Holding

The reservation of the land lapses because the Municipal Corporation did not take a step constituting commencement of acquisition under Section 126(1)(c), and the appellants are entitled to de‑reservation and use of the land under Section 127.

Summary

The Supreme Court examined whether the Municipal Corporation of Greater Mumbai had taken the statutory "steps" required under Section 126 of the Maharashtra Regional and Town Planning (MRTP) Act to commence acquisition of land reserved for a public purpose, after the appellants served a purchase notice under Section 127. The Court held that merely passing a resolution or sending a letter requesting the State Government to acquire the land does not constitute a step, as the step must be the issuance of a declaration under Section 6 of the Land Acquisition Act. Since no such step was taken within six months of the notice, the reservation lapsed and the land was deemed de‑reserved, allowing the appellants to use it as permitted under Section 127. The Court also declined to consider the applicability of the newly inserted Section 11A (1IA) of the Land Acquisition Act, as the matter was resolved on the interpretation of Section 127. The Division Bench judgment of the Bombay High Court was set aside.

Issues considered

The meaning of "steps" under Section 127 of the MRTP Act and whether a resolution or application to the State Government satisfies it.
Whether Section 11A (1IA) of the Land Acquisition Act, 1894, as amended by Act 68 of 1984, applies to acquisitions under the MRTP Act.
Whether the reservation of land lapses when the planning authority fails to commence acquisition within six months of a purchase notice.

Legislation cited

Constitution of Indias. Article 246
Land Acquisition Act, 1894s. 11A, s. 1IA, s. 4(1), s. 54, s. 6, s. 8-28
Maharashtra Regional and Town Planning Act, 1966s. 125, s. 126, s. 127, s. 128, s. 129

Subjects

Land acquisitionMRTP ActSection 127De‑reservationStatutory interpretationIncorporation by referenceSection 11AEminent domainProcedural lapse

Judgment

MIS. GIRNAR TRADERS A
v.
STATE OF MAHARASHTRA AND ORS.

AUGUST 27, 2007

[B.N. AGRAWAL, P.K. BALASUBRAMANYAN AND B
P.P. NAOLEKAR, JJ.)

Land Acquisition Act, 1894/Maharashtra Regional and Town Planning
Act, 1966: c
Section I IA/Sections 126, 127

Interpretation and applicability of newly inserted S.11 A of the Land
Acquisition Act to the MRTP Act-Referred to larger Bench-There is no
application under clause (s) of S.126(/) moved by the officer authorized by D
the Municipal Corporation i.e. the Municipal Commissioner to the State
Government for acquisition of the land-Thus, it cannot be said that steps
as contemplated were taken for the commencement of acquisition
proceedings-Hence, appellants are entitled to deemed dereservation and
permitted to utilize the land as permissible under S.127 of the MRTP Act- E
Constitution of India, 1950, Article 246.

Interpretation of Statutes-When language of the Legislature admits of
two constructions, Court should not adopt the construction which would
lead to absurdity or obvious injustice-The construction which would be F
consistent with the smooth working of the system which the statute proposed
to be regulating should be chosen-The alternative is to be rejected which
will introduce uncertainly, friction or confusion with the working of the
system.
G
Words and Phrases:

'Steps'-Meaning of in the context of S.127 of Maharshtra Regional
and Town Planning Act, 1966.

383 H
384 SUPREME COURT REPORTS [2007] 9 S.C.R.

A C.A.No.3922 of 2007 has been filed against the dismissal of Writ
Petition by the Bombay High Court holding that Section llA of the Land
Acquisition Act as amended is not applicable to the proceedings for acquisition
initiated under the Maharashtra Regional and Town Planning Act, relying
on State of Maharashtra & Anr. v. Sant Joginder Singh Kishan Singh and
B Ors., (1995] Supp. 2 sec 475.

Civil Appeal No. 3703 of 2003 has been referred to the present 3 Judge
Bench after a 2 Judge Bench of this Court doubted the correctness of the
decisio~ rendered in Sant Joginder Singh 's case.

c On behalf of Municipal Corporation of Greater Mumbai, it was contended
that the Chief Engineer (Development Plan) sent a letter to the State of
Maharashtra enclosing therewith a copy of Resolution No. 956 dated
16.9.2002, requesting that steps be taken for acquisition of the land and this
step taken by the respondents would constitute 'steps' for the acquisition of
D the land under clause (c) of Section 126(1) of the MRTP Act, the same having
been taken on 17.9.2002 when the period of six months had not expired, the
provision of de-reservation under Section 127 would not apply.

On behalf of the appellants, it was contended that the intent and purpose
E of Section 127 of the MRTP Act is the acquisition of land within six months
or the steps are taken for acquisition of the land within six months, which
could only be when a declaration under Section 6 of the LA Act is published
in the Official Gazette; that the words "if within six months from the date of
the service of such notice, the land is not acquired or no steps as aforesaid
F are commenced for its acquisition" are not susceptible of a literal construction
and the words have to be given a meaning which safeguards a citizen against
arbitrary and irrational executive action which, in fact, may not result in
acquisition of the land for a long period to come; and that it cannot be doubted
that the period of 10 years is a long period where the land of the owner is
G kept in reservation. Section 127 gives an opportunity to the owner for de-
reservation of the land if no steps are taken for acquisition by the authorities
with in a period of six months inspite of service of notice for de-reservation
after the period of 10 years has expired.

H It was also contended for the appellants that the decision in Municipal
GIRNARTRADERSv. STATE 385
Corporation of Greater Bombay v. Dr. Hakimwadi Tenants' Association and .,A
Ors., (1988) Supp. SCC 55 squarely covers the proposition of law wherein it
has been held that the development or the planning authority must take
recourse to acquisition with some amount of promptitude in order that the
compensation paid to the expropriated owner bears a just relation to the real
value of the land; and that the period of six months provided by Section 127 B
upon the expiry of which the reservation of the land under a development plan
lapses, is a valuable safeguard to the citizens against the arbitrary and
irrational executive action. Section 127 of the Act is a fetter upon the power
of eminent domain.
c
On behalf of the State it was submitted that in para 11 of the said
judgment, it is clearly held that the steps for commencement of the acquisition
obviously refer to the steps contemplated by Section 126(1) which means the
step taken of making an application under clause (c) of Section 126(1) of the
MRTP Act and that this Court had already observed that after the service of D
notice from the owner or any person interested in the land as provided under
Section 127 of the MRTP Act, the steps taken within six months of such
-{
service, included any step taken by the appropriate authority for the acquisition
ofland as contemplated under the provisions of Section 126 (1) of the MRTP
Act It has been further contended that such observation of this Court is binding E
as precedent

Allowing Civil Appeal No.3922 of 2007 and as regards Civil Appeal
No.3703 of 2003 referring the question regarding interpretation and
applicability of Seetion l lA introduced into the Land Acquisition Act, 1894 F
by Amendment Act 68 of 1984 to the Maharashtra Regional and Town
Planning Act, 1966 for consideration by a larger Bench, the Court

HELD: (Per Naolekar, J. for himself and Agrawal, J.):

1.1. Giving a plain meaning to the words used in the statute would not G
be resorted to when there is a sense of possible injustice. In such a case, the
simple application of the words in their primary and unqualified sense is not
always sufficient and will sometimes fail to carry out the manifest intention
oflaw-giver as collected from the statute itself and the nature of subject-matter
and the mischiefs to be remedied. If the plain words lead apparently to do some H
-t'
386 SUPREME COURT REPORTS [2007) 9 S.C.R.

A injustice or absurdity and at variance with, or not required by, the scope and
object of the legislation, it would be necessary to examine further and to test,
by certain settled rules of interpretation, what was the real and true intention
of the legislature and thereafter apply the words if they are capable of being
so applied so as to give effect to that intention. Where the plain literal
B interpretation of statutory provision were to manifestly result .in injustice
never intended by the legislature, the court is entitled to modify the language
used by the legislature so as to achieve the intention of the legislature and to
produce a rational construction. (Para 21) (412-A-C]

C Municipal Coproration of Greater Bombay v. Dr. Hakimwadi Tenants'
Association & Ors., (1988] Suppl. SCC 55, referred to.

1.2. Where the legislature has used words in an Act which if generally
construed, must lead to palpable injustice and consequences revolting to the
D mind of any reasonable man, the court will always endeavour to place on such
words a reasonable limitation, on the ground that the legislature could not
have intended such consequence to ensue, unless the express language in
the Act or binding authority prevents such limitation being interpolated into
the Act. In construing an Act, a construction ought not be put that would work
E injustice, or even hardship or inconvenience, unless it is clear that such was
the intention of the legislature. It is also settled that where the language of
the legislature admits of two constructions and if construction in one way
would lead to obvious injustice, the courts act upon the view that such a result
could not have been intended, unless the intention had been manifested in
F express words. (Para 22) [412-D-F)

Collector of Customs v. Digvijaysinhji Spinning & Weaving Mills Ltd.,
(1962) 1 SCR 896 and His Holiness Kesvananda Bharati v. State of Kera/a,
AIR (1973) SC 1461, relied on.

G 1.3. The court must always lean to the interpretation which is a
reasonable one, and discard the literal interpretation which does not fit in
with the scheme of the Actunder consideration. [Para 23] [413-A)

Narashimaha Murthy v. Susheelabai, (1996) 3 SCC 644 and American
H Home Products Corporation v. Mac Laboratories Pvt. Ltd and Anr., AIR
GIRNAR TRADERSv. STATE 387

(1986) SC 137, relied on. A

State of Punjab v. Sat Ram Das, AIR (1959) Punj. 497, referred to.

1.4. Many a times, it becomes necessary to look into the true intention
of the legislature in order to give a proper effect to the statutory provisions B
and in order to achieve the actual intended goal behind the legislation.
(Para 25) (413-F)

Tirath Singh v. Bachittar Singh and Ors., AIR (1955) SC 830;
Commissioner of Income Tax, Bangalore v. J.H. Got/a, AIR (1985) SC 1698 C
and State ofRajasthan v. Leela Jain and Ors., AIR (1965) SC 1296, relied on.

