (44th Amendment) Act, 1978 by practically reinserting Article 31(1) of the Constitution. Therefore, right to property is no longer a fundamental right but a right envisaged and conferred by the Constitution and that also by retaining only Article 31(1) of the Constitution and specifically deleting Article 31(2), as it stood. In view of the aforesaid position the entire concept to right to property has to be viewed with a different mindset than the mindset which was prevalent during the period when the concept of eminent domain was the embodied provision of fundamental rights. But even now as provided under Article 300A of the Constitution the State can proceed to acquire land for specified use but by enacting a law through State legislature or by Parliament and in the manner having force of law. When the State exercises the power of acquisition of a private property thereby depriving the private person of the property, provision is generally made in the statute to pay compensation to be fixed or determined according to the criteria laid down in the statute itself. It must be understood in this context that the acquisition of the property by the State in furtherance of the Directive Principles of State Policy was to distribute the material resources of the community including acquisition and taking possession of private property for public purpose. It does not require payment of market value or indemnification to the owner of the property expropriated. Payment of market value in lieu of acquired property is not a condition precedent or sine qua non for acquisition. It must be clearly understood that the acquisition and payment of amount are part of the same scheme and they cannot be separated. It is true that the adequacy of compensation cannot be questioned in a court of law, but at the same time the compensation cannot be illusory.
65. In K.T. Plantation Pvt. Ltd. v/s State of Karnataka : (2011) 9 SCC 1 (para 189) a case where for nearly 140 acres of land, the compensation payable for acquisition by the Government would be only Rs. 2 lakhs, the Supreme Court held that "requirement of public purpose, for deprivation of a person of his property under Article 300-A, is a precondition, but no compensation or nil compensation or its illusiveness has to be justified by the State on judicially justiciable standards. Measures designed to achieve greater social justice, may call for lesser compensation and such a limitation by itself will not make legislation invalid or unconstitutional or confiscatory."
66. In Oriental Gas co. Ltd. Vs. State of West Bengal: AIR 1979 SC 248, the Supreme Court has held that what is to be scrutinized by the Court in judicial review is not the amount of compensation but principles specified by the Legislature for determining compensation. The Court held as under:
... The right declared by the Constitution guarantees that compensation shall be given before a person is compulsorily expropriated of his property for a public purpose. What is fixed as compensation by statute, or by the application of principles specified for determination of compensation is guaranteed: it does not mean however that something fixed or determined by the application of specified principles which is illusory or can in no sense be regarded as compensation must be upheld by the Courts, for, to do so, would be to grant a charter of arbitrariness, and permit a device to defeat the constitutional guarantee. But compensation fixed or determined on principles specified by the Legislature cannot be permitted to be challenged on the somewhat indefinite plea that it is not a just or fair equivalent. Principles may be challenged on the ground that they are irrelevant to the determination of compensation, but not on the plea that what is awarded as a result of the application of those principles is not just or fair compensation. A challenge to a statute that the principles specified by it do not award a just equivalent will be in clear violation of the constitutional declaration that inadequacy of compensation provided is not justiciable.
67. In view of the above settled legal position, we find considerable substance in the submission made by learned counsel for the respondents that the expression "illusory", is required to be interpreted to mean that when principles of the valuation are unreasonable or unscientific then the product of implementation of such unreasonable/unscientific principles of the valuation, result in the valuation which can be described as illusory valuation. Therefore, to find out, whether the valuation is illusory or not, we cannot go on case to case basis and attempt to ascertain factually whether the amount is illusory or not. This is because, if factually the amount is illusory, the remedy by way of Appeal is always there, to get the amount corrected. Even if the Appellate Authority decides in the Appeal against the land owner, it would be open for him to file the writ petition and challenge it before the Writ Court.
68. In view of the above settled legal position, we must now turn to the petitioners' challenge to the provisions of Section 17 of the Slum Act read with the First Schedule to the said Act which lays down principles for determination of the net average monthly income.
Section 17(3) of the Slum Act provides that where no agreement is reached between the Government and the land owner, the amount payable as compensation in respect of any land acquired shall be "an amount equal to sixty 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 notice referred to in Section 14".
