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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NOS.8708-8709          OF     2012   [Arising out of SLP (C.) NOS. 6825-6826 OF 2010]

Jayesh Dhanesh Goragandhi               .. Appellant

Versus

Municipal Corporation of  Greater Mumbai & Ors.  .. Respondents

J     U     D     G     M     E     N     T   

K.     S.     Radhakrishnan,     J.   

1. Leave granted.

2. The question that has come up for consideration before us is  

whether after framing a Town Planning Scheme and the final  

scheme brought into force, after reserving plots for public purposes,  

providing compensation under Chapter V of the Maharashtra

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Regional and Town Planning Act, 1966 (for short ‘the MRTP Act’),  

can the land owner insist that the land be acquired only by  

following the provisions of Chapter VII of the MRTP Act, especially  

under Section 126 of the MRTP Act.

Facts

3.  Vallabhadas Goragandhi was the original owner of plot No. 9  

which was renumbered as Final plot No.44 in the Town Planning  

Scheme for Borivali with few structures thereon.  After the death of  

Vallabhadas, his son Hiralal became the owner of the plot.  

Originally, that plot was under the Borivali Municipal Council in  

Thane District, Bombay.  A Town Planning Scheme was prepared  

under the Town Planning Act, 1919 for Borivali with effect from  

15.07.1919.  In the year 1941, Hiralal expired and the appellant  

herein and respondent Nos.3 to 6 are the legal heirs of Hiralal.   

4. The Bombay Town Planning Act, 1919 was replaced by the  

Bombay Town Planning Act, 1954 and the Borivali Municipal  

Council declared its intention to vary the scheme prepared earlier.  

Then Government of Bombay declared on 31.12.1956 the intention  

of the Municipal Council to vary the scheme.  With effect from

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01.07.1957, Borivali Suburban became a part of Greater Mumbai  

and Municipal Corporation of Greater Mumbai became the  

Planning Authority for that area.  On 30.11.1959 vide Resolution  

No. 1108, the Municipal Corporation declared its intention to vary  

the said scheme under the Bombay Town Planning Act, 1954.  The  

Municipal Corporation vide its notification dated 10.12.1959  

published its intention to vary the scheme.  On 21.01.1961, the  

scheme was approved and published and original plot No.9 was  

renumbered as final plot No. 44.  The Municipal Corporation on  

16.12.1961 informed the 6th respondent Ranjit Hiralal that the  

above mentioned plot was reserved for public purpose.  The  

Government of Maharashtra on 09.03.1962 sanctioned draft  

scheme (first variation) wherein the property in question was  

reserved for a public purpose.  Later, an arbitrator was appointed  

under the Town Planning Act who served notice upon Smt.  

Jayantibai whose name was mentioned as owner of the property in  

the Property Register Card.  Two of the legal heirs (who were  

plaintiffs in the suit) sent a representation to the Corporation to  

release their land from reservation.  

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5. The MRTP Act came into force with effect from 11.01.1967.  

The Corporation informed the legal heirs about the reservation of  

the property in question for public purpose.  Ranjit Harilal, the 6th  

respondent along with his brother appeared before the Arbitrator  

on 03.01.1968 and filed a detailed statement on 08.02.1968  

objecting the reservation of land for Municipal Offices.  The  

Arbitrator by its order dated 10.04.1968 rejected the objections  

raised by the owner of the property.  Later Smt. Jayantibai died on  

11.01.1971.  The Arbitrator gave the award under Section 72(3)  

(xviii) of the MRTP Act on 9.6.1973, confirming the proposal under  

draft scheme for reservation of the plot for the purpose of Municipal  

Office.  The Town Planning Scheme for Borivali (II) (1st Variation)  

(final) was then published in the Government Gazette on 9.7.1973.  

Against the award of the Arbitrator dated 9.07.1973, an appeal was  

preferred by the respondents under Section 74 of the MRTP Act  

which was dismissed by the Tribunal.  However, the rate of  

compensation was enhanced from Rs.15.60 to Rs.21.53 per sq.  

mtr.  The Government of Maharashtra later sanctioned the final  

scheme on 17.07.1976 and the same was notified on 20.07.1976.  

The Town Planning Scheme as varied came into effect from

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28.09.1976.  The Corporation later sent a notice to the owners of  

the plot calling upon them to collect the amount of compensation to  

the tune of Rs.1,17,918/- and the Ward Officer of the Corporation  

also issued notice under Section 89 of the MRTP Act calling upon  

the legal heirs to remove the structure from the property.

6. The legal heirs of Hiralal challenged the above mentioned  

notice, the award of the Arbitrator and the decision of the Tribunal  

by filing Writ Petition (C) 1084 of 1978 before High Court of  

Bombay.  Writ Petition was, however, dismissed by a learned Single  

Judge of the High Court on 14.10.1981.  Writ Appeal No. 530 of  

1981 was preferred challenging the above mentioned judgment  

which was also dismissed by the Division Bench on 03.12.1981.

7. The Corporation later issued a notice under Section 89 of the  

MRTP Act which was challenged by the legal heirs by filing a civil  

suit before the City Civil Court.  The Court rejected the plaint on  

28.3.1988 under Order VII Rule 11(d) of CPC on the ground that  

under Section 149 of the MRTP Act, the City Civil Court has no  

jurisdiction to entertain and try the suit.  The legal heirs then

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challenged the said order by filing Appeal No. 350 of 1988 before  

the High Court which was set aside and the suit was restored to the  

file to be heard and decided on merits.  The City Civil Court vide its  

order dated 16/20.02.1995 decreed the suit in favour of the legal  

heirs and liberty was granted to the Corporation to take recourse to  

the proceedings under Chapter VII of the MRTP Act, particularly  

Section 126 for the purpose of acquisition of land.   

8. The Corporation then preferred First Appeal No. 442 of 1995  

which was dismissed by the learned Single Judge of the High  

Court, against which they preferred LPA No. 17 of 2002 which was  

allowed by the High Court vide its judgment dated 06.05.2005.  

Aggrieved by the judgment of the High Court dated 06.05.2005, the  

appellant preferred SLP (C) No. 20750 of 2005.  The special leave  

petition was, however, disposed of by this Court on 24.10.2005  

stating as follows:

“It is stated by learned counsel for the petitioners that  certain points which were really germane to the subject  matter in dispute before the High Court, had not been  placed for its consideration.  It is stated that an  appropriate application shall be filed before the High  Court for permission to urge those points.  If it is done,  the High Court shall deal with the matter in its proper

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perspective and in accordance with law which we express  no opinion.

The special leave petition is, accordingly, disposed of.”

9. Appellant then filed a review petition No.10143 of 2006 with  

an application for condonation of delay.  Following are the  

propositions made in the review petition:

“(1) Proposals for Development Plan must provide, inter  alia, for:

(a) allocating the use of land for purposes such as;  residential, industrial, commercial, agricultural,  recreational.

(b) designation of land for public purposes like schools,  colleges....,markets...,Government and other buildings.... (vide section 22)

(2) Town Planning Schemes prepared for implementing  the [proposals in the final Development plan should also  make provisions for the matters specified in the  Development Plan, including reservation, acquisition, or  allotment of land required for all purposes mentioned in  Section 59(1)(b). (vide Sections 59 & 64).

(3 ) The Arbitrator appointed in accordance with Section  72 is required to define, demarcate and decide the areas  allotted to or reserved for the public purpose or purposes  of the Planning Authority, and also the final plots.

(4) All lands required, reserved or designated in a  Development Plan or town planning scheme for a public

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purpose, are deemed to be the land needed for a public  purpose within the meaning of the Land Acquisition Act,  1894 (vide Section 125) and all such lands, required or  reserved for any public purpose specified in any plan or  scheme, may be acquired at any time by the Planning  Authority or the Development Authority or any other  appropriate Authority in accordance with the provisions  contained in the Land Acquisition Act, 1894 (vide Section  126).