Andhra Cotton Mills Ltd v. Lakshmi Ganesh Cotton Mill, (1996) l ALT
537 AP, referred to.

2.1. The question for consideration before the Court in the Municipal D
Corporation ofGreater Bombay Case has reference to first step required to
be taken by the owner after lapse of 10 years' period without any step taken
by the authority for acquisition ofland, whereby the owners of the land served
the notice for dereservation of the land. The Court was not called upon to
decide the case on the substantial step, namely, the step taken by the authority E
within six months of service of notice by the owners for dereservation of their
land which is second step required to be taken by the authority after service
of notice. The observations of this Court regarding the linking of word
'aforesaid' from the wordings 'no steps as aforesaid are commenced for its
-r· acquisition' of Section 127 with the steps taken by the competent authority F
for acquisition of land as provided under Section 126(1) of the MRTP Act,
had no direct or substantial nexus either with the factual matrix or any of the
legal issues raised before it. It is apparent that no legal issues, either with
respect to interpretation of words 'no steps as aforesaid are commenced for
its acquisition' as stipulated under the provisions of Section 127 or any link G
of these words with steps to be taken on service of notice, were contended
before the Court. Thus, observations of the Court did not relate to any of the
legal questions arising in the case and, accordingly, cannot be considered as
the part of ratio decidendi. Hence, the reliance placed on mere general
observations or casual expressions of the Court, is not of much avail to the H
388 SUPREME COURT REPORTS [2007) 9 S.C.R.

A respondents. (Para 30) (419-A-E)

Union ofIndia and Ors. v. Dhanwanti Devi and Ors., (1996) 6 SCC 44;
Director ofSettlements, A.P. and Ors. v. MR. Apparao and Anr., (2002) 4 SCC
638 and Shin-Etsu Chemical Co. ltd v. Aksh Optifibre Ltd and Anr., (2005)
B 7 sec 234, relied on.

Municipal Coproration of Greater Bombay v. Dr. Hakimwadi Tenants'
Asscciation & Ors., (1988) Suppl. SCC 55, referred to.

2.2. On a conjoint reaaing of Sections 126 and 127 of the MRTP Act, it
C is appar.ent that the legislative intent is to expeditiously a_cquire the land
reserved under the Town Planning Scheme and, therefore, various periods
have been prescribed for acquisition of the owner's property. The intent and
purpose of the provisions of Sections 126 and 127 has been well explained in
Municipal Corporation ofGreater Bombay Case. If the acquisition is left for
D a time immemorial in the hands of the concerned authority by simply making
an application to the State Government for acquiring such land under the LA
Act, 1894, then the authority will simply move such an application and if no
such notification is issued by the State Government !or one year of the
publication of the draft regional plan under Section 126(2) read with Section
E 6 of the LA Act, wait for the notification to be issued by the State Government
by exercising suo motu power under sub-section (4) of Section 126; and till
then no declaration could be made under Section 127 as regards lapsing of
reservation and contemplated declaration of land being released and available
for the land owner for his utilization as permitted under Section 127. Section
F 127 permitted inaction on the part of the acquisition authorities for a period
of 10 years for de-reservation of the land. Not only t~at, it gives a further
time for either to acquire the land or to take steps for acquisition of the land
within a period of six months from the date of service of notice by the land
owner for de-reservation. The steps towards commencement of the acquisition
G in such a situation would necessarily be the steps for acquisition and not a
step which may not result into acquisition and ~erely for the purpose of
seeking time so that Section 127 does not come into operation. Providing the
period of six months after the service of notice clearly indicates the intention
of the legislature of an urgency where nothing has been done in regard to
H the land reserved under the plan for a period of 10 years and the owner is
GIRNAR TRADERSv. STATE 389

deprived of the utilization of his land as per the user permissible under the A
plan. (Para 31) (419-F-H; 420-A-C)

Municipal Coproration of Greater Bombay v. Dr. Hakimwadi Tenants'
Association & Ors., (1988) Suppl. SCC SS, referred to.

2.3. The underlying principle envisaged in Section 127 of the MRTP
B
Act is either to utilize the land for the purpose it is reserved in the plan in a
given time or let the owner utilize the land for the purpose it is permissible
under the Town Planning Scheme. The step taken under the Section within
the time stipulated should be towards acquisition of land. It is a step of C
acquisition of land and not step for acquisition of land .. It is trite that failure
of authorities to take steps which result in actual commencement of acquisition
of land cannot be permitted to defeat the purpose and object of the scheme of
acquisition under the MRTP Act by merely moving an application requesting
the Government to acquire the land, which Government may or may not accept
Any step which may or may not culminate in the step for acquisition cannot D
be said to be a step towards acquisition. (Para 31) (420-E-G)

3.1. The MRTP Act does not contain any reference to Section 4 or
Section SA of the LA Act. The MRTP Act contains the provisions relating to
preparation of regional plan, the development plan, plans for comprehensive E
developments, town planning schemes and in such plans and in the schemes,
the land is reserved for public purpose. The reservation of land for a particular
purpose under the MRTP Act is done through a complex exercise which begins
with land use map, survey, population studies and several other complex
factors. This process replaces the provisions of Section 4 of the LA Act and F
the inquiry contemplated under Section SA of the LA Act. These provisions
are purposely excluded for the purposes of acquisition under the MRTP Act.
The acquisition commences with the publication of declaration under Section
6 of the LA Act. The publication of the declaration under sub-sections (2) and
(4) of Section 126 read with Section 6 of the LA Act is a sine qua non for the G
commencement of any proceedings for acquisition under the MRTP Act. It is
Section 6 declaration which would commence the acquisition proceedings
under the MRTP Act and would culminate into passing of an award as provided
in sub-section (3) of Section 126 of the MRTP Act. Thus, unless and until
Section 6 declaration is issued, it cannot be said that the steps for acquisition H
390 SUPREME COURT REPORTS [2007] 9 S.C.R.

A are commenced. [Para 33] (421-C-F]

3.2. If one reads Section 126 of the MRTP Act and the words used
therein are given the verbatim meaning, then the steps commenced for
acquisition of the land would not include making of an application under
B Section 126(1)(c) or the declaration which is to be made by the State
Government under sub-section (2) of Section 126 of the MRTP Act. On a
conjoint reading of sub-sections (I), (2) and (4) of Section 126, it is seen that
Section 126 provides for different steps which are to be taken by the
authorities for acquisition of the land in different eventualities and within a· -i

C particular time span. Steps taken for acquisition of the land by the authorities
under clause (c) of Section 126(1) have to be culminated into Section 6
declaration under the LA Act for acquisition of the land in the Official Guette,
within a period of one year under the proviso to sub-section (2) of Section
126. If no such declaration is made within the time prescribed, no declaration
D under Section 6 of the LA Act could be issued under the proviso to sub-section
(2) and no further steps for acquisition of the land could be taken in pursuance
of the application moved to the State Government by the planning authority or
other authority. Proviso to sub-section (2) of Section 126 prohibits publication
of the declaration after the expiry of one year from the date of publication of
E draft regional plan, development plan or any other plan or scheme. Thus, from
the date of publication of the draft regional plan, within one year an application
has to be moved under clause (c) of Section 126(1) which should culminate
into a dech.1ration under Section 6 of the LA Act. In other words, during one
year of the publication of the draft regional plan, two steps need to be
F completed, namely, (i) application by the appropriate authority to the State
Governm~nt under Section 126(1)(c); and (ii) declaration by the State ~

Government on receipt of the application mentioned in clause (c) of Section
126(1) on satisfaction of the conditions specified under Section 126(2). The
only exception to this provision has been given under Section 126(4).
(Para, 34 35] [421-G, H; 422-A-E]
G
3.3. In the present case, the amended regional plan was published in
the year 1991. Thereafter, the steps by making an application under clause
(c) of sub-section (1) of Section 126 for issuance of the declaration of
acquisition and the declaration itself has to be made within the period of one
H
GIRNAR TRADERSv. STATE 391
year from the date of the publication of regional plan, that is, within the period A
of one year from 1991. The application under Section 126{l)(c) could be sai~
to be a step taken for acquisition of the land if such application is moved withi"
the period of one year from the date of publication of regional plan. Th~
application moved after the expiry of one year could not result in the
publication of declaration in the manner provided under Section 6 of the LA B
Act, under sub-section (2) of Section 126 of the MRTP Act, there being a
prohibition under the proviso to issue such declaration after one year.
(Para 35) (422-E-G]

3.4. The High Court has committed an apparent error when it held that C
the steps taken by the respondent-Corporation on 9.9.2002 and 13.9.2002
would constitute steps as required under Section 126(l){c) of the MRTP Act.
What is required under Section 126(l)(c) is that the application is to be moved
to the State Government for acquiring the land under the LA Act by the
planning/local authority. Passing of a resolution by the Improvement D
Committee recommending that the steps be taken under Section 126(l)(c) or
making an application by the Chief Engineer without there being any authority
or resolution passed by the Municipal Corporation, could not be taken to be ·
steps taken of moving an application before the State Government for acquiring ·
the land under the LA Act. The High Court has committed an apparent error , E
in relying on these two documents for reaching the conclusion that the steps
for acquisition had been commenced by the Municipal Corporation before the
expiry of period of six months which was to expire on 18.9.2002. Further, the
letter dated 17.9.2002 shows that the resolution was passed by the Municipal
Corporation on 16.9.2002 whereby it was informed that the sanction had been p
accorded to initiate the acquisition proceedings for the land in question. The
letter also mentioned that the authorization had been given to the Municipal
Commissioner to make an application to the State Government as per the
provisions of Section 126(1) of the MRTP Act. Under Section 2(19) read with
Section 2(15) with Section 126(1) of the MRTP Act, the application to the G
State Government under clause (c) of Section 126(1) has to be made by the
planning/local authority, i.e. the Municipal Corporation of Greater Mumbai
constituted under the Bombay Municipal Corporation Act. The Municipal
Corporation had passed a resolution delegating authority to Municipal
Commissioner for making an application to the State Government, but the H
392 SUPREME COURT REPORTS [2007) 9 S.C.R.