Section 17(4) read with the First Schedule to the Slum Act provides that for such determination, the Competent Authority 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 lands. After such gross rent actually derived by the owner of the land is ascertained, forty per cent of the gross monthly rental is to 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 collecting charges, for works of repairs and maintenance of buildings, if any, on the lands, etc.
Paragraph 5 of the First Schedule provides that where the land has been unoccupied or the owner has not received any rent for occupation of the land during the whole year or any part of the period of five years preceding the date of notice under Section 14, the gross rent shall be taken to be the income the owner would have derived if the land would have been leased out for rent during the said period. For this purpose, the rent actually derived from the land during a period prior or subsequent to the period during which it remained vacant or from similar land in the vicinity shall be taken into account.
69. However, when one considers that paragraphs 3 and 4 of the principles for determination of net average monthly income laid down in First Schedule to the Slum Act provide for further deduction of forty per cent of the gross monthly rental actually derived or derivable rent by the owner of the land, the amount of compensation would work out to thirty six times the gross average monthly income actually derived or derivable by the owner of the land i.e. only three times the amount of average gross annual income.
70. Our attention has been invited to the various decisions of the Supreme Court where the amount of compensation to be paid for acquisition was an amount equal to eight times the amount of average annual income. In Rajiv Sarin (supra) under Section 19(1)(b) of the Kumaun & Uuttarakhand Zamindari Abolit
ation and Land Reforms Act, 1960, compensation provided was eight times the amount of average annual income which would mean an amount equal to ninety six times the average monthly income from the land. In view of the above decision, though the amount of compensation equal to sixty times the net average monthly income actually derived or derivable from such land during the period of five consecutive years immediately preceding the date of publication of notice referred in Section 14 i.e. an amount equal to five times the net average annual income is less than the amount equal to eight times the average annual income upheld by the Supreme Court in Rajiv Sarin's case (supra), but in view of the other decisions referred to hereinafter, it is not possible to hold that Section 17(3) of the Slum Act may be struck down as laying down principles for illusory amount for acquiring private property. 71. In Jilubhai Nanbhai Khachar vs. State of Gujarat : 1995 Suppl. (1) SCC 596, a two Judge Bench of the Supreme Court upheld the constitutional validity of the Bombay Land Revenue Code and Land Tenure Abolition Laws (Gujrat Amendment) Act, 1971, providing for compensation "an amount equivalent to the average of the net annual income received by the occupant in respect of the mines and mineral products during the three years immediately preceding the date of vesting.". The Court relied upon the decision of the Constitution Bench in Bhim Singhji Vs Union of India : (1981) 1 SCC 166, and further held as under: 55. It would thus be clear that acquisition of the property by law laid in furtherance of the Directive Principles of State Policy was to distribute the material resources of the community including acquisition and taking possession of private property for public purpose. It does not require payment of just compensation or indemnification to the owner of the property expropriated. It is the very negation of effectuating the public purpose. Payment of market value in lieu of acquired property is not sine qua non for acquisition. Acquisition and payment of amount are part of the scheme and they cannot be dissected. However, fixation of the amount or specification of the principles and the manner in which the amount is to be determined must be relevant to the fixation of amount. The amount determined need not bear reasonable relationship. In other words, it is not illusory. The adequacy of the resultant amount cannot be questioned in a court of law. However, the validity of irrelevant principles are amenable to judicial scrutiny. 72. In Maharao Sahib Shri Bhim Singhi v/s Union of India : (1981) 1 SCC 166 (para 4), a Constitution Bench of the Supreme Court held that the maximum compensation of Rs. 2 lakhs specified in "Section 11(6) of the Urban Land (Ceiling and Regulation) Act, 1976... is valid. The amount thus payable, is not illusory and the provision is not confiscatory Rupees two lakhs is not like a farthing even if the excess land may be a fortune". The Court (in para 12) went on to "repudiate the proposition that payment of a sum of Rs. 2 lakhs, whatever the total value of the property in the market may be is so fictitious and flimsy as to be a farthing." 