(5) The cost of the scheme is required to be met wholly or  in part by a contribution to be levied by the Planning  Authority on each final plot calculated in proportion to  the increment which is estimated to accrue in respect of  such plot (vide Section 99). The cost of the scheme  includes all sums payable by a Planning Authority and  all sums payable as compensation for lands reserved or  allotted for any public purpose or purpose of a Planning  Authority which is solely beneficial to the owners or  residents within the area of the scheme.

(6) Such plots of lands as are earmarked or reserved  specifically for a public purpose, but which are not solely  beneficial to the owners or residents within the area of  the scheme, would not fall within the jurisdiction of the  Arbitrator since the estimated amount of compensation  payable for such lands could not be determined by him  following the criterion laid down in Section 72 of the Act.

(7) The lands, which are specifically reserved for a public  purpose but not solely beneficial to the owners or the  residential  within the area of the scheme, would have to  be compulsorily acquired in accordance with the Land  Acquisition Act following the mandates of Sections 125  and 126. The compensation that would become payable  to the land owners for such acquisition would also not  form part of such cost of such scheme and no part of the

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compensation amount could be met form the  contribution to be levied by the Planning Authority on  each final plot.

(8) The lands specifically reserved and earmarked for a  public purpose in the scheme which is not solely  beneficial to the owners or the residents within the area  of the scheme, are not lands “required by the planning  Authority”  and hence, the provisions of Section 88(a)  have no application in respect of such lands.

(9) The decision dated 23.12.2004 of the Division Bench  of this Hon’ble Court in Zahir Jahangir Vakil v. Pune  Municipal Corporation, has no application to the  present case since the nature of the land which was the  subject matter of the scheme therein was completely  different. In that case, out of the original plot (revised  plot no 77), two plots had been carved out - Final plot  nos. 75 and 76. While the Final Plot no. 76 was allotted  to the landlord in substitution of the original plot of land,  the other final plot no. 75 was reserved for a school. The  purpose of the school is a public purpose, and was  reserved solely for the benefit of the owners and  residents within the area of the scheme and hence, the  cost of the said land became payable as compensation  derived from the contribution levied by the Planning  Authority and became part of the cost of the scheme.  

(10) In Zahir Jahangir Vakil’s case, the provisions  relating to “Finance of Schemes” contained in Section 97  and in particular clause (c) of Sub-section (1) thereof and  sections 98 and 99, among others, had not been  considered. Moreover, the interrelationship between the  provisions in Sections 125 and 126 on the one hand, and  Sections 22(b), 64(b) and 97(1)(c) read with Section 99  regarding lands reserved for specific purpose in the

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development plan and in the Town Planning Scheme,  which are not solely beneficial to the owners or residents  within the area of the scheme had not been considered.  The said decision, therefore, could not be regarded as a  precedent for the questions involved in the present  proceedings (vide Union of India v. Dhanwanti Devi,  (1996) 6 SCC 44, Para 9 and 10)”.

10. The High Court condoned the delay in filing the review petition  

and examined the propositions and rejected all vide its order dated  

16.10.2009.  Further, the High Court also expressed the following  

view:

“What is important to be noted first is that all the  grounds which have been raised by way of the  propositions of law which has been advanced, were not  part of the pleadings in the main Suit.  Since the matter  has arisen from the Suit, the said pleadings were very  much necessary so that the other side could have had an  opportunity to meet out those pleadings and led evidence  in that regard.  Viewed from any angle, we do not find  any substance in the afore-stated propositions advanced  on behalf of the petitioner.”

11. In our view, once the SLP had been disposed of on  

24.10.2005, all the findings recorded in the judgment of the High  

Court dated 6.5.2005 had attained finality.  Liberty was, however,  

granted on the request of the appellant to raise certain points

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which they could not raise earlier before the High Court.  The High  

Court was also directed to deal with those points in accordance  

with law.

12. Shri Dushyant Dave, learned senior counsel appearing for the  

appellant, took us elaborately through the MRTP Act especially  

various provisions of Chapter V of the Act dealing with the Town  

Planning Schemes.  Learned senior counsel submitted that when a  

land is clearly identified under the Development Plan or under the  

Town Planning Scheme as required for specified public purpose  

and it is so designated and declared in such a scheme, whether the  

land owner thereof is a participant in the scheme or a beneficiary of  

the scheme or not, such land could only be acquired in terms of the  

provisions contained in the Land Acquisition Act.  Learned senior  

counsel pointed out that Section 59 of the MRTP Act opens with the  

words “subject to the provisions of this Act” and that has to be read  

along with Section 126 of the Act which provides that such land  

which is required or reserved for any of the public purposes  

specified in any plan or scheme may be acquired under the Land  

Acquisition Act.  Learned senior counsel, therefore, submitted that

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any land which is required or reserved for any public purposes  

specified in any plan or scheme would be deemed to be land  

“needed for a public purpose”  within the meaning of the Land  

Acquisition Act and hence would have to be acquired in accordance  

with the provisions of the Land Acquisition Act.

13. Learned senior counsel also submitted that the High Court  

has not properly appreciated the scope and purpose of Section 88  

of the MRTP Act which has to be read in the context of Section 126  

of the MRTP Act.  The expression “vest absolutely” is used in a very  

limited sense in Section 88, which involves only adjustment of  

different values between the allottees and the other beneficiaries,  

limiting that much of lands which are required by Planning  

Authority, for its own purposes, while the rest of the lands under  

the Scheme undergoes transformation of exchanging in the rights of  

the land owners falling within the scheme.  Learned senior counsel  

also submitted that the Act does not lay down any guidelines as to  

the circumstances that would justify acquisition of the land under  

Sections 125 and 126 on the one hand and extinguishment of the  

rights of the owners in the lands in terms of Section 88 with a

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meager compensation determined by the Arbitrator.  Learned senior  

counsel also referred to the Preamble of the MRTP Act and  

submitted that the object of the Act was to make compulsory  

acquisition of land required for the public purposes in respect of  

the Town Planning Schemes.  Learned senior counsel also referred  

to various judgments of this Court in support of its contention.  

Reference was made to the judgments of this Court in Municipal  

Corporation of Greater Bombay and others v. Hindustan  

Pertoleum Corporation and another (2001) 8 SCC 143,  Shri  

Rangaswami, Textile Commissioner and Others v.  The Sagar Textile  

(P) Ltd. and Anr. (1977) 2 SCC 578, Sub-Committee on Judicial  

Accountability v. Union of India and others (1991) 4 SCC 699,  

Ram Prasad Narayan Sahi and another v. The State of Bihar  

and others (1953) 4 SCR 1129, The State of West Bengal  v.  

Mrs. Bela Banerjee and others (1954) SCR 558, P. Vajravelu  

Mudaliar v. Special Deputy Collector, Madras & Anr. (1965) 1  

SCR 614 etc.  Learned senior counsel also submitted what  

Municipal Corporation required is space for Municipal office of its  

own approximately 50,000 sq. feet which the appellant is ready and

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willing to provide while carrying out the construction of the area in  

question free of cost.  