A application/letter either dated 13.9.2002or17.9.2002 were made to the State
Government by the Chief Engineer (Development Plan). The authority was
given by the Municipal Corporation to the Municipal Commissioner to make
an application to the State Government No such application or letter moved
by the Municipal Commissioner has been produced before this Court.
B (Para 36( (433-8-H)

State of Maharashtra and Anr. v. Sant Joginder Singh Kishan Singh
and Ors., [1995) Supp. 2 SCC 475, dissented from.

C Nagpur Improvement Trust v. Vasantrao and Ors., (2002) 7 SCC 657
and UP. Avas Evam Vikas Parishad v. Jainul Islam and Anr., (1998( .2 SCC
467, referred to.

4.1. In view of the decision on the interpretation and applicability of
D Section 127 of the MRTP Act to the facts of the present case, the appellants
are entitled to the relief claimed, and the other question argued on the
applicability of the newly inserted Section 11 A of the LA Act to the acquisition
of land made under the MRTP Act need not require to be considered in this
case. [Para 37) (424-CJ

E 4.2. The impugned judgment and order dated 18.3.2005 passed by the
Division Bench of the Bombay High Court is set aside. As no steps have been
taken by the Municipal Corporation for acquisition of the land within the time
period, there is deemed de-reservation of the land in question and the
appellants are permitted to utilise the land as permissible under Section 127
F of the MRTP Act. (Para 38] (424-D-EI

Per P.K. Balasubramanyan, J.:

I.I. On an analysis of the provisions in the context of the questions that
G are before this Court, what emerges is that the publication of the ptan with
the reservation therein itself operates as a notification like the one under
Section 4(1) of the Land Acquisition Act, that a declaration has to be made
akin to a declaration under Section 6 of the Land Acquisition Act, the
compensation has to be paid not with reference to the date of the notification
H under Section 125 of the Act but with reference to the date of declaration
GIRNAR TRADERSv. STATE 393
..
_ under Section 126 of the MRTP Act and that a declaration under Section 126 A
of the Act had to be made within one year of the application for acquisition
made by the authority under the MRTP Act. But in case the declaration was
not so made, a fresh declaration has to be issued and compensation has to be
paid with reference to the date of the fresh declaration and the authority had
also the power to take prior possession in case of urgency on the conditions B
stipulated under Section 129 of the MRTP Act. The MRTP Act provides for
lapsing of reservations but does not provide for lapsing of the acquisition.
>--
The reservation lapses on the expiry of ten years and on the expiry of six
months after a purchase notice is issued by the owner of the land unless steps
are taken in the meanwhile to proceed with the acquisition. If there is no c
agreement regarding compensation and acquisition then the State
Government has to be approached "for acquiring such land under the Land
Acquisition Act, 1894." (Para 12) (431-G-H; 432-A-C)

1.2. Under the Land Acquisition Act, a notification under Section 4(1)
D
of the Act is followed by a declaration under Section 6 of the Act. The
amendment introduced by Act 68of1984 provides that no declaration under
'I'
Section 6 shall be made after the expiry of one year from the date of
publication of the notification under Section 4(1) of the Act. It further provides
that the Collector, after the declaration is made, has to take an order for
E
acquisition, mark out the land available, issue notice to persons interested in
the land to be acquired and for, passing an award containing the true area of
the land acquired, the compensation that should be allowed for the land and
the apportionment of the compensation among the claimants, if there are more
,... than one. Section l IA introduced by Act 68of1984 provides that the Collector
shall make an award within a period of two years from the date of publication
F
of the declaration and if no award is made within that period the entire
proceedings for the acquisition of the land shall stand lapsed. Thus, the Land
Acquisition Act, as amended in the year 1984 provides for two lapses of the
acquisition; one, in a case where a declaration under Section 6 is not made
within one year of the publication of the notification under Section 4(1) of the G
Act and; two, the award itself not being made within a period of two years
-{
from the publication of the declaration. (Para 13) (432-D, GI

2. It is clear that when the MRTP Act was enacted, the Land Acquisition
Act that was referred was the unamended Act of 1894. That Act did not contain H
394 SUPREME COURT REPORTS [2007] 9 S.C.R.

A either a provision for lapsing of the acquisition on the non issue of a __)._
declaration under Section 6 of the Act within one year of a notification under
Section 4(1) of the Act or by the award not being rendered within two years
of a declaration under Section 6 of the Act. These two time limits were
prescribed by Act 68of1984. Thereafter, the State Legislature amended the
B MRTP Act by substituting the proviso to sub-Section (2) of Section 126
providing that a declaration shall not be made after the expiry of one year
from the date of notification under Section 125 of the MRTP Act.
Simultaneously, sub-Section (4) was amended providing that notwithstanding --(
the fact that a declaration had not been made within one year, the Government
C could make another declaration under Section 126 of the MRTP Act in terms
of the Land Acquisition Act in the manner provided by sub-sections (2) and
(3) of Section 126 with the only consequence that the compensation payable
shall be the compensation as on the date of the fresh declaration. Significantly,
the State Legislature did not introduce any provision either for the lapse of
D an acquisition or for lapsing of the proceedings for acquisition if an award is
not made within two years of the declaration under Section 126 of the MRTP
Act read with Section 6 of the Land Acquisition Act. (Para 15) {433-B, El

Chairman ofthe Municipal Commissioners of Howrah v. Shalimar Wood
E Products & Anr., (1963) 1S.C.R.47; UP. Awas Evam· Vikas Parishadv. Jainu/
Islam & Ors:, (1998} 2 SCC 467 and Nagpur Improvement Trust v. Vasantrao
& Ors., [2002) 7 S.C.C. 657, relied on.

Secretary of State v. Hindustan Cooperative Insurance Societies Ltd.,
AIR (1931) P.C. 149; Rangoon Botatoung Company v. Collector of Rangoon,
F 39 Indian Appeals 197; Ujagar Prints & Ors. v. Union ofIndia & Ors., (1989) ~
3 S.C.C. 488; Nagpur Improvement Trust and Anr. v. Vithal Rao & Ors., (1973)
1 SCC 500; State of Kera/a & Ors. v. T.M P<Jter & Ors., (1980) 3 S.C.C. 554
and The State of Madhya Pradesh v. M. V. Narasimhan, [1975) 2 S.C.C. 377,
referred to.
G
3.1. Under our Constitution, there is a distribution oflegislative powers.
between the Parliament and the legislatures of States. Under Article 246 (1)
of the Constitution, Parliament has exclusive power to make laws with respect }-
to any of the matters enumerated in List I of the Seventh Schedule to the
H Constitution. Under Article 246 (3) of the Constitution, State has exclusive

l
GIRNAR TRADERSv. STATE 395

power to make laws for the State with respect to any of the matters enumerated. A
in List II in the Seventh Schedule to the Constitution. Of course, under Article
246(2) of the Constitution, in respect of matters enumerated in List III in the
Seventh Schedule to the Constitution, both the Parliament and the State
Legislatures have the power to make laws. The legislative fields thus are well
defined subject to some overlapping here and there. Therefore, in the context B
of the Indian Constitution and what can be called the separation of legislative
powers, the question arises as to how far it is open to adopt the theory of
legislation by reference and to adopt the consequences flowing therefrom. No
doubt, as on that day, the legislature had chosen to adopt the parliamentary
legislation. Actually, when a State Legislature incorporates the provisions of C
a parliamentary enactment as part of its own legislation, it is enacting it as
on that day as its own legislation. The effect thereof can be conceived to be a
case of the legislature re-enacting the parliamentary enactment in respect of
a subject matter which is exclusively within its legislative field.

fPara 26) 1441-F-H; 442-A-BJ D
3.2. It cannot be readily inferred that the State Legislature has made
such a surrender of its legislative powers when it adopts a parliamentary
enactment as on the date it existed, by referring to it in its enactment or by
incorporating it in its enactment. This aspect requires consideration by a E
Constitution Bench considering that it also involves an ·interpretation of the
Constitution and the Constitutional Scheme of Legislation.

fPara 26] (442-F-G)

4.1. The second of the questions, of course, relate to the interpretation F
of Section 127 of the MRTP Act. The question has to be considered in the
light of the decision in Municipal Corporation of Greater Bombay v. Dr.
Hakimwadi Tenants' Association & Ors., and the expression used in Section
127 of the Act which speaks of the land not being acquired or no steps as
stated earlier are commenced for its acquisition. Obviously, under the MRTP G
Act, in a case where it is not acquired by negotiation, the authority can only
request the State Government to acquire the lands. In the context of Sections
126 and 127, the question is whether it is not sufficient ifthe authority within
six months of receipt of the purchase notice issued by the owner, applies to a
State Government for acquiring the land as a step contemplated by Section
H
396 SUPREME COURT REPORTS [2007] 9 S.C.R.

A 127 of the MRTP Act. This is also a question which is of considerable
importance in the context of the Town Planning Acts and the lapsing of schemes
as distinct from the lapsing of acquisition. This is also an important question
which requires an authoritative pronouncement, in the context of the argument
on behalf of the appellant that the step contemplated by Section 127 of the Act
B is a step under the Land Acquisition Act and not a step under the MRTP Act

fPara 27) (442-G-H; 443-A:-C)

4.2. Under Section 126(1) of the Act the authority under the MRTP Act
can only make an application to the State Government for acquiring the
C concerned land under the Land Acquisition Act, 1894. This is clear from
Section 126(l)(c). And clause (c) applies, when the acquisition cannot be made
in terms of clauses (a) and (b) of Section 126Q). The authority under the
MRTP Act cannot be set in motion proceeding under the Land Acquisition
Act while acting under Section 126(1) of the MRTP Act. It can only request
D the State Government to acquire the land and the State Government initiates
steps to acquire it when it is satisfied that the land, the acquisition of which
is sought for, is needed for the public purpose specified in the application
made by the authority under the MRTP Act It is not as if the authority under
the MRTP Act can issue a declaration in the manner provided for under
E Section 6 of the Land Acquisition Act read with Section 126(2) of the MRTP
Act. fPara 28) [443-D-F)

4.3. When Section 127 of the Act is interpreted, it is not possible to
forget the impact of Section 126(1) of the Act. Obviously, the provisions have
to be read harmoniously. The court can only postulate the question whether
F the authority under the MRTP Act has done which it possibly could, in terms
of the statute. Therefore, while reading Section 127, one has to take note of
the fact that the authority under the MRTP Act can only make an application
for acquisition under the Land Acquisition Act and nothing more. Therefore,
when Section 127 of the MRTP Act says that "if within six months from the
G date of the service of such notice, the land is not acquired or no steps as
aforesaid are commenced for its acquisition" the reservation shall be deemed
to lapse. One has to see what the Authority under MRTP Act has done. The
first part of the provision above quoted is unambiguous and that is a case where
the land is actually acquired. Or, in other words, the acquisition is complete.
H The second limb above quoted shows that it is possible to avert the lapse of
+
GIRNAR TRADERSv. STATE 397

the scheme if steps as aforesaid are commenced for its acquisition. The step A
that the authority under the MRTP Act can commence, is the step of applying
to the State Government to acquire such land under the Land Acquisition Act.
After all, the legislature has given the authority a locus poenitentiae for.
invoking the machinery for acquisition under the Land Acquisition Act.
Therefore, when a purchase notice is received by it, in all reasonableness, B
what it can do is to make an application to the State Government to make the
acquisition within six months of the receipt of the purchase notice.

