1. Acquisition of land for public streets under Sections 298 and 299 of the BMC Act — Dispute over compensation determination under Section 301(1). (Para 2 )
Back
Next 
1994 Supreme(SC) 498
SUPREME COURT OF INDIA
K. RAMASWAMY AND N. VENKATACHALA, JJ.
Municipal Corporation of Greater Bombay and others, Appellants
Versus
Central Bank of India and another etc.etc., Respondents.
Civil Appeals Nos. 1278-1287 of 1977,
D/-2-5-1994.
Important Points
Compensation under Section 301(1) of the BMC Act is based on loss sustained and expenses incurred, not market value. Loss is calculated as the difference between the property's market value before acquisition and the market value of the remainder property after acquisition, accounting for any value changes.
Subject
Compensation - Land Acquisition
Act Referred
Headnote
Bombay Municipal Corporation Act, 1888 - Section 298, 299 and 301 - Determination of Compensation - Possession - Appeals lie in a narrow compass lying within area of Bombay Municipal Corporation - " BMC", are public streets envisaged under BMC Act which resolve to improve said public streets by widening them, acquired out of lands of respondents in these appeals, certain portions which fell within regular line of public streets and took their possession, as provided for in sub-section (2) of Section 298 and sub-section (1) of Section 299 of the BMC Act - Commissioner who was liable under sub-section (1) of Section 301 of BMC Act, to pay compensation to the respondents in these appeals for their acquired portions of lands, offered to pay them compensation at an uniform rate of Rs. 80/- per square yard of land. But, the respondents, who disputed adequacy of said compensation offered to be paid to them – Held, Amount of market value of the whole land of the respondent/ s in each of the appeals arrived at, as stated, minus the amount of market value of the remainder land of respective respondents arrived at, as stated, shall be treated as the loss sustained by each of them, as a consequence of acquisition of their respective portions of land. Such amount of loss, if any, shall alone be the amount, to be ordered to be paid to the concerned respondent/s, as compensation payable to him/ them under sub-section (1) of Section 301 of the BMC Act, inasmuch as there is no claim or evidence the cases as to the expenses incurred, by him/them, as a consequence of acquisation, which would have otherwise become payable as a component of compensation under that subsection. That no interest is payable on the amount of compensation to be ordered to be paid, shall, however, be noted - Appeals allowed.
Legal Category Hierarchy
Advocates:
ANAND PRASAD, D.B.MUKHERJI, D.N.Mishra, GAGRAT JANEDRA LAL, R.B.HATHIKHANAVALA, R.F.NARIMAN, U.A.RAMA, V.A.BOBDE
ANAND PRASAD, D.B.MUKHERJI, D.N.Mishra, GAGRAT JANEDRA LAL, R.B.HATHIKHANAVALA, R.F.NARIMAN, U.A.RAMA, V.A.BOBDE
Table of Contents
2. Whether compensation under Section 301(1) of the BMC Act should be based on market value or limited to loss sustained and expenses incurred. (Para 3 )
3. Section 301(1) specifies compensation for loss and expenses, excluding market value, and requires considering value changes in the remainder property. (Para 5 , 6 , 7 , 9 , 10 , 11 , 12 , 14 , 15 , 16 , 24 , 25 )
4. Compensation under Section 301(1) of the BMC Act is based on loss sustained and expenses incurred, not market value, and excludes interest. (Para 8 , 13 , 23 , 26 )
5. Appeals allowed — Lower court judgments set aside — Cases remanded for compensation recalculation based on loss sustained without interest. (Para 28 , 33 )
6. Does Section 301(1) of the BMC Act allow for compensation based on the market value of acquired land?
No. The section specifies that compensation is payable only for the loss sustained and expenses incurred by the owner as a consequence of the acquisition, explicitly excluding the market value of the land. (Para 7 , 8 , 9 , 10 , 13 )
7. What is the appropriate method for determining the amount of loss sustained under Section 301(1) of the BMC Act?
Loss is determined by subtracting the market value of the remainder property—after accounting for any increase or decrease in value due to the street improvement—from the market value of the entire property before acquisition. (Para 16 , 23 )
8. Is interest payable on compensation awarded under Section 301(1) of the BMC Act if the statute is silent on interest?
No. Since the BMC Act contains no provision for the payment of interest on such compensation, no liability for interest arises. (Para 25 , 26 )
Judgment
VENKATACHALA, J.:- These appeals by Special Leave, directed against the common judgment dated 5th, 6th and 7th August, 1974 rendered in First Appeals Nos. 386-395 of 1968 by the High Court of Judicature at Bombay, are required to be decided by us by considering and answering three important questions:
(i) Does the provision in sub-section (1) of Section 301 of the BOMBAY MUNICIPAL CORPORATION ACT , 1888 -"the BMC Act" specify a principle of determination of compensation payable to the owners of the buildings or lands acquired for a public street under Sections 298 and 299 thereof ?
(ii) Does the principle specified in subsection (1) of Section 301 of the BMC Act, for determination of compensation payable to the owners for their buildings or lands acquired under Sections 298 and 299 thereof, warrant determination of such compensation according to the market value of such acquired buildings or lands?
(iii) What method could be adopted for determining the amount of compensation payable under sub-section (1) of Section 301 of the BMC Act?
2. The salient facts which have led to the filing of the present appeals lie in a narrow compass: Gowalia Tank Road and Bhulabhai Desal Road lying within the area of the Bombay Municipal Corporation - "the BMC", are public streets envisaged under the BMC Act. In the year 1962, the BMC which resolve to improve the said public streets by widening them, acquired out of the lands of respondents in these appeals, certain portions which fell within the regular line of the public streets and took their possession, as provided for in sub-section (2) of Section 298 and sub-section (1) of Section 299 of the BMC Act. The Commissioner who was liable under sub-section (1) of Section 301 of the BMC Act, to pay compensation to the respondents in these appeals for their acquired portions of lands, offered to pay them compensation at an uniform rate of Rs. 80/- per square yard of land. But, the respondents, who disputed the adequacy of the said compensation offered to be paid to them, filed applications before the Chief Judge of the Court of Small Causes, Bombay, praying for grant of higher compensation for their acquired portions of lands, by taking recourse to the provision in Section 504 of the BMC Act. The Chief Judge, who entertained those applications, with the consent of parties, clubbed all the said applications, recorded common evidence thereon and decided them by his common judgment dated 14th March, 1968. Under that common judgment, the compensation made payable to the respondents in these appeals the owners, for their acquired portions of lands, was their market value worked out at a rate ranging from Rs. 450/- per sq. yard to Rs. 640/per sq. yard. The BMC assailed that common judgment of the learned Chief Judge, as granting excessive compensation, by filing appeals in the High Court of Judicature at Bombay. A Division Bench of the High Court, which heard those appeals, by its common judgment dated the 5th, the 6th and the 7th August, 1974, while allowed one of them partly by reducing the compensation in some measure, dismissed the rest. According to the Chief Judge of the Court of Small Causes, and the Division Bench of the High Court, what was payable by way of compensation under sub-section (1) of Section 301 of the BMC Act to the owners, for the portions of their lands acquired under either of Sec. 298 or Sec. 299 thereof, was the market value of such portions and, therefore, the market value obtainable by the owners for their respective entire lands had to be apportioned between the un-acquired portion of the land and the acquired portion of the land and it was that much of the market value apportionable to acquired land, which was liable to be paid to the owner as compensation for his acquired land. Consequently, both the Chief Judge of Court of Small Causes and the Division Bench of the High Court determine the market value of the entire land of respondent/s concerned in each appeal, of wh