14. Shri U.U. Lalit, learned senior counsel for the Municipal  

Corporation, took us through the provisions of the MRTP Act,  

especially Chapter V in respect of framing of the Town Planning  

Scheme and submitted that the said chapter is a full and  

comprehensive provision for the preparation of the Town Planning  

Scheme.  Learned senior counsel submitted that once the town  

planning scheme is framed in accordance with the said chapter and  

brought into force, the right, title of the original owner of the plot  

stands extinguished and the land would stand vested in the  

authority as per Section 88 of the MRTP Act.  Learned senior  

counsel also submitted that Chapter VII of the MRTP Act is not  

applicable in such a case and the question of resorting to Section  

126 does not arise, since an in-built mechanism has already been  

provided in Chapter V of the Act.  Learned senior counsel also  

submitted that the appellant has already availed all the remedies  

available in Chapter V and there is no justification for invoking  

Section 126 of the MRTP Act.  Learned senior counsel submitted

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that as per the Town Planning Scheme which came into force on  

20.09.1976 the final plot No. 44 stood reserved for municipal office  

and has already been allotted to the Municipal Corporation and  

they are in physical possession of the plot in question.  Learned  

senior counsel also submitted that SLP filed against the original  

judgment dated 6.5.2005 has already been dismissed by this Court  

and the points which attained finality cannot be reopened.   

15. Learned senior counsel also pointed out that Municipal  

Corporation has already handed over the plot to M/s Vitrag  

Construction and they have already started construction of the  

corporation office and the grounds/foundation work is already over.  

Learned senior counsel submitted that the Corporation required an  

area of about 63,161.20 sq. ft. to accommodate all the existing  

offices and, therefore, the offer made by the appellant is legally  

unacceptable.   

Maintainability     of     the     Appeal   

16. We fully endorse the view expressed by the learned senior  

counsel for the Corporation that, on dismissal of the SLP, the

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points already dealt with and decided by the High Court had  

attained finality.  This Court, while disposing of the petition on  

24.10.2005 permitted the appellants to raise those points which are  

germane to the “subject matter”  for which, suitable pleadings  

should have been made in the plaint.  The High Court in the review  

order dt. 16.10.2009 has clearly found that the grounds, which  

were raised in the review petition, were not part of the pleadings.  

In our view, that itself is sufficient to reject this appeal.   

17. We have come across several orders passed by this court  

making observations while dismissing the SLP at the admission  

stage, that too without hearing the opposite side, which may  

apparently seem to be innocuous but may generate more litigations  

and embarrassment to the respective High Courts.  If this Court  

grants liberty to any party to raise “certain points”, those points  

should be clearly formulated in the order of this Court, so that the  

High Court would be in a better position to understand the points  

left to be decided by the High Court.  Non formulation of such  

points by this Court creates confusion in the mind of the litigants  

giving room for more rounds of litigation.  Our humble view is that

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this calls for serious introspection.  Be that it may, we are inclined  

to examine the legal contentions urged before us.

18. We have already stated that the only question that arises for  

consideration is whether the landowners can take recourse to  

Section 126 of the MRTP Act, once the TP Scheme is framed and  

the final scheme has been brought into force, vesting the land in  

the Corporation and providing compensation as provided in the  

Town Planning Scheme.

19. The scope and ambit of MRTP Act came up for consideration  

before a five Judge Bench of this Court in Girnar Traders (3) v.  

State of Maharashtra and Others [(2011) 3 SCC 1] and this  

Court has taken the view that the provisions of the MRTP Act relate  

to preparation, submission and sanction of approval of different  

plans by the concerned authorities which are aimed at achieving  

the object of planned development in contradiction to haphazard  

development. An owner/person interested in the land and who  

wishes to object to the plans at the appropriate stage, a self-

contained adjudicatory machinery has been spelt out in the MRTP

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Act. Even the remedy of appeal is available under the MRTP Act  

with a complete Chapter being devoted to acquisition of land for the  

planned development. Providing adjudicatory mechanism is one of  

the most important facets of deciding whether a particular statute  

is a 'complete code' in itself or not.   

20. Various provisions of the Act comprehensively prescribe what  

and how the steps are required to be taken by the authorities under  

the Act, right from the stage of preparation of draft development  

plan to its finalization as well as preparation and finalization of all  

regional and town planning schemes.  Right of the interested  

person to raise objections, pre-finalization of the respective plans, is  

specifically provided.  Besides providing right of objection to the  

owner of the land or property, which fall within the development  

plan, the State Act also provides machinery for finalization and  

determination of disputes between the authorities and private  

parties. Furthermore, a person is entitled to raise all disputes  

including the dispute of ownership. The Arbitrator nominated  

under the MRTP Act has the jurisdiction to decide all such matters.  

The jurisdiction of the Arbitrator is a limited one like estimation

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and payment of compensation in relation to plots in distinction to  

lands as defined under the Act within the four corners of the  

provisions of Sections 72     to     74   of the MRTP Act with reference to  

Section 97 of the State Act.  

21. The MRTP Act is, therefore, a code in itself and has one  

predominant purpose, i.e., planned development.  The principal  

purpose of the MRTP Act can be achieved without the aid of the  

Land Acquisition Act which has a very limited and restricted  

application.   Whenever a land is required or reserved for any public  

purpose specified in any plan or scheme under the MRTP Act, the  

concerned authority may, with the exception of the provisions of  

Section 113A of the State Act, i.e. land designated under the Act  

connected with the development of the new town, acquire the land  

by different modes i.e. (a) by paying an amount agreed (by  

agreement); (b) in lieu of any such amount by granting the right  

specified under Section 126(1)(b); and (c) by making an application  

to the State Government for acquiring such land under the Land  

Acquisition Act. Section 126(2) lays down the procedure, primarily,  

as to how the application made under Section 126(1)(c) is to be

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23. Sections 30 and 31 provide for submission of a draft  

Development Plan and sanction to draft Development Plan  

respectively.  Those provisions are extracted hereunder for easy  

reference as it stood prior to the Amendment in 2011:  

“Section 30 - Submission of draft Development plan  

(1) The Planning Authority or as the case may be, the  said Officer shall submit the draft Development Plan to  the State Government for sanction within a period of  twelve months from the date of publication of the notice  in the Official Gazette regarding its preparation under  section 26 :

Provided that, the State Government may, on an  application by a Planning Authority or the said Officer by  an order in writing, and for adequate reasons which  should be recorded, extend from time to time the said  period by such further period as may be specified in the  order but not in any case exceeding twenty-four months  in the aggregate.

(2) The particulars referred to in sub-section (2) of  section 26 shall also be submitted to the State  Government.

Section 31 - Sanction to draft Development plan  

(1) Subject to the provisions of this section, and not later  than one year from the date of receipt of such plan from  the Planning Authority, or as the case may be, from the  said Officer, the State Government may, after consulting  the Director of Town Planning by notification in the  Official Gazette sanction the draft Development Plan  submitted to it for the whole area, or separately for any  part thereof, either without modification, or subject to

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such modifications as it may consider proper or return  the draft Development plan to the Planning Authority or  as the case may be, the said Officer for modifying the  plan as it may direct or refuse to accord sanction and  direct the Planning Authority or the said Officer to  prepare a fresh Development plan;

Provided that, the State Government may, if it  thinks fit, whether the said period has expired or not,  extend from time to time, by a notification in the Official  Gazette, the period for sanctioning the draft Development  plan or refusing to accord sanction thereto, by such  further period as may be specified in the notification :

Provided further that, where the modifications  proposed to be made by the State Government are of a  substantial nature, the State Government shall publish a  notice in the Official Gazette and also in local  newspapers inviting objections and suggestions from any  person in respect of the proposed modification within a  period of sixty days, from the date of such notice.

(2) The State Government may appoint an officer of rank  not below that of a Class I Officer and direct him to hear  any such person in respect of such objections and  suggestions and submit his report thereon to the State  Government.

(3) The State Government shall before according sanction  to the draft Development plan take into consideration  such objections and suggestions and the report of the  officer.