[Para 291 [443-G-H; 444-A-DJ

Municipal Coproration of Greater Bombay v. Dr. Hakimwadi Tenants' C
Association & Ors., [1988) Suppl. SCC 55, relied on.

Girnar Traders v. State of Maharashtra & Ors., (2004) 8 S.C.C. 505
and State of Maharashtra & Anr. v. Sant Joginder Singh Kishan Singh &
Ors., (1995) 2 S.C.R. 242, referred to.
D
5.1. In the instant case, the application has been made according to the
-.f
respondents by the Chief Engineer as authorised by the local authority and to
say that the letter written by him is unauthorised or is not adequate compliance
of Section 127 of the MRTP Act appears to be unwarranted especially when
one keeps in mind the laudable objects of the MRTP Act. The MRTP Act serves E
a great social purpose and the approach of the court to an interpretation must
be to see to it that the social purpose is not defeated as far as possible.
Therefore, a purposive interpretation of Section 127 of the Act so as to achieve
the object of the MRTP Act is called for.

[Para 29 and 301 (444-G-H; 445-AI
F

5.2. There has been sufficient compliance with the requirement of
Section 127 of the MRTP Act by the authority under the Act by the acquisition
initiated against the appellant in the appeal No.3922 of 2007 and the
reservation in respect of the land involved therein does not lapse by the G
operation of Section 127 of the Act. However, the said question also would
stand referred to the larger Bench. [Para 31 J 1445-B-C)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3703 of2003.
H
'
398 SUPREME COURT REPORTS [2007] 9 S.C.R.

A From the final Judgment and Order dated29.03.2000 of the High Court
of Judicature at Bombay, Bench at Aurangabad in Writ Petition No. 822 of
2000.

V.A.Mohta, Soli J.Sorabjee, U.U.Lalit, Shyam Divan, ShekharNaphade
and Bhim Rao Naik, Sanjeev Kumar Choudhary, Sanjay Visen, Nilkant Nayak,
B P.V.Yogeswaran, Ruby Singh Ahuja, Arunabh Chowdhary, Ardhendumauli
K.Prasad, Reetu Shanna, Amo! Chitle, Manu.Aggarwal, Manik Karanjawala,
Shivaji M. Jadhav, Himanshu Gupta, Brij Kishor Sah, Rahul Joshi, R.K.Adsure,
Chinmoy Khaladkar, Sushila Karanjkar, Gautam Godara, Bhargava V.Desai,
Rahul Gupta and Reema Shanna for the appearing parties.
c The Judgment of the Court was delivered by

P.P. NAOLEKAR, J. I. We have had the benefit of perusing the judgment
prepared by learned brother P.K. Balasubramanyan, J. in Civil Appeal No.3703
of2003 titled Mis. Girnar Traders v. State of Maharashtra and Ors., wherein
D learned brother has taken into consideration various decisions of this Court,
including decisions delivered by 3-Judge Benches, and various aspects
considered therein, and thought it proper to refer the question regarding
\.-
interpretation and applicability of Section 11 A introduced into the Land
Acquisition Act, 1894 (for short "the LA Act") by Amendment Act 68 of 1984
to the Maharashtra Regional and Town Planning Act, 1966 (for short "the
E MRTP Act") for consideration by a larger Bench. A 3-Judge Bench of this
Court in Nagpur Improvement Trust v. Vasantrao and Ors., [2002] 7 SCC 657
and UP. Avas Evam Vikas Parishad v. Jainul Islam and.Anr., [1998] 2 SCC
467, on interpretation of the provisions of the Acts under challenge, has held
that the LA Act was incorporated in those statutes, that is, they were cases
F of legislation by incorporation and, therefore, the amendment brought about
subsequently in the LA Act would not apply to .the statutes in question.
However, beneficial amendment of payment of compensation under the
amended provisions of the LA Act was made applicable and the owner of the
land was held to be entitled to the beneficial payment of compensation. It
appears, it was so held to save the Acts from the vice of arbitrary and hostile
G discrimination. There does not appear to be any justifiable reason for not
applying this principle so far as it relates to the acquisition of land. If the land
is not acquired within the stipulated time, then the whole proceedings in
acquisition comes to an end, and thereby the owner of the land would be
entitled to retain his land which appears to be the superior right than the
H owner's right to get the compensation for acquisition of his land. A 2-Judge
GIRNARTRADERSv.STATE[P.P.NAOLEKAR,J.] 399

Bench of this Court in State of Maharashtra and Anr. v. Sant Joginder Singh A
Kishan Singh and Ors., [1995] Supp. 2 SCC 475 has held that Section I IA
of the LA Act is a procedural provision and does not stand on the same
footing as Section 23 of the LA Act. We find it difficult to subscribe to the
view taken. Procedure is a mode in which the successive steps in litigation
are taken. Section I IA not only provides a period in which the land acquisition B
proceedings are to be completed but also provides for consequences, namely,
that if no award is made within the time stipulated, the entire proceedings for
the acquisition of the land shall lapse. Lapsing of the acquisition of the land
results in owner of the land retaining ownership right in the property and
according to us it is a substantive right accrued to the owner of the land, and
that in view thereof we feel Section I IA of the LA Act is part of the law which C
creates and defines right, not adjective law which defines method of enforcing
rights. It is a law that creates, defines and regulates the right and powers of
the party. For this and the other reasons assigned by our learned brother, we
are in agreement with him that the question involved requires consideration
by a larger Bench and, accordingly, we agree with the reasons recorded by
my learned brother for referring the question to a larger Bench. However, on D
consideration of the erudite judgment prepared by our esteemed & learned
brother Balasubramanyan, J., regretfully we are unable to persuade ourselves
to agree to the decision arrived at by him on interpretation of Section 127 of
the MRTP Act and also reference of the case to a larger Bench. Section 127
of the MRTP Act is a special provision and would be attracted in the peculiar . E
facts and circumstances mentioned in the Section itself. The Section provides
a procedure for the land owner to get his land de-reserved if steps are not
taken by the State Government within the stipulated period and the relief
which the owner of the land is entitled to is also provided therein. The steps
to be taken for acquisition of land as provided under Section 127 of the MRTP
Act have to be taken into consideration keeping in mind the time lag between F
the period the land is brought under reservation and inaction on the part of
the State to acquire it. Section 127 of the MRTP Act is a unique provision
providing remedial measure to the owner of the land whose land is under the
planning scheme for a long period oftime, which would be interpreted in the
facts and circumstances of each individual case. It does not have any universal G
application and, therefore, the applicability thereof would depend on the facts
of each case. S.L.P.(C) No.11446 of 2005 titled Mis. S.P. Building Corporation
and Anr. v. State of Maharashtra and Ors., is required to be decided by ,this
Bench only and, therefore, we propose to decide it as follows:

2. Leave granted. H
-+
400 SUPREME COURT REPORTS [2007] 9 S.C.R.

A 3. The brief facts necessary for deciding the questions raised· in this
_;.___-
appeal are that appellant No. I is a partnership finn registered under the Indian
Partnership Act, 1932 and is the owner of an immovable property, i.e. a piece
of land, bearing City Survey No.181738, admeasuring about 5387.35 sq.yds.
situated at Cannichael Road, Malabar Hill Division, Mumbai-400026.

B 4. On 7.7.1958, Bombay Municipal Corporation had issued a declaration
under Section 4(1) of the Bombay Town Planning Act, 1954 (hereinafter
referred to as "the Act of 1954"), expressing its intention to prepare a
development plan for the area under its jurisdiction and published a
development plan in accordance with the provisions of the said Act on
C 9.l.l964. The plan was submitted by the Corporation to the Government of
Maharashtra for sanction on 8. 7.1964 and on 6.1.1967 the Government of
Maharashtra accorded sanction to the development plan which pertained to
'D' Ward of the Corporation area and the plan came into force on 7.2.1967.
The land of the appellant was notified for development as 'Open Space and
Children's Park'. On l l.l.l967, the Maharashtra Regional and Town Planning
D Act, 1966 (hereinafter referred to as "the MRTP Act") repeal!Xf the Act of 1954
saving the proceedings already initiated under the Act of 1954.

5. Proceedings were taken up for acquisition of the land. Since no award
was made as per Section l 1A of the Land Acquisition (Amendment) Act, 1984
which came into force on 24.9.1984, the acquisition proceedings were declared
E by the Land Acquisition Officer to have lapsed. Later on a revised development
plan sanctioned by the State Government on 6. 7.1991 came into effect cm
16.9.1991. On 3.2.1998 the appellants served notice through their advocates
under Section 127 of the MRTP Act asking for re-notifying the property or
to release the said property from reservation and accord sanction/approval to
F develop the property by the owner. In reply, the Municipal Corporation, ~
Greater Mumbai infonned the appellants that purchase notice issued by their
advocates was invalid as ten years had not expired since the sanction of the
revised development plan, came into force on 16.9.1991. On 18.10.2000, the
appellants again served purchase notice under Section 127 of the MRTP Act.
Again the Municipal Corporation of Greater Mumbai infonned the appellants
G that the notice was invalid as the period of ten years had not lapsed from the
date of the revised plan.