73. In view of the above settled legal position, we are unable to accept the petitioners' challenge to the constitutional validity of Section 17 of the Slum Act read with the First Schedule thereto, because Sections 14 and 17 of the Slum Act and the provisions of the Act are in furtherance of the goals set out in Article 39(b) and (c) of the Constitution. In U.P. State Electricity Board and another Vs Hari Shankar Jain and others : AIR 1979 SC 65, the Apex Court has made the following pertinent observations: 4A. Before examining the rival contentions, we remind ourselves that the Constitution has expressed a deep concern for the welfare of workers and has provided in Art. 42 that the State shall make provision for securing just and humane conditions of work and in Art. 43 that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure etc. These are among the "Directive Principles of State Policy." The mandate of Art. 37 of the Constitution is that while the Directive Principles of State Policy shall not be enforceable by any Court, the principles are 'nevertheless fundamental in the governance of the country' and 'it shall be the duty of the State to apply these principles in making laws'. Addressed to Courts, what the injunction means is that while Courts are not free to direct the making of legislation, Courts are bound to evolve, affirm and adopt principles of interpretation which will further and not hinder the goals set out in the Directive Principles of State Policy. This command of the Constitution must be ever present in the minds of Judges when interpreting statutes which concern themselves directly or indirectly with matters set out in the Directive Principles of State Policy. (emphasis supplied) 74. Acquisition of slum lands under the provisions of the Slum Act are not merely for the benefit of a large number of persons residing in sub-human conditions in slums but also to ensure that improvement of their living conditions will lead to improvement of the urban economy which is very much dependent upon the labour force being supplied by the occupants of hutments in the slums. As per the settled legal position, scope of judicial review in such cases is to find out whether the principles for valuation set out in the legislation are relevant to the principles for determination of value of the land and since we find that the principles are relevant, the scope of the judicial review stops here and we are not concerned with the final outcome or the actual amount of compensation arrived at by the Competent Authority. 75. However, even while declining the petitioners' prayers for striking down the provisions of Sections 14 and 17(3) and (4) of the Slum Act as unconstitutional, we are inclined to grant one more opportunity to the aggrieved land owners to challenge the fixation of compensation in individual cases by filing appeal within thirty days from the date of the judgment, if not already filed. Section 17(6) and (7) of the Maharashtra Slum Areas (Improvement, Clearance & Development) Act, 1971, provide for Appeal in the following terms: 17. (1) to (5) .... (6) Any person who does not agree to the amount of the net average monthly income determined by the Competent Authority under sub-section (5), and claims a sum in excess of that amount may prefer an appeal to the Tribunal within thirty days from the date specified in the notice referred to in that sub-section. (7) On appeal, the Tribunal shall, after hearing the appellant, determine the net average monthly income and its determination shall be final and shall not be questioned in any court of law, Resultantly, the following order: ORDER (A) The challenge to the constitutional validity of Sections 14 and 17 of the Maharashtra Slum Areas (Improvement, Clearance & Development) Act, 1971 (the Slum Act) is rejected. We hold that the provisions of Section 14 and 17 of the said Act are intra vires the provisions of the Constitution of India. (B) It is declared that before and after the amendment of Section 14(1) of the Slum Act by Maharashtra Act No. 11 of 2012, the State Government or the Competent Authority is empowered to acquire the land within a slum area and also the lands adjoining or surrounded by a slum area. (C) The petitioners/land owners/aggrieved persons will be at liberty to file appeals under section 17(6) of the Slum Act against the amounts determined by the Competent Authority under Section 17(5) thereof, within 30 days from the date of this judgment. If such appeals are filed within 30 days from today, the appeals shall be treated as filed within the period of limitation. (D) The appeals shall be heard and decided on merits and in pending appeals also, the parties will be at liberty to file additional pleadings and/or documents in support of their case for higher compensation. The Appellate Authority shall redetermine the compensation in accordance with law after giving full opportunities to the parties. (E) All the Writ Petitions be placed before the appropriate Bench for final orders and for other prayers, if any, on 11th June 2013. After the judgment is pronounced, learned counsel for the petitioners pray that the ad-interim/interim stay operating during the pendency of these petitions may be continued for some time in order to enable the parties to have further recourse in accordance with law. The prayer is opposed by learned counsel for the respondents. Since the ad-interim/interim stay has been operating for quite some time, the ad-interim/interim stay granted during pendency of these petitions shall stand extended till 3rd July 2013.