(4) The State Government shall fix in the notification  under sub-section (1) a date not earlier than one month  from its publication on which the final Development plan  shall come into operation.

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(5) If a Development plan contains any proposal for the  designation of any land for a purpose specified in clauses  (b) and (c) of section 22, and if such land does not vest in  the Planning Authority, the State Government shall not  include that in the Development plan, unless it is  satisfied that the Planning Authority will be able to  acquire such land by private agreement or compulsory  acquisition not later than ten years from the date on  which the Development plan comes into operation.

(6) A Development plan which has come into operation  shall be called the "final Development plan" and shall,  subject to the provisions of this Act, be binding on the  Planning Authority.”

24. The Provisions of Town Planning Scheme are covered by  

Chapter V of the MRTP Act.  Section 59 deals with preparation and  

contents of town planning scheme which reads as follows:

“Section 59 - Preparation and contents of town  planning scheme  

(1) Subject to the provisions of this Act or any other law  for the time being in force-.

(a) a Planning Authority may for the purpose of  implementing the proposals in the final Development  Plan, prepare one or more town planning schemes for the  area within its jurisdiction, or any part thereof;

(b) a town planning scheme may make provision for any  of the following matters, that is to say-

(i) any of the matters specified in section 22;

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(ii) the laying out or re-laying out of land, either vacant or  already built upon, including areas of comprehensive  development;

(iii) the suspension, as far as may be necessary for the  proper carrying out of the scheme, of any rule, by-law,  regulation, notification or order made or issued under  any law for the time being in force which the Legislature  of the State is competent to make;

(iv) such other matter not inconsistent with the object of  this Act, as may be directed by the State Government.

(2) In making provisions in a draft town planning scheme  for any of the matters referred to in clause (b) of sub- section (1), it shall be lawful for a Planning Authority  with the approval of the Director of Town Planning and  subject to the provisions of section 68 to provide for  suitable amendment of the Development plan.”

25. Section 61 of the MRTP Act deals with the making and  

publication of draft scheme by means of notice which is extracted  

hereunder for easy reference:

“Section 61 - Making and publication of draft scheme  [by means of notice]:-

(1) Not later than twelve months from the date of the  declaration, subject, however, to sub-section (3) the  Planning Authority shall, in consultation with the  Director of Town Planning, make a draft scheme for the  area in respect of which the declaration was made, and  published a notice in the Official Gazette, and in such  other manner as may be prescribed stating that the draft  scheme in respect of such area has been made. The

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notice shall state the name of the place where a copy  thereof shall be available for inspection by the public and  shall state that copies thereof or any extract therefrom  certified to be correct shall be available for sale to the  public at a reasonable price.

(2) If the Planning Authority fails to make a draft scheme  and publish a notice regarding its making within the  period specified in sub-section (1) or within the period  extended under sub-section (3), the declaration shall  lapse, unless the State Government appoints an Officer  to prepare and submit the draft scheme to the State  Government on behalf of the Planning Authority not later  than twelve months from the date of such appointment  or the extended period under sub-section (3); but any  such lapse of declaration shall not debar the Planning  Authority from making a fresh declaration any time in  respect of the same area.

(3) The State Government may, on application made by  the Planning Authority or, as the case may be, the officer,  from time to time by notification in the Official Gazette,  extend the period specified in sub-section (1) or (2) by  such period not exceeding six months as may be  specified in the notification.”

26. The power of State Government to require Planning Authority  

to make scheme is provided under Section 63 which is extracted  

hereunder:

“Section 63 - Power of State Government to require  Planning Authority to make scheme:-

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(1) Notwithstanding anything contained in this Act, the  State Government may, in respect of any Planning  Authority after making such inquiry as it deems  necessary, direct that Authority to make and submit for  its sanction, a draft scheme in respect of any land in  regard to which a town planning scheme may be made  after a notice regarding its making has been duly  published in the prescribed manner.

(2) If the Planning Authority fails to make the  declaration of intention to make a scheme within three  months from the date of direction made under sub- section (1), the State Government may by notification in  the Official Gazette, appoint an officer to make and  submit the draft scheme for the land to the State  Government after a notice regarding its making has  been duly published as aforesaid] and thereupon the  provisions of sections 60, 61 and 62 shall, as far as may  be applicable, apply to the making of such a scheme.”

27. Section 64 provides for contents of draft Scheme which are as  

follows:

“Section 64 - Contents of draft scheme:-

A draft scheme shall contain the following particulars so  far as may be necessary, that is to say,--

(a) the ownership, area and tenure of each original plot;

(b) reservation, acquisition or allotment of land required  under sub-clause (i) of clause (b) of section 59 with a  general indication of the uses to which such land is to  be put and the terms and conditions subject to which,  such land is to be put to such uses;

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(c) the extent to which it is proposed to alter the  boundaries of the original plots by reconstitution;

(d) an estimate of the total cost of the scheme and the  net cost to be borne by the Planning Authority;

(e) a full description of all the details of the scheme with  respect to such matters referred to in clause (b) of  section 59 as may be applicable;

(f) the laying out or re-laying out of land either vacant or  already built upon including areas of comprehensive  development;

(g) the filling up or reclamation of low lying swamp or  unhealthy areas or levelling up of land;

(h) any other prescribed particulars.”

28. Section 65 deals with the reconstituted plot.  The same is also  

extracted hereunder for easy reference:

“Section 65 - Reconstituted plot:-  

(1) In the draft scheme, the size and shape of every  reconstituted plot shall be determined, so far as may be,  to render it suitable for building purposes, and where a  plot is already built upon, to ensure that the buildings as  far as possible comply with the provisions of the scheme  as regards open spaces.

(2) For the purpose of sub-section (1), a draft scheme  may contain proposals--

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(a) to form a final plot by reconstitution of an original plot  by alteration of the boundaries of the original plot, if  necessary;

(b) to form a final plot from an original plot by the  transfer wholly or partly of the adjoining lands;

(c) to provide, with the consent of the owners, that two or  more original plots each of which is held in ownership in  severally or in joint ownership shall hereafter, with or  without alteration of boundaries be held in ownership in  common as a final plot;

(d) to allot a final plot to any owner dispossessed of land  in furtherance of the scheme; and

(e) to transfer the ownership of an original plot from one  person to another.”

29. Section 67 deals with the objections to draft scheme which  

reads as follows:

“Section 67 - Objections to draft scheme to be  considered:-  

If within thirty days from the date of the publication of  notice regarding the preparation of the draft scheme,  any person affected thereby communicates in writing  any objection relating to such scheme, the Planning  Authority, or the officer appointed under sub-section (2)  of section 61 or Section 63 shall consider such objection  and may, at any time before submitting the draft scheme  to the State Government as hereinafter provided, modify  such scheme as it or he thinks fit.”

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30. Section 68 deals with the power of State Government  to  

sanction draft scheme, the same is extracted for easy reference:

“Section 68 - Power of State Government to sanction  draft scheme:-  

(1) The Planning Authority or, as the case may be, the  officer aforesaid shall, not later than six months from  the date of the publication of the notice in the Official  Gazette, regarding the making of the draft scheme,  submit the same with any modifications which it or he  may have made therein together with a copy of  objections received by it or him to the State  Government, and shall at the same time apply for its  sanction.

(2) On receiving such application, after making such  inquiry as it may think fit and consulting the Director of  Town Planning, the State Government may, not later  than six months from the date of its submission,  notification in the Official Gazette, or not later than such  further time as the State Government may extend, either  sanction such draft scheme with or without  modifications and subject to such conditions as it may  think fit to impose or refuse to give sanction.

(3) If the State Government sanctions such scheme, it  shall in such notification state at what place and time  the draft scheme shall be open to the inspection of the  public and the State Government shall also state therein  that copies of the scheme or any extract therefrom  certified to be correct shall on application be available  for sale to public at a reasonable price.”