6. On 15.3.2002, the appellants addressed yet another notice to the
Municipal Corporation, Greater Mumbai under Section 127 of the MRTP Act
H stating therein that ten years' period had lapsed on 16.9.2001 and since no
+-·-
GIRNARTRADERSv.STATE[P.P.NAOLEKAR,J.] 401

proceedings for acquisition of the land as contemplated under Section 127(1) A
of the MRTP Act or under the Land Acquisition Act, 1894 (hereinafter referred
to as "the LA Act") having been commenced nor has any award been made
or compensation paid, the property should be de-reserved. The purchase
notice was served on the Municipal Commissioner, Greater Mumbai on
19.32002.
B
7. The counsel for respondent-Municipal Corporation has submitted
certain documents before us at the time of hearing. In pursuance of the
purchase notice served on the Municipal Corporation, Greater Mumbai, a
meeting of the Improvement Committee was called. On 9.9.2002 (document
no.I), the Improvement Committee passed Resolution No.183 recommending C
the Municipal Corporation to initiate the acquisition proceedings under the
provisions of Section 126(2) and (4) of the MRTP Act read with Section 6 of
the LA Act, as amended upto date, or in the alternative to recommend
acquisition as provided under Section 126(1) of the MRTP Act. The rates for
acquisition under the LA Act and that under the provisions of Section 126(1)
of the MRTP Act were also provided for. On 13.9.2002 (document no.2) D
without there being any resolution sanctioning acquisition or taking steps for
acquisition, an application was sent by the Chief Engineer (Development
Plan) to the State Government for initiating acquisition proceedings under
Section 126 of the MRTP Act as amended upto date read with Section 6 of
the LA Act. Thereafter, on 16.9.2002 (document no.3) the Corporation passed E
Resolution No.956 whereby sanction was given to initiate the acquisition
proceedings of the land and the Municipal Commissioner was authorised to
make an application to the State Government under the provisions of Section
126(2) & (4) of the MRTP Act read with Section 6 of the LA Act, as amended
upto date; and I or, initiate proceedings under Section 90(1) & (3) of the
Bombay Municipal Corporation Act, 1888 as amended upto date, for the land F
being purchased by the Commissioner on behalf of the Corporation. After the
Resolution was passed, on 17.9.2002 (document no.4) a letter was written by
the Chief Engineer (Development Plan) to the Secretary, Urban Development
Department, Government of Maharashtra informing that the Corporation have
accorded sanction to initiate acquisition proceedings and for the said purpose G
authorized the Municipal Commissioner to make an application to the State
Government as per the provisions of Section 126(1) of the MRTP Act as
amended upto date to issue orders for acquisition of the property under the
MRTP Act read with Section 6 of the LA Act. The letter dated 17.9.2002 is
·reproduced herein:-
H
-----+'
402 SUPREfvlE COURT REPORTS [2007] 9 S.C.R.

A "To,
The Secretary,
Urban Development Dept.,
Govt. of Maharashtra,
Mantralaya;
Mumbai-400032
B
Sub: Acquisition of land bearing C.S.No.18738 of Malabar Hill
divi~ion reserved for Children Park.
Ref: i) TPB-4302/572/UD- l 1 dtd.27.3.02
ii) CHE/ACQ/C/962 dtd. 13.9.2002
c
Sir,

With reference to above, it is to be mentioned here that Corporation
by their Resolution No. 956of16.9.2002 (copy enclosed) have accorded
sanction to initiate the acquisition proceedings for the above mentioned
D land reserved for Children's Park adm. approximately 4504.52 sq.mt.
and also authorized the Municipal Commissioner to make application
to State Govt. as per provision of 126(1) of the M.R.&T.P. Act 1966
as amended upto date to issue order for the acquisition of property
under reference as provided under the provisions of sec. 126(2) (3)
and (4) of the M.R.&T.P. Act 1966 as amended upto date read with
E sectfon 6 of L.A. Act 1894. The application to State Govt. along with
the required information in the usual proforma in triplicate & three ·,
copies of plans have already been submitted vide this office letter
issued u/no. CHE/ACQ/C/962 dtd. 13.9.2002 (copy enclosed). This is
for information and further necessary action.
F Yours faithfully,
Sd/-
CHIEF ENGINEER
(DEVELOPMENT PLAN)"

G
Later on the State Government on 20.11.2002 issued a notification exercising
the power conferred by sub-section (4) read with sub-section (2) of Section
126 of the MRTP Act read with Section 6 of the LA Act.

H 8. Having .aggrieved by the action of the respondents, the appellants
GIRNAR TRADERSv. STATE[P.P.NAOLEKAR,J.] 403

filed a writ petition in the High Court of Judicature at Bombay which was A
registered as Writ Petition No.353of2005 (Mis. S.P. Building Corporation &
Anr. v. State of Maharashtra and Ors.) challenging the proceedings initiated
by the respondents. It was contended by the appellants that under Section
127 of the MRTP Act, no steps having been taken within the period prescribed,
the reservation is deemed to have lapsed; and secondly, the acquisition
proceedings initiated under the MRTP Act, are deemed to have lapsed in view B
of Section l lA of the LA Act, the award having not been admittedly made
within two years from the date of publication of the declaration. The Division
Bench of the Bombay High Court dismissed the petition on both counts. It
was held by the Bombay High Court that the resolution of the Improvement
Committee passed on 9.9.2002 and the letter written by the Chief Engineer C
dated 13.9.2002 would constitute a 'step' taken by the Municipal Corporation
as provided under Section 127 of the MRTP Act. The Division Bench relying
on a judgment of this Court in the case of State of Maharashtra and Anr.
v. Sant Joginder Singh Kishan Singh and Ors., (1995] Supp. 2 SCC 475, has
held that Section I lA of the LA Act as amended is not applicable to the
proceedings for acquisition initiated under the MRTP Act and dismissed the D
writ petition.

9. The appellants filed this appeal by way ofS.L.P. (C) No. 11446 of2005
challenging the order of the Division Bench of the Bombay High Court. This
Court by an order dated 11.7.2005, issued notice and tagged the case along E
with C.A. No. 3703 of 2003 wherein a 2-Judge Bench of this Court had
doubted the correctness of the decision rendered by this Court in Sant
Joginder Singh Case (supra) on which the Bombay High Court has relied, in
regard to the applicability of the newly inserted provision of Section l lA of
the LA Act, to the acquisition under Chapter VII of the MRTP Act. Thus, the
matter has been heard along with C.A. No.3703 of 2003 wherein the only F
question raised is in regard to the applicability of the new provision of
Section l lA of the LA Act to the acquisition made under the MRTP Act;
whereas, apart from the said question, in this case we are also required to
decide the scope and ambit of Section 127 read with Section 126 of the MRTP
Act for the purposes of de-reservation of the land reserved under a G
development plan.

10. The question that requires consideration and answer in the present
case is: Whether the reservation has lapsed due to the failure of the planning
authority to take steps within the period of six months from the date of service
of the notice of purchase as stipulated by Section 127 of the MRTP Act; and H
-+
404 SUPREME COURT REPORTS - [2007] 9 S.C.R.

A also the question as regards applicability of new Section 11 A of the LA Act -"-- -
to the acquisition of land under the MRTP Act.

11. Under Section 2(19) of the MRTP Act, the planning authority means
a local authority and includes other authorities provided in clauses (a) and
(b ). The local authority is defined in Section 2(15) which for the purposes of
B this case would be the Municipal Corporation of Greater Mumbai constitute~
under the Bombay Municipal Corporation Act.

12. Chapter VII of the MRTP Act deals with land acquisition. Sections
125 to 129 fall in Chapter y11. Section 125 provide~ that any land required,
C 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
0

needed for a public purpose within the meaning of the LA Act. Section 126
provides three modes of acquisition of the I.and incl~ded in the town planning
scheme for the public purpose. Sec~ion 127 provides for lapsing of reserv?tion
D if the land reserved, allotted or designated is not acquired by agreement
within l 0 years from the date on which a final regional plan or fmal development
plan comes into force or if proceedings for acquisition of land under the
MRTP Aet or under the LA Act are not cqmmenced within such period, then
the owner or any 1wrson interested in the land may serve a notice. If within
six months from the date of service of such notice, the land is not acquired
E or no steps as aforesaid are commenced for its acquisition, the reservation,
allotment or designation shall be deemed to have lapsed and the land shall
be deemed to be released from such reservation. Section 128(1) confers the
power on the State Government to acquire the land needed for a public
purpose different from any public purpose under the scheme, or purpose of
F the planning authority or development authority or appropriate authority; the
State Government may, notwithstanding anything contained in the. MRTP
Act, acquire the land under the provisions of the LA Act. Section 129(1)
empowers the Collector after the publication of the declaration under Section
126(2) to enter on and take possession of"the land under acquisition after
giving a notice of 15 days.
G
13. Section 127 falling in Chapter VII requi~s interpretation in the
present case. However, the same cannot be understood without reference to
Section 126 which has an important bearing while interpreting the words used
in Section 127, namely, "the land is not acquired or no steps as aforesaid are
H commenced for its acquisition". Therefore, the relevant provisions to be
GIRNARTRADERSv. STATE[P.P.NAOLEKAR,J.] 405

considered are Sections 126 and 127 of the MRTP Act. Section 126 of the A
MRTP Act reads as follows:

"126. Acquisition of land required for public purposes specified in
plans.-{l) When 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 B
plan or scheme under this Act at any time the Planning Authority,
Development Authority, or as the case may be, any Appropriate
Authority may, except as otherwise provided in section l l3A, acquire
the land, -

(a) by agreement by paying an amount agreed to, or c
(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 D
to be determined by any of the said Authorities concerned on the
basis of the principles laid down in the Land Acquisition Act,
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 E
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 J;'
such land under the Land Acquisition Act, 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, as G
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, ifthe State Government is satisfied
that the land specified in the application is needed for the public H
406 SUPREME COURT REPORTS (2007]9 S.C.R.

A purpose therein specified, or ifthe State Government (except in cases
falling under section 49 and except as provided in section ll3A) 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, in respect of the said land. The declaration so
B published shall, 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
c 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
D 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;
E
(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 an undeveloped
area; and

F (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 :

G 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 Maharashtra Regional and Town Planning (Second Amendment)
Act, 1972:

H ·Provided further that, for the purpose of clause (ii) of this sub-section,
GIRNAR TRADERSv. STATE[P.P.NAOLEKAR,J.] 407

the market value in respect of land included in any undeveloped area A
notified under sub-section (1) of section 40 prior to the commencement
of the Maharashtra Regional and Town Planning (Second Amendment)
Act, 1972, shall be the market value prevailing on the date of such
commencement.

(4) Notwithstanding anything contained in the proviso to sub-section B
(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 Region~!
and Town Planning (Amendment) Act, 1993), the State Government
may make a fresh declaration for acquiring the land under the Land C
Acquisition Act, 1894, in the manner provided by sub-sections (2) an(i
(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."

Under sub-section ( l) of Section 126, after publication of the draft regional D
plan, a development or any other plan or town planning scheme, any land
required or reserved for any of the public purposes specified in any plan dr
scheme under the MRTP Act, may be acquired (a) by agreement between tht
parties by paying an amount agreed to; or (b) by granting the land owner or
the lessee, Floor Space Index (FSI) or Transferable Development Rights (TOR)
against the area of land surrendered free of cost and free from all encumbrances E
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 LA Act. Sub-section (2) provides F
that on receipt of such application or on its own motion, the State Government
would satisfy itself .that the land specified in the application, is needed for
a public purpose and, if it is so found, would make a declaration by issuing
a notification in the Official Gazette in the manner provided in Section 6 ofI
the LA Act. Proviso is added to sub-section (2) whereunder a declaration
under Section 6 of the LA Act in the Official Gazette has to be made within G
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. Sub-section (3)
postulates that on publication of a declaration in the Official Gazette undet
Section 6 of the LA Act, the Collector shall proceed to take orders for the
acquisition of the land under the LA Act and the provisions of that Act shall H
408 SUPREME COURT REPORTS [2007] 9 S.C.R.

A apply to the acquisition of the said land with certain modifications as provided
in clauses (i), (ii) and (iii) of sub-section (3) for determination of the market
value on the basis of different dates. Sub-section (3) makes it abundantly
clear that after publication of the declaration. in the Official Gazette under
Section 6 of the LA Act, the entire procedure which shall be followed will be
as provided under the LA Act, that is to say, from Section 8 onwards upto
B Section 28 of the LA Act which deal with acquisition of land under the LA
Act.

14. Sub-section (2) of Section 126 provides for one year's limitation for
.....
publication of the declaration from the date of publication of the draft plan
C or scheme. Sub-section (4), however, empowers the State Government to make
a fresh declaration under Section 6 of the LA Act even if the prescribed
period of one year has expired. This declaration is to be issued by the State
Government for acquisition of the land without there being any application
moved by the planning/local authority under clause (c) of Section 126(1 ). Sub-
section (4) of Section 126 authorizes the State Government to make a declaration
D for acquisition of the land under Section 6 of the LA Act without any steps
taken by the planning authority, i.e., Bombay Municipal Corporation. Under
sub-section (4) of Section 126, the State Government can make a .fresh
declaration if the declaration under sub-section (2) of Section 126 was not
made within the time stipulated for acquisition of the land, if it is satisfied that
E the land is required for a public purpose, subject to the modification that the
market value of the land shall be the market value at the date on which the
declaration in the Official Gazette is made for acquisition of the land afresh.
Sub-section (4) is the provision whereunder only the State Government is
authorized and empowered to issue fresh declaration for acquiring the land
under the LA Act.
F
15. Section 127 of the MRTP Act which requires consideration in the
present case is a provision which provides, as is clear from its heading itself,
· for lapsing of reservation of the lands included in the develop~ent plan. The
development authority for utilization of the land for the purpose for. which it
is included in the plan has to take steps and do things within the period
. G ·-stipulated in a particular span of time, the land having been reserved curtailing
the right of the owner of its user. Section 127 reads as under:

"127. Lapsing of reservations.- If any land reserved, allotted or
designated for any purpose specified in any plari under this Act is not
acquired by agreement within. ten years from the date on which a final
· GIRNAR TRADERSv. STATE[P.P.NAOLEKAR,J.) 409

Regional Plan, or final Development Plan comes into force or if A
proceedings for the acquisition of such land under this Act or under
the Land Acquisition Act, 1894, are not commenced within such
period, the owner or any person interested in the land may serve
notice on the Planning Authority, Development Authority or as the
case may be, Appropriate Authority to that effect; and if within six B
months from the date of the service of such notice, the land is not
acquired or no steps as aforesaid are commenced for its acquisition,
the reservation, allotment or designation shall be deemed to have
lapsed, and thereupon the land shall be deemed to be released from
such reservation, allotment or designation and shall become available
to the owner for the purpose of development as otherwise permissible C
in the case of adjacent land under the relevant plan."

Section 127 prescribes two time periods. First, a period of 10 years within
which the acquisition of the land reserved, allotted or designated has to be
completed by agreement from the date on which a regional plan or development
plan comes into force, or the proceedings for acquisition of such land under D
the MRTP Act or under the LA Act are commenced. Secondly, ifthe first part
of Section 127 is not complied with or no steps are taken, then the second
part of Section 127 will come into operation, under which a period of six
months is provided from the date on which the notice has been served by
the owner within which the land has to be acquired or the steps as aforesaid E
are to be commenced for its acquisition. The six-month period shall commence
from the date the owner or any person interested in the land serves a notice
on the planning authority, development authority or appropriate authority
expressing his int~nt claiming de-reservation of the land. If neither of the
things is done, the reservation shall lapse. If there is no notice by the owner
or any person interested, there is no question of lapsing reservation, allotment F
or designation of the land under the development plan. Second part of
Section 127 stipulates that the reservation of the land under a development
scheme shall lapse if the land is not acquired or no steps are taken for
acquisition of the land within the period of ~ix months from the date of service
of the purchase notice. The word 'aforesaid' in the collocation of the words G
"no steps as aforesaid are commenced for its acquisition" obviously refers
to the steps contemplated by Section 126 of the MRTP Act.

--< . 16. If no proceedings as provided under Section 127 are taken and as
a result thereof the reservation of the land lapses, the !and shall be released
from reservation, allotment or designation and shall be available to the owner H
410 SUPREME COURT REPORTS [2007] 9 S.C.R.

A for the purpose of development. The availability of the land to the owner for
the development would only be for the purpose which is permissible in the
case of adjacent land under the relevant plan. Thus, even after the release,
the owner cannot utilize the land in whatever manner he deems fit and proper,
but its utilisation has to be in conformity with the relevant plan for which the
B adjacent lands are permitted to be utilized.

17. It is an admitted position that on 16.9.1991 the revised development
plan was sanctioned and 10 years have expired on 15.9.2001 without there
being any acquisition or steps being taken for acquisition of the land in
question. On 15.3.2002, the purchase notice under Section 127 was given by .....
C the appellants which was received by the authorities on 19.3.2002. Under the
second part of Section 127, the land was either required to be acquired or
steps in that regard have to be commenced by 18.9.2002. For the first time
after the service of purchase notice, on 9. 9 .2002 a proposal was. made by the
Improvement Committee recommending the Municipal Corporation for sanction
to initiate the acquisition proceedings. On 13.9.2002 without there being any
D resolution by the Municipal Corporation, the Chief Engineer (Development
Plan) sent an application to the State Government for initiating the acquisition
proceedings. For the first time on 16.9.2002, a resolution was passed by the
Municipal Corporation whereby sanction was given to initiate the acquisition
proceedings of land and the Municipal Commissioner was authorised to make
E an application to the State Government and on 17 .9 .2002 a letter was sent by
the Chief Engineer (Development Plan) to the Secretary, Urban Development
Department, Government of Maharashtra for initiating acquisition proceedings.
Admittedly, in the present case, the land was neither acqu-ired nor were the
steps taken within 10 years from the date on which the final regional plan or
F final development plan came into force.

18. Shri Shekhar Naphade, Senior Advocate appearing for the State and
Shri Bhim Rao Naik, Senior Advocate appearing for the Municipal Corporation
contended that the steps were taken on 17 .9 .2002 when in pursuance of the
resolution passed by the Municipal Corporation of Greater Mumbai, the Chief
G Engineer (Development Plan) sent a letter to the State of Maharashtra enclosing
therewith a copy of Resolution No. 956 dated 16.9.2002, requesting that the
steps be taken for acquisition of the land and this step taken by the
respor.dents would constit~te 'steps' for the acquisition of the land under
clause (c) of Section 126(1) of the MRTP Act, the same having been taken
on 17.9.2002 when the period of six months had not expired, the same to be
H expired on 18.9.2002 and, therefore, the provision of de-reservation under
GIRNAR TRADERSv. STATE[P.P.NAOLEKAR,J.] 411

Section 127 would not apply. A
19. It is contended by Shri Soli J. Sorabjee and Shri U.U. Lalit, learneci
senior counsel appearing for the appellants, that the intent and purpose of
Section 127 of the MRTP Act is the acquisition of land within six months or
the steps are taken for acquisition of the land within six months, which could
only be when a declaration under Section 6 of the LA Act is published in the B
Official Gazette. It is submitted by the learned senior counsel that the words
"if within six months from the date of the service of such notice, the land is
not _acquired or no steps as aforesaid are commenced for its acquisition" are
not susceptible of a literal construction and the words have to be given a
meaning which safeguards a citizen against arbitrary and irrational executive C
action which, in fact, may not result in acquisition of the land for a long period
to come. It cannot be doubted that the period of I 0 years is a long period
where the land of the owner is kept in reservation. Section 127 gives an
opportunity to the owner for de-reservation of the land if no steps are taken
for acquisition by the authorities within a period of six months in spite of
service of notice for de-reservation after the period of I 0 years has expired. D
20. While interpreting the purpose of Section 127, this Court in the
matter of Municipal Corporation of Greater Bombay v. Dr. Hakimwadi
Tenants' Association and Ors., [ 1988] Supp. SCC 55, has said :

"11. ... It cannot be doubted that a period of IO years is long enough. E
The Development or the Planning Authority must take recourse to
acquisition with some amount of promptitude in order that the
compensation paid to the expropriated owner bears a just relation to
the real value of the land as otherwise, the compensation paid for the .
acquisition would be wholly illusory. Such fetter on statutory powers
is in the interest of the general public and the conditions subject to F
which they can be exercised must be strictly followed."