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31. Section 72 deals with the powers and duties of the Arbitrator  

which reads as follows:-

“Section 72 - Arbitrator; his powers and duties:-

(1) Within one month from the date on which the  sanction of the State Governments to the draft scheme  is published in the Official Gazette, the State  Government shall for purposes of one or more planning  schemes received by it for sanction appoint any person  possessing such qualifications as may be prescribed to  be an Arbitrator with sufficient establishment and his  duties shall be as hereinafter provided.

(2) The State Government may, if it thinks fit at any  time, remove for incompetence or misconduct or replace  for any good and sufficient reason an Arbitrator  appointed under this section and shall forthwith appoint  another person to take his place and any proceeding  pending before the Arbitrator immediately before the  date of his removal or replacement shall be continued  and disposed of by the new Arbitrator appointed in his  place.

(3) In accordance with the prescribed procedure, every  Arbitrator shall,--

(i) after notice given by him in the prescribed manner  define, demarcate and decide the areas allotted to, or  reserved, for the public purpose or purposes of the  Planning Authority, and also the final plots;

(ii) after notice given by him in the prescribed manner,  decide the person or persons to whom a final plot is to  be allotted; when such plot is to be allotted; and when  such plot is to be allotted to persons in ownership in  common, decide the shares of such person;

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(iii) estimate the value of and fix the difference between  the values of the original plots and the values of the final  plots included in the final scheme, in accordance with  the provisions contained in clause (f) of sub-section (1)  of section 97;

(iv) estimate the compensation payable for the loss of the  area of the original plot in accordance with the  provisions, contained in clause (f) of sub-section (1) of  section 97 in respect of any original plot which is wholly  acquired under the scheme;

(v) determine whether the areas allotted or reserved for  the public purpose or purposes of the Planning  Authority are beneficial wholly or partly to the owners or  residents within the area of the scheme;

(vi) estimate the proportion of the sums payable as  compensation of each plot used, allotted or reserved for  the public purpose or purposes of the Planning  Authority which is beneficial partly to the owners or  residents within the area of the scheme and partly to the  general public, which shall be included in the cost of the  scheme;

(vii) determine the proportion of contribution to be levied  on each plot used, allotted or reserved for a public  purpose or purposes of the Planning Authority which is  beneficial partly to the owners or residents within the  area of the scheme and partly to the general public;

(viii) determine the amount of exemptions, if any, from  the payment of the contribution that may be granted in  respect of plots or portions thereof exclusively used or  occupied for religious or charitable purposes at the date  on which the final scheme is drawn up under clause  (xviii) of this sub-section;

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(ix) estimate the value of final plots included in the final  scheme and the increment to accrue in respect of such  plots in accordance with the provisions of section 98;

(x) calculate the proportion in which the increment in  respect of the final plots included in the final scheme  shall be liable to contribution to the cost of the scheme  in accordance with the provisions contained in section  97;

(xi) calculate the contribution to be levied on each final  plot included in the final scheme;

(xii) determine the amount to be deducted from or added  to, as the case may be, the contribution leviable from a  person in accordance with the provisions contained in  section 100;

(xiii) provide for the total or partial transfer of any right  in an original plot to a final plot or provide for the  extinction of any right in an original plot in accordance  with the provisions contained in section 101;

(xiv) estimate the amount of compensation payable  under section 66;

(xv) where a plot is subject to a mortgage with  possession or a lease, decide the proportion of  compensation payable to or contribution payable by the  mortgagee or lessee on one hand and the mortgagor or  lessor on the other;

(xvi) estimate in reference to claims made before him,  after the notice given by him in the prescribed manner,  the compensation to be paid to the owner of any  property or right injuriously affected by the making of a  town planning scheme in accordance with the provisions  contained in section 102;

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(xvii) determine the period in which the works provided  in the scheme shall be completed by the Planning  Authority;

(xviii) draw in the prescribed form the final scheme in  accordance with the draft scheme:

Provided that--

(a) he may make variations from the draft scheme;

(b) he may with the previous sanction of the State  Government after hearing the Planning Authority and  any owners who may raise objections make substantial  variations in the draft scheme.

Explanation,--For the purpose of sub-clause (b) of this  proviso, "substantial variation" means increase in the  total cost of the draft scheme by more than 20 per cent.  or two lacs of rupees whichever is higher, on account of  the provision of new works or the reservation of  additional sites for public purposes included in the final  scheme drawn up by the Arbitrator.

(4) The Arbitrator shall decide all matters referred to in  sub-section (3) within a period of twelve months from  the date of his appointment; and in the case of an  Arbitrator appointed under the Bombay Town Planning  Act, 1915 (Bom. I of 1915) or a Town Planning Officer  appointed under the Bombay Town Planning Act, 1954  (Bom. XXVII of 1955) (whose appointment is continued  under section 165), within a period of twelve months  from the date of commencement of this Act :

Provided that, the State Government may, if it thinks fit,  whether the said period has expired or not, and whether  all the matters referred to in sub-section (3) have been  decided or not, extend from time to time by a notification  in the Official Gazette, the period for deciding all the

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matters referred to in that sub-section (3) or any  extended period therefor.”

32. Section 74 deals with the Appeal, as provided against the  

award of the Arbitrator which reads as follows:

“Section 74 – Appeal:-

(1) Any decision of the Arbitrator under clauses (iv) to  (xi), (both inclusive) and clauses (xiv), (xv) and (xvi) of  sub-section (3) of section 72 shall be forthwith  communicated to the party concerned including the  Planning Authority; and any party aggrieved by such  decision may, within two months from the date of  communication of the decision, apply to the Arbitrator to  make a reference to the Tribunal of Appeal for decision of  the appeal.

(2) The provisions of sections 5, 12 and 14 of the Indian  Limitation Act, 1963 (36 of 1963) shall apply to appeals  submitted under this section.”

33. Section 86 deals with sanction by State Government to final  

scheme which reads as follows:

“Section 86 - Sanction by State Government to final  scheme:-  

(1) The State Government may, within a period of four  months from the date of receipt of the final scheme  under section 82 from the Arbitrator or within such  further period as the State Government may extend, by

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notification in the Official Gazette, sanction the scheme  or refuse to give such sanction provided that, in  sanctioning the scheme the State Government may make  such modifications as may in its opinion be necessary,  for the purposes of correcting an error, irregularity or  informality.

(2) If the State Government sanctions such scheme, it  shall state in the notification--

(a) the place at which the final scheme is kept open to  inspection by the public and also state therein that  copies of the scheme or extracts therefrom certified to be  correct shall, on application, be available for sale to the  public at a reasonable price;

(b) a date (which shall not be earlier than one month  after the date of the publication of the notification) on  which all the liabilities created by the scheme shall take  effect and the final scheme shall come into force:

Provided that, the State Government may, from time to  time, postpone such date, by notification in the Official  Gazette, by such period, not exceeding three months at a  time as it thinks fit.

(3) On and after the date fixed in such notification, a  town planning scheme shall have effect as if it were  enacted in this Act.”

34. Section 88 deals with the effect of final scheme which reads as  

follows:

“Section 88 - Effect of final scheme:-

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On and after the day on which a final scheme comes into  force--

(a) all lands required by the Planning Authority shall,  unless it is otherwise determined in such scheme, vest  absolutely in the Planning Authority free from all  encumbrances;

(b) all rights in the original plots which have been  reconstituted shall determine and the reconstituted plots  shall become subject to the rights settled by Arbitrator;

(c) the Planning Authority shall handover possession of  the final plots to the owners to whom they are allotted in  the final scheme.”