The Court also said:

"While the contention of learned counsel appearing for the appellant
that the words 'six months from the date of service of such notice' G
in Section 127 of the Act were not susceptible of a literal construction,
must be accepted, it must be borne in mind that the period of six
months provided by Section 127 upon the expiry of which the
reservation of the land under a Development Plan lapses, is a valuable
safeguard to the citizen against arbitrary and irrational executive action. H
t
412 SUPREME COURT REPORTS [2007] 9 S.C.R.

A Section 127 of the Act is a fetter upon the power of eminent domain."

21. Giving a plain meaning to the words used in the statute would not
be resorted to when there is a sense of possible injustice. In such a case, the
simple application of the words in their primary and unqualified sense is not
always sufficient and will sometimes fail to carry out the manifest intention
B of law-giver as collected from the statute itself and the nature of subject-
matter and the mischiefs to be remedied. If the plain words lead apparently
to do some injustice or absurdity and at variance with, or not required by, the
scope and object Of the legislation, it would be necessary to examine further
and to test, by certain settled rules of interpretation, what was the real and
C true intention of the legislature and thereafter apply the words if they are
capable of being so applied so as to give effect to that intention. Where the
plain literal interpretation of statutory provisi~n were to manifestly result in
injustice never intended by the legislature, the court is entitled to modify the
language used by the legislature so as to achieve the intention of the legislature
and to produce a rational construction.
D
22. Where the legislature has used words in an Act which if generally
construed, must lead to palpable injustice and consequenc.es revolting to the
mind of any reasonable man, the court will always endeavour to place on such
words a reasonable limitation, on the ground that the legislature could not
have intended such consequence to ensue, unless the express language in
E the Act or binding authority prevents such limitation being interpolated into
the Act. In construing an Act, a construction ought not be put that would
work injustice, or even hardship or inconvenience, unless it is clear that such
was the intention of the legislature. It is also settled that where the language
of the legislature admits of two constructions and if construction in one way
F would lead to obvious injustice, the courts act upon the view that such a
result could not have been intended, unless the intention had been manifested
in express words. Out of the two interpretations, that language of the statute
should be preferred to that interpretation which would' frustrate it. It is a
cardinal rule governing the interpretation of the statutes that when the
language of the legislature admits of two constructions, the court should not
G adopt the construction which would lead to a!1 absurdity or obvious injustice.
It is equally well settled that within two constructions that alternative is to
be chosen which would be consisterit with the smooth working of the system
which the statute purported to be regulating and that alternative is to be >--'
rejected which will introduce uncertainty, friction or con(usion with the working
H of the system. [See Collector of Customs v. Digvijaysinhji Spinning & Weaving
GIRNARTRADERSv. STATE[P.P.NAOLEKAR,J.] 413

Mills Ltd., [1962] l SCR 896, at page 899 and His Holiness Kesvananda A
Bharati v. State of Kera/a, AIR (1973) SC 1461].

23. The court must always lean to the interpretation which is a reasonable
one, and discard the literal interpretation which does not fit in with the
scheme of the Act under consideration.
B
24. [n series of judgments of this Court, these exceptional situations
have been provided for. In Narashimaha Murthy v. Susheelabai, [1996] 3 SCC
644 (at page 647), it was held that:

" ... The purpose of law is to prevent brooding sense of injustice.
It is not the words of the law but the spirit and eternal sense of it that C
makes the law meaningful...."

In the case of American Home Products Corporation v. Mac Laboratories
Pvt. Ltd. and Anr., AIR (1986) SC 137 (at page 166, para 66), it was held that:

" .. It is a well-known principle of interpretation of statutes that D
a construction should not be put upon a statutory provision which
+ would lead to manifest absurdity or futility, palpable injustice, or
absurd inconvenience or anomaly ...."

Further, in the case of State ofPunjab v. Sat Ram Das, AIR (1959) Punj. 497,
the Punjab High Court held that: E
"To avoid absurdity or incongruity, grammatical and ordinary
sense of the words can, in certain circumstances, be avoided."

25. Many a times, it becomes necessary to look into the true intention
,.
of the legislature in order to give a proper effect to the statutory provisions F
and in order to achieve the actual intended goal behind the legislation. In the
case of Tirath Singh v. Bachittar Singh and Ors., AIR (1955) SC 830 (at page
833, para 7), it was held by the Court that:

" ... Where the language of a statute, in its ordinary meaning and
grammatical construction, leads to a manifest contradiction of the G
apparent purpose of the enactment, or. to some inconvenience or
absurdity, hardship or injustice, presumably not intended, a
-(
construction may be put upon it which modifies the meaning of the
words and even the structure of the sentence".

The same has been upheld by the Supreme Court in Commissioner of Income H
---t-'

414 SUPREME COURT REPORTS (2007] 9 S.C.R.

A Tax, Bangalore v. J.H. Got/a, AIR (1985) SC 1698 and inAndhra Cotton Mills
Ltd v. Lakshm(Ganesh Cotton Mill, (1996) 1ALT537 (AP). Similarly, in the
case of State ofRajasthan ':'·Leela Jain and Ors., AIR{l965) SC 1296 (at page
1299, para 11 ), it was held that:

" ... Unless the words are unmeaning or absurd, it would not be in
B accord with any sound principle of construction to refuse to give
effect to the provisions of a statute on the very elusive ground that
to give them their ordinary meaning leads to consequences which are
not in accord with the notions of propriety or justice ..."

26. Learned senior counsel appearing on both sides have strongly relied
C on the decision of this Court in Municipal Corporation of Greater Bqmbay
v. Dr. Hakimwadi Tenants' Association and Ors., (1988] Supp. SCC 55. It is
contended by the learned senior counsel for the appellants that the decision
squarely covers the proposition of law wherein it has been held that the
development or the planning authority must take recourse to acquisition with
D some amount of promptitude in order that the compensation paid to the
expropriated owner bears a just relation to the real value of the land; and that
the period of six months provided by Section 127 upon the expiry of which
the reservation of the land under a development plan lapses, is a valuable
safeguard to the citizens against the arbitrary and irrational executive action.
Section 127 of the Act is a fetter upon the power ofeminent domain. On the
E other hand, the learned senior counsel for the State submits that if we read
para 11 of the above judgment, it is clearly held that the steps for commencement
of the acquisition obviously refer to the steps contemplated by Section 126(1)
which means the step taken of making an application under clause (c) of
Section 126(1) of the MRTP Act and has contended that this Court had
F already observed that after the service of notice from the owner or any person
interested in the land as provided under Section 127 of the MRTP Act, the
--
steps taken within six months of such service, included any step taken by the
appropriate authority for the acquisition of land as contemplated under the
provisions of Section 126 (I) of the MRTP Act. It has been further contended
that such observation of this Court is binding as precedent.
G
27. At this juncture, it will be appropriate for us to refer some of the
judicial pronouncements to illustrate what constitutes the binding precedent.
This Court in Additional District Magistrate, Jabalpur v. Shivakant Shukla,
[1976] 2 sec 521 has observed:

H
+
GIRNARTRADERSv. STATE[P.P.NAOLEKAR,J.] 415

"394 ....The Earl ofHalsbury, L.C. said in Quinn v. Leathern, (1901) AC A
495, 506 that the generality of the expressions which may be found
in a judgment are not intended to be expositions of the whole law but
are governed and qualified by the particular facts of the case in which
such expressions are to be found. This Court in the State of Orissa
v. Sudhansu Sekhar Misra, [1968] 2 SCR 154, 163, uttered the caution B
that it is not a profitable task to extract a sentence here and there from
a judgment and to build upon it because the essence of the decision
is its ratio and not every observation found therein ..."

474 .... when we are considering the observations of a high judicial
authority like this Court, the greatest possible care must be taken to C
relate the observations of a judge to the precise issues before him and
to confine such observations, even though expressed in broad terms,
in the general compass of the question before him, unless he makes
it clear that he intended his remarks to have a wider ambit. It is not
possible for judges always to express their judgments so as to exclude
entirely the risk that in some subsequent case their language may be D
misapplied and any attempt at such perfection of expression can only
lead to the opposite result of uncertainty and even obscurity as
regards the case in hand ... "

In Union of India and Ors. v. Dhanwanti Devi and Ors., [ 1996] 6 SCC 44, a
three-Judge Bench of this Court has observed as follows: E
"9 ... .It is not everything said by a Judge while giving judgment that
constitutes a precedent. The only thing in a judges' decision binding
a party is the principle upon which the case is decided and for this
reason it is important to analyse a decision and isolate from it the ratio
decidendi. According to the well-settled theory of precedents; every F
decision contains three basic postulates - (i) findings of material facts,
direct and inferential. An inferential finding of facts is the inference
which the Judge draws from the direct, or perceptible facts; (ii)
statements of the principles of law applicable to the legal problems
disclosed by the facts; and (iii) judgment_ based on the combined G
effect of the above. A decision is only an authority for what it actually
decides. What is of the essence in a decision is its ratio and not every
observation found therein nor what logically follows from the various
observations made in the judgment. Every judgment must be read as
applicable to the particular facts proved, or assumed to be proved,
since the generality of the expressions which may be found there is H
416 SUPREME COURT REPORTS [2007] 9 S.C.R.