35.  The Town Planning Scheme envisaged under the MRTP Act is,  

therefore, a code by itself and the provisions relating to  

compensation are inbuilt in the scheme itself.  Provisions of Town  

Planning scheme provide for computation of compensation by the  

Arbitrator and if a party is aggrieved by the determination of  

compensation by the arbitrator, a party has a right of appeal before  

the Tribunal under the provisions of the MRTP Act.  On the final  

scheme being sanctioned by the State Government under Section  

88(a), the property vests free of all encumbrances in the State  

Government and all rights of the original holders in the original plot  

of land stand extinguished, the rights of the parties are those

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governed by the provisions of the said scheme and cannot be dealt  

with outside the scheme.

36. We have already noticed that, after coming into force the  

MRTP Act, the Corporation had informed the legal heirs about the  

reservation of the property in question for public purpose.  Legal  

heirs then appeared before the Arbitrator and objections were filed  

before the Arbitrator objecting the reservation of property in  

question for municipal office.  The Arbitrator rejected the objections  

raised by the legal heirs and passed an award on 09.06.1973 in  

conformity with the draft scheme under Section 72(3)(xviii) of the  

MRTP Act.  The Arbitrator has also awarded the compensation and,  

aggrieved by the same, we have already indicated, legal heirs  

preferred an appeal under Section 74 of the MRTP Act which was  

dismissed by the Tribunal.  However, the rate of compensation was  

enhanced from Rs.15.60 to Rs.21.53 per sq. mtr.  Following all  

those statutory provisions, the Government of Maharashtra finally  

accorded sanction for the scheme in exercise of powers conferred  

under Section 86 of the MRTP Act.  The effect and consequence of  

the final scheme has been provided under Section 88 of the MRTP

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Act.   Therefore, once the final Town Planning Scheme has been in  

force and vesting of the land on the Town Planning authority takes  

place as provided under Section 88(a) of the Act.

37. We find that all the above-mentioned procedures have already  

been followed in the instant case resulting in vesting of the plot in  

question in the Planning Authority under Section 88(a) of the MRTP  

Act and the amount of compensation was also paid.  The appellant  

contends that in spite of the fact that the plot stood vested in the  

Government or Town Planning Authority under Section 88(a) of the  

MRTP Act, even then the procedure prescribed under Chapter VII  

will have to be followed including Section 126 of the MRTP Act.

38. Appellant submits that even though there can be a provision  

of reservation and/or compensation under the Town Planning  

Scheme of any portion of the land vested on the Town Planning  

Authority, for the purposes of determining compensation, the State  

Government has to follow the procedure prescribed under Section  

126(2) of the Act and proper compensation be paid under  

provisions of the Land Acquisition Act.  It was further submitted

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that the vesting provided under Section 88(a) on final scheme being  

sanctioned by State Government, would be subject to computation  

of compensation as contemplated under Sections 126(2) and (3) of  

the Act.  Even though, in the earlier part of the judgment, we have  

referred to Sections 125 and 126, it would be appropriate to extract  

both the sections in its entirety to appreciate the contentions raised  

by the appellant.

Section 125 - Compulsory acquisition of land, needed  for purposes of Regional plan, Development plan or  Town planning schemes, etc.:-

Any land required, reserved or designated in a Regional  plan, Development plan or Town Planning Scheme for a  public purpose or purposes including plans for any area  of comprehensive development or for any new town shall  be deemed to be land needed for a public purpose within  the meaning of the Land Acquisition Act, 1894 (I of  1894).

Section 126 - Acquisition of land required for public  purposes specified in plans:-

(1) Where after the publication of a draft Regional Plan, a  Development or any other plan or Town Planning  Scheme, any land is required or reserved for any of the  public purposes specified in any plan or scheme under  this Act at any time the planning Authority, Development  Authority, or as the case may be, any Appropriate  Authority may, expect as otherwise provided in section  113A acquire the land,--

(a) by agreement by paying an amount agreed to, or

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(b) in lieu of any such amount, by granting the land- owner or the lessee, subject, however, to the lessee  paying the lessor or depositing with the Planning  Authority, Development Authority or Appropriate  Authority, as the case may be, for payment to the lessor,  an amount equivalent to the value of the lessor's interest  to be determined by any of the said Authorities  concerned on the basis of the principles laid down in the  Land Acquisition Act, 1894 (I of 1894), Floor Space Index  (FSI) or Transferable Development Rights (TDR) against  the area of land surrendered free of cost and free from all  encumbrances, and also further additional Floor Space  Index or Transferable Development Rights against the  development or construction of the amenity on the  surrendered land at his cost, as the Final Development  Control Regulations prepared in this behalf provide, or

(c) by making an application to the State Government for  acquiring such land under the Land Acquisition Act,  1894 (I of 1894), and the land (together with the amenity,  if any so developed or constructed) so acquired by  agreement or by grant of Floor Space Index or additional  Floor Space Index or Transferable Development Rights  under this section or under the Land Acquisition Act,  1894 (I of 1890), as the case may be, shall vest  absolutely free from all encumbrances in the Planning  Authority, Development Authority, or as the case may be,  any Appropriate Authority.

(2) On receipt of such application, if the State  Government is satisfied that the land specified in the  application is needed for the public purpose therein  specified, or if the State Government (except in cases  falling under section 49 and except as provided in  section 113A) itself is of opinion) that any land included  in any such plan is needed for any public purpose, it  may make a declaration to that effect in the Official  Gazette, in the manner provided in section 6 of the Land  Acquisition Act, 1894 (I of 1894), in respect of the said  land. The declaration so published shall,

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notwithstanding anything contained in the said Act, be  deemed to be a declaration duly made under the said  section:

Provided that, subject to the provisions of sub-section  (4), no such declaration shall be made after the expiry of  one year from the date of publication of the draft  Regional Plan, Development Plan or any other Plan, or  Scheme, as the case may be.

(3) On publication of a declaration under the said section  6, the collector shall proceed to take order for the  acquisition of the land under the said Act; and the  provisions of that Act shall apply to the acquisition of the  said land with the modification that the market value of  the land shall be,-

(i) where the land is to be acquired for the purposes of a  new town, the market value prevailing on the date of  publication of the notification constituting or declaring  the Development Authority for such town;

(ii) where the land is acquired for the purposes of a  Special Planning Authority the market value prevailing  on the date of publication of the notification of the area  as undeveloped area; and

(iii) in any other case the market value on the date of  publication of the interim development plan, the draft  development plan or the plan for the area or areas for  comprehensive development, whichever is earlier, or as  the case may be, the date or publication of the draft  Town Planning Scheme:

Provided that, nothing in this sub-section shall affect the  date for the purpose of determining the market value of  land in respect of which proceedings for acquisition  commenced before the commencement of the

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Maharashtra Regional and Town Planning (Second  Amendment) Act, 1972 (Mah. XI of 1973):

Provided further that, for the purpose of clause (ii) of this  sub-section, the market value in respect of land included  in any undeveloped area notified under sub-section (1) of  section 40 prior to the commencement of the  Maharashtra Regional and Town Planning (Second  Amendment) Act, 1972 (Mah. XI of 1973), shall be the  market value prevailing on the date of such  commencement.

(4) Notwithstanding anything contained in the proviso to  sub-section (2) and sub-section (3), if a declaration, is  not made, within the period referred to in sub-section (2)  (or having been made, the aforesaid period expired on  the commencement of the Maharashtra Regional and  Town Planning (Amendment) Act, 1993 (Mah. X of  1994))], the State Government may make a fresh  declaration for acquiring the land under the Land  Acquisition Act, 1894 (I of 1894), in the manner provided  by sub-sections (2) and (3) of this section, subject to the  modification that the market value of the land shall be  the market value at the date of declaration in the Official  Gazette, made for acquiring the land afresh.

39. This Court had occasion to consider the scope of provisions of  

the Bombay Town Planning Act in State of Gujarat v. Shantilal  

Mangaldas and Others AIR 1969 SC 634.  Though there was no  

provision similar to Section 126 prescribing for payment of  

compensation following the Land Acquisition Act in the Bombay  

Town Planning Act, Section 53 of the Bombay Town Planning Act is

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in pari materia with Section 88 of the MRTP Act.  In that case,  

placing reliance on judgment of this Court in P. Vajravelu  

Mudaliar v. Special Deputy Collector, Madras and Another  

[(1965) 1 SCR 614], it was contended that Section 53 (similar to  

Section 88 of the MRTP Act) and Section 67, in any event, infringed  

Article 14 of the Constitution of India and were on that account  

void.  Repealing the contention, the court in Shantilal Mangaldas  

held as follows:

“There is no option under that Act to acquire the land  either under the Land Acquisition Act or under the Town  Planning Act.  Once the draft town planning scheme is  sanctioned, the land becomes subject to the provisions of  the Town Planning Act, and on the final town planning  scheme being sanctioned by statutory operation the title  of the various owners is readjusted and the lands needed  for a public purpose vest in the local authority.  Land  required for any of the purposes of a town planning  scheme cannot be acquired otherwise than under the  Act, for it is a settled rule of interpretation of statutes  that when power is given under a statute to do a certain  thing in a certain way, the thing must be done in that  way or not.  Taylor Vs. Taylor, (1875) 1 ChD 426.  Again  it cannot be said that because it is possible for the State,  if so, minded, to acquire lands for a public purpose of a  local authority, the statutory effect given to a town  planning scheme results in discrimination between  persons similarly circumstanced.  In P. Vajravelu  Mudaliar’s case (1965) 1 SCR 614, the Court struck  down the acquisition on the ground that when the lands  are acquired by the State Government for a housing  scheme under the Madras Amending Act, the claimant  gets much smaller compensation than the compensation

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he would get if the land or similar lands were acquired  for the same public purpose under the Land Acquisition  Act, 1894.  It was held that the discrimination between  persons whose lands were acquired for housing schemes  and those whose lands were acquired for other public  purposes could not be sustained on any principle of  reasonable classification founded on intelligible  differentia which a rational relation to the object sought  to be achieved.  One broad ground of distinction between  P. Vajravelu Mudaliar’s case (1965) 1 SCR 614 and this  case is clear, the acquisition was struck down in P.  Vajravelu Mudaliar’s case (1965) 1 SCR 614 because the  State Government could resort to one of the two methods  of acquisition the Land Acquisition Act, 1894 and the  Land Acquisition (Madras Amendment) Act, 1961 and no  guidance was given by the Legislature about the statute  which should be resorted to in a given case of acquisition  for a housing scheme.  Power to choose could, therefore,  be exercised arbitrarily.  Under the Bombay Town  Planning Act, 1955, there is no acquisition by the State  Government of land needed for a town planning scheme.  When the Town Planning Scheme comes into operation  the land needed by a local authority vests by virtue of  S.53(a) and that vesting for purposes of the guarantee  under Article 31(2) is deemed compulsory acquisition for  a public purpose.  To lands which are subject to the  scheme, the provisions of Sections 53 and 67 apply, and  the compensation is determined only in the manner  prescribed by the Act.  There are therefore two separate  provisions, one for acquisition by the State Government,  and the other in which the statutory vesting of land  operates as acquisition for the purpose of town planning  by the local authority.  The State Government can  acquire the land under the Land Acquisition Act, and the  local authority only under the Bombay Town Planning  Act.  There is no option to the local authority to resort to  one or the other of the alternative methods which result  in requisition.  The contention that the provisions of  Sections 53 and 67 are invalid on the ground that they

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deny the equal protection of the laws or equality before  the laws must, therefore, stand rejected.”

40. It was also urged in that case that ‘vesting’ under Section 53  

(section 88 of the present Act) is not a valid vesting because the  

Government cannot expropriate property of a citizen without  

providing compensation in respect thereof.  The Court held as  

follows:

“26. The principal argument which found favour with the  High Court in holding Section 53 ultra vires, is that when  a plot is reconstituted and out of that plot a smaller area  is given to the owner and the remaining is utilized vests  in the local authority for a public purpose, and since the  Act does not provide for giving compensation which is a  just equivalent of the land expropriated at the date of  extinction of interest the guaranteed right under Article  31(2) is infringed.  While adopting that reasoning,  counsel for the first respondent adopted another line of  approach also.  Counsel contended that under the  scheme of the Act the entire area of the land belonging to  the owner vests in the local authority, and when the final  scheme is framed in lieu of the ownership of the original  plot, the owner is given a reconstituted plot by the local  authority and compensation in money is determined in  respect of the land appropriated to public purposes  according to the rules contained in Secs. 67 and 71 of  the Act.  Such a scheme for compensation is, it was  urged, inconsistent with the guarantee under Article  31(2) for two reasons –  (1) that compensation for the  entire land is not provided; and (2) that payment of  compensation in money is not provided even in respect of  land appropriated to public use.  The second branch of  the argument is not sustainable for reasons already set

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out, and the first branch of the argument is wholly  without substance.  Section 53 does not provide that the  reconstituted plot is transferred or is to be deemed to be  transferred from the local authority to the owner of the  original plot.  In terms Section 53 provides for statutory  re-adjustment of the rights of the owners of the original  plots of land.  When the scheme comes into force all  rights in the original plots are extinguished and  simultaneously therewith ownership springs in the  reconstituted plots.  There is no vesting of the original  plots in the local authority nor transfer of the rights of  the local authority in the reconstituted plots.  A part or  even the whole plot belonging to an owner may go to form  a reconstituted plot which may be allotted to another  person, or may be appropriated to public purposes under  the scheme.  The source of the power to appropriate the  whole or part of the original plot in forming a  reconstituted plot is statutory.  It does not predicate  ownership of the plot in the local authority and no  process – actual or notional – of transfer is contemplated  in that appropriation.  The lands covered by the scheme  are subjected by the Act to the power of the local  authority to readjust titles, but no reconstituted plot  vests at any stage in the local authority unless it is  needed for a purpose of the authority.  Even under  clause (a) of section 53 the vesting in a local authority of  land required by it is on the coming into force of the  scheme.  The concept that lands vest in the local  authority when the intention to a make a scheme is  notified is against the plain intendment of the Act.”

41. The provisions of Bombay Town Planning Act again came up  

for consideration before this Court in Prakash Amichand Shah v.  

State of Gujarat and Others; 1986 (1) SCC 581 wherein this  

Court again examined the provisions of the Bombay Town Planning

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Act, particularly the provisions of Sections 53 and 67 to 71, which  

deal with the Scheme and consequential acquisition.  The Court  

held that the acquisition of land under the Town Planning Scheme  

by the local authority under Section 53 cannot be said to be  

discriminatory or offending the equality clause on the ground that  

the local authority has an option to acquire the land under the  

Land Acquisition Act, 1894 which is a more favourable method of  

acquisition as regards the land owner.  In Zandu Pharmaceutical  

Works Ltd. v. G.J. Desai [1969 UJ (SC) 575] the Court, while  

dealing with the provisions of the above-mentioned Act, observed as  

follows:   

“When the Town Planning Scheme comes into operation  the land needed by a local authority vests by virtue of  Section 53(a) and that vesting for purposes of the  guarantee under Art. 31(2) is deemed compulsory  acquisition for a public purpose. To lands which are  subject to the scheme, the provisions of Sections 53 and  67 apply, and the compensation is determined only in  the manner prescribed by the Act. There are therefore  two separate provisions one for the acquisition by State  Government and the other in which the statutory vesting  of land operates as acquisition for the purpose of town  planning by the local authority. The State Government  can acquire the land under the Land Acquisition Act, and  the local authority only under the Bombay Town  Planning Act. There is no option to the local authority to

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resort to one or the other of the alternative methods  which result in acquisition. Hence the provisions of  Sections 53 and 67 are not invalid on the ground that  they deny equal protection of the loss or equality before  laws.”

19. In order to appreciate the contentions of the  appellant it is necessary to look at the object of the  legislation in question as a whole. The object of the Act is  not just acquiring a bit of land here or a bit of land there  for some public purpose. It consists of several activities  which have as their ultimate object the orderly  development of an urban area. It envisages the  preparation of a development plan, allocation of land for  various private and public uses, preparation of a Town  Planning Scheme and making provisions for future  development of the area in question. The various aspects  of a Town Planning Scheme have already been set out.  On the final Town Planning Scheme coming into force  under section 53 of the Act there is an automatic vesting  of all lands required by the local authority unless  otherwise provided, in the local authority. It is not a case  where the provisions of the Land Acquisition Act,1894  have to be set in motion either by the Collector or by the  Government.”

42. In this connection, we may also refer to the judgment of this  

Court in Nagpur Improvement Trust and Another v. Vithal Rao  

and Others [AIR 1973 SC 689].  In that case this Court held that  

the Government can acquire the land for a housing accommodation  

scheme either under the Land Acquisition Act or under the

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Improvement Act.  The Court held that it enables the State  

Government to discriminate between one owner equally situated  

from another owner.   

43. The scope of various provisions in Chapter VII of the MRTP  

Act itself came up for consideration before this Court in  

Laxminarayan R. Bhattad and Others v. State of Maharashtra  

and Another [(2003) 5 SCC 413].  In that case, the petitioner  

claimed an entitlement of TDR in lieu of compensation which he  

was claiming under the provision of Section 126 of the MRTP Act.  

Rejecting the contention, this Court held as follows:

“61. The State while granting sanction could have  modified the Scheme prepared by the Arbitrator. While  doing so it was permissible for the State to make any  modification with the Arbitrator's Scheme stating that  TDR in lieu of compensation would be granted. Having  not said so it is not for the appellant to contend that the  State would be bound by its purported directives despite  statutory interdicts contained in Section 86 and 88 of the  Act.

62. In view of our findings aforementioned the third  reason assigned by the Corporation must also be upheld.  We may notice that the appellant herein has given up the  question of applicability of Rule 10(2) before the High  Court. The High Court in its impugned judgment  recorded "we may add that under Rule 10(2) of the D.C.  Rules of 1967, additional FSI in lieu of the compensation

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was provided in certain cases. There, is however, no  dispute that petitioners were not eligible for grant of  additional FSI under the said Rule 10(2) inasmuch as the  original plot belonging to the petitioners or any part  thereof did not form part of the final plots which were  allotted to them nor were the plots allotted to the  petitioners affected by the road."

63. A legal right to have an additional FSI or TDR can be  claimed only in terms of a statute or statutory  regulations and not otherwise.

64. By reason of the provisions contained in Section 88  of the Act, original plot No. 433 vested in the State  whereas the final plots Nos. 694 and 713 became the  property of the appellants. Title on the land having been  conferred under a statute, it is idle to contend that there  is no automatic vesting.

65. Reliance placed by Mr. Devarajan on State of Gujarat  (supra) is misplaced. In that case the question which  arose for consideration related to a draft Scheme  sanctioned by the Government on 17th August, 1942  under the Bombay Town Planning Act, 1915. The  Scheme which had commenced under the 1915 Act  continued under the Bombay Town Planning Act, 27 of  1955. The Respondents' land was acquired under the  Scheme where after the plot was reconstituted into two,  one each reserved for the respondent and the local  authority respectively. A compensation was awarded for  reservation of the said land in the local authority on the  basis of market value as on 18th April, 1927. The said  order having been questioned, construction of Section 53  of the Bombay Town Planning Act came up for  consideration. This Court held:

"27. The principal argument which found favour with the  High Court in holding Section 53 ultra vires is that when  a plot is reconstituted and out of that plot a smaller area  is given to the owner and the remaining area is utilised  for public purpose, the area so utilised vests in the local  authority for a pubic purpose, and since the Act does not

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provision for determination of compensation, right of appeal,  

dispute resolution mechanism etc.  On a detailed survey of the  

provisions of the MRTP Act and the related judgments interpreting  

the provisions of the Bombay Town Planning Act and the MRTP Act,  

it may be noted that the provisions of scheme contained in Chapter  

V of the Act is a self operative scheme by itself.   

45. The Town Planning Scheme, as per the Act, is meant for  

planned developments of certain local areas depending on various  

factors in order to make available utilities and facilities to the  

general public in the said area.  For the purpose of said Town  

Planning Schemes, various facilities, utilities and services are  

required to be provided for which certain lands are required.  

These Town Planning Schemes are for immediate need of the  

community and not for acquisition on deferred basis and therefore  

these sections under Chapter V provide a machinery to prepare and  

develop the area and implement such schemes in presenti.  These  

schemes are not for future projections but for making available  

resources at the immediate time.  In view of these circumstances,  

the lands required for implementation of various utilities and  

facilities, services of any public need and requirement would be for

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a public purpose and therefore the same have to be made available  

the Government immediately so as to implement the scheme.

46.  Once the town planning scheme is finally sanctioned under  

Section 86, compensation is finally determined by the Arbitrator,  

the property vests under Section 88 in the State Government, then  

there is no question of resorting to further acquisition under  

Section 126(2) of the Act.  The words “town planning scheme” used  

in Section 126(2) is in respect of the town planning scheme which  

is yet to be finalized and sanctioned under Section 86 by the State  

Government as a final scheme for inviting objections under Section  

67 of the Act.  Provisions of Section 126(2) providing for acquisition  

of land, therefore will apply only prior to the town planning scheme  

is finally sanctioned under the provision of Section 86 of the Act.   

47. We therefore hold that the provisions of Section 126 can apply  

only when the scheme is not sanctioned and the amount of  

compensation has not been determined by the Arbitrator.  

Therefore, in cases where town planning scheme is already  

sanctioned and the property vests in the State Government under

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Section 88 (a) of the Act, the question of resorting to Section 126(2)  

of the Act does not arise.   

48. We also reject the contention that under the scheme, if any  

property is acquired by the Planning Authority and if it is required  

for the beneficial use of the persons, it is only then that the  

Arbitrator can fix the compensation and pass the award.  If the  

property is taken over by the Planning Authority for the  

construction of its office and all civic amenities can be provided by  

the Planning Authority and if the office of the authority is located in  

an area where the scheme has been framed then it would be  

beneficial to the public as well.  Since, it is also for a public  

purpose covered by the scheme, the contention that the area  

earmarked for the Town Planning Authority can be acquired only by  

following Section 126 of the Act, has no basis.   

49. We find from the facts of the case that after completing the  

procedure under Chapter V, compensation was offered and paid to  

the appellant and the appeal preferred by the appellant was also  

dismissed by the Tribunal and therefore further acquisition of land

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under Section 126 does not arise.  The High Court in our view has  

correctly interpreted the provisions of the Act which calls for no  

interference.  The appeal is, therefore, dismissed without any order  

as to costs.  

……………………………………….…J (K. S. RADHAKRISHNAN)

………………………………………..J. (DIPAK MISRA)

New Delhi, December 4, 2012