A not intended to be exposition of the whole law, but governed and
qualified by the particular facts of the case in which such expressions
are to be found. It would, therefore, be not profitable to extract a
sentence here and there from the judgment and to build upon it
because the essence of the decision is its ratio and not every
observation found therein. The enunciation of the reason or principle
B on which a question before a court has been decided is alone binding
as a precedent. The concrete decision alone is binding between the
parties to it, but it is the abstract ratio decidendi, ascertained on a
consideration of the judgment in relation to the subject matter of the
decision, which alone has the force of law and which, when it is clear
c what it was, is binding. It is only the principle laid down in the
judgment that is binding law under Article 141 of the Constitution. A
deliberate judicial decision arrived at after hearing an argument on a
question which arises in the case or is put in issue may constitute a
precedent, no matter for what reason, and the precedent by long
recognition may mature into rule of stare decisis. It is the rule deductible
D from the application of law to the facts and circumstances of the case
which constitutes its ratio decidendi.

10. Therefore, in order to understand and appreciate the binding force
of a decision it is always necessary to see what were the facts in the
case in which the decision was given and what was the point which
E had to be decided. No judgment can be read as if it is a statute. A
word or a clause or a sentence in the judgment cannot be regarded
as a full exposition of law. Law cannot afford to be static and therefore,
Judges are to employ an intelligent technique in the use of
precedents ... "
F
Similarly, in Director ofSettlements, A.P. and Ors. v. MR. Apparao and Anr.,
[2002] 4 SCC 638, a Bench comprising of three Judges, has observed:

"7 .... But what is binding is the ratio of the decision and not any
finding of facts. It is the principle found out upon a reading of a
G judgment as a whole, in the light of the questions before the Court
that forms the ratio and not any particular word or sentence ...A
judgment of the Court has to be read in the context of questions
which arose for consideration in the case in which the judgment was .,_
delivered. An "obiter dictum" as distinguished from a ratio decidendi
is an observation by the Court on a legal question suggested in a case
H .before it but not arising in such manner as to require a decision ... "
GIRNAR TRADERSv. STATE[P.P.NAOLEKAR,J.] 417

This Court in Shin-Etsu Chemical Co. Ltd v. Aksh Optifibre Ltd and Anr., A
[2005] 7 sec 234 has observed:

"69. ... if the court thinks that an issue does not arise, then any
observation made with regard to such an issue would be parely obiter
dictum. It is a well-settled proposition that the ratio decidendi of a
case is the principle of law that decided the dispute in the facts of the B
case and, therefore, a decision cannot be relied upon in support of a
proposition that it did not decide. [See also: Mittal Engg. Works (P)
Ltd. v. CCE, [1997] 1 SCC 203 at p. 207 (para. 8); Jagdish Lal v. State
ofHaryana, [1997] 6 SCC 538 at p. 560 (para. 17); Divisional Controller,
KSRTC v. Mahadeva Shetty, [2003] 7 SCC 197 at p. 206 (para. 23).] ..." C
28. We will now analyse that whether the observations of the Court in
Municipal Corporation of Greater Bombay Case (supra) as extracted from
paragraph 11 of that Judgment (supra) constituted binding or authoritative
precedent with respect to the question of law arising in the present case. In
Municipal Corporation of Greater Bombay Case (supra), the planning D
authority had published a draft Development Plan in which land of a trust
property was reserved for a recreation ground. The Development Plan was
finalised and sanctioned by the State Government on 6.1.1967. The final
development scheme came into effect from 7.2.1967. Since no action had been
taken for acquisition of the land until 1.1.1977, the owners thereof, i.e., the
trustees, served a purchase notice dated I. 7 .1977 on Corporation either to E
acquire the same or release it from acquisition,, and the same was received on
4.7.1977. On 28.7.1977 the Corporation's Executive Engineer wrote a letter to
the trustees asking information regarding the ownership of the land and the
particulars of the tenants thereof. It was also stated that the relevant date
.,.. under Section 127 of the MRTP Act would be the date upon which such F
information was received. The trustees, by their lawyer's letter dated 3 .8.1977,
conveyed that the date of six months stipulated by Section 127 had to be
computed from the date of the receipt from them of the information required
and that Corporation could not make an inquiry at that stage without taking
a decision on the material question. The Executive Engineer once again wrote
to trustees stating that the period of six months allowed by Section 127 would G
commence on 4.8.1977, i.e., the date when the requisite information was
furnished. The Corporation passed a resolution dated 10.1.1978 for the
acquisition of the land and made an application to the State Government
which ori being satisfied that the land was required for a public purpose
issued the requisite notification dated 7.4.1978 under Section 6 of the LA Act H
418 SUPREME COURT REPORTS [2007] 9 S.C.R.

A for acquisition of the land. A petition was filed before the High Court to
quash the aforementioned notification, which was allowed by the Single
Judge and subsequently maintained by the Division Bench. The contention
of the appellant Corporation before this Court was that the period of six
months after the notice by the owner or any person interested in the land as
specified under section 127, would start from date when such person had
B provided the requisite information to the Corporation.

29. In light of the above-mentioned factual matrix, the question of law
involved in the Municipal Corporation of Greater Bombay Case (supra) was
as follows:
c "2. The short point involved in this appeal by special leave from a
judgment of a Division Bench of the Bombay High Court dated June
18, I 986, is whether the period of six months specified in Section 127
of the Act is to be reckoned from the date of service of the purchase
notice dated July 1, 1977 by the owner on the Planning Authority i.e.
D the Municipal Corporation of Greater Bombay here, or the date on
which the requisite information of particulars is furnished by the
owner."

The Court has answered the above question as follows:

"7. According to the plain reading of Section 127 of the Act, it is
E
manifest that the question whether the reservation has lapsed due to
the failure of the Planning Authority to take any steps within a period
of six months of the date of service of the notice of purchase as
stipulated by Section 127, is a mixed question of fact and law. It would
therefore be difficult, if not well nigh impossible, to lay down a rule
F of universal application. It cannot be posited that the period of six
months would necessarily begin to run from the date of service of a
purchase notice under Section 127 of the Act. The condition pre-
requisite for the running of time under Section 127 is the service of
a valid purchase notice. It is needless to stress that the Corporation
must primafacie be satisfied that the notice served was by the owner
G
of the affected land or any person interested in the land. But, at the
same time, Section 127 of the Act does not co~template an investigation
into title by the officers of the Planning Authority, nor can the officers
prevent the running of time if there is a valid notice ... "

H 30. Thus, after perusing the judgment in Municipal Corporation of
GIRNARTRADERSv.STATE[P.P.NAOLEKAR,J.] 419

Greater Bombay Case (supra), we have found that the question for A
consideration before the Court in the Municipal Corporation of Greater
Bombay Case (supra) has reference to first· step required to be taken by the
owner after lapse of I0 years' period without any step taken by the authority
for acquisition of land, whereby the owners of the land served the notice for
dereservation of the land. The Court was not called upon to decide the case B
on the substantial step, namely, the step taken by the authority within six
months of service of notice by the owners for dereservation of their land
which is second step required to be taken by the authority after service of
notice. The observations of this Court regarding the linking of word 'aforesaid'
from the wordings 'no steps as aforesaid are commenced for its acquisition'
of Section 127 with the steps taken by the competent authority for acquisition C
of land as provided under Section 126(1) of the MRTP Act, had rio direct or
substantial nexus either with the factual matrix or any of the legal issues
raised before it. It is apparent that no legal issues, either with respect to
interpretation of words 'no steps as aforesaid are commenced for its
acquisition' as stipulated under the provisions of Section 127 or any link of
these words with steps to be taken on service of notice, were contended D
before the Court. Thus, observations of the Court did not relate to any of the
legal questions arising in the case and, accordingly, cannot be considered as
the part of ratio decidendi. Hence, in light of the aforementioned judicial
pronouncements, which have well settled the proposition that only the ratio
decidendi can act as the binding or authoritative precedent, it is clear that the E
reliance placed on mere general observations or casual expressions of the
Court, is not of much avail to the respondents.

31. When we conjointly read Sections 126 and 127 of the MRTP Act,
it is apparent that the legislative intent is to expeditiously acquire the land
reserved under the Town Planning Scheme and, therefore, various periods F
have been prescribed for acquisition of the owner's property. The intent and
purpose of the provisions of Sections 126 and 127 has been well explained
in Municipal Corporation of Greater Bombay Case (supra). Iftlie acquisition
is left for a time immemorial in the hands of the concerned authority by simply
making an application to the State Government for acquiring such land under G
the LA Act, 1894, then the authority will simply move such an application and
if no such notification is issued by the State Government for one year of the
publication of the draft regional plan under Section 126(2) read with Section
6 of the LA Act, wait for the notification to be issued by the State Government
by exercising suo motu power under sub-section (4) of Section 126; and till
then no declaration could be made under Section 127 as regards lapsing of H
-+
420 SUPREME COURT REPORTS [2007] 9 S.C.R.

A reservation and contemplated declaration of land being released and available
for the land owner for his utilization as permitted under Section 127. Section
127 permitted inaction on the part of the acquisition authorities for a period
of l 0 years for de-reservation of the land. Not only that, it gives a further time
for either to acquire the land or to take steps for acquisition of the land within
B a period of six months from the date of service of notice by the land owner
for de-reservation. The steps towards commencement of the acquisition in
such a situation would necessarily be the steps for acquisition and not a step
which may not result into acquisition and merely for the purpose of seeking
time so that Section 127 does not come into operation. Providing the period
of six months after the service of notice clearly indicates the intention of the
C legislature of an urgency where nothing has been done in regard to the land
reserved under the plan for a period of 10 years and the owner is deprived
of the utilization of his land as per the user permissible unde_r the plan. When
mandate is given in a Section requiring compliance within a particular period,
the strict compliance is required thereof as introduction of this Section is with
legislative intent to balance the power of the State of"eminent domain". The
D State possessed the power to take or control the property of the owner for
the benefit of public cause, but when the State so acted, it was obliged to
compensate the injured upon making just compensation. Compensation
provided to the owner is the release of the land for keeping the land under
reservation for 10 years without taking any steps for acquisition of the same.
E The underlying principle envisaged in Section 127 of the MRTP Act is e.ither
to utilize the land for the purpose it is reserved in the plan in a given time
or let the owner utilize the land for the purpose it is permissible under the
Town Planning Scheme. The step taken under the Section within the time
stipulated should be towards acquisition of land; It is a step of acquisition
of land and not step for acquisition of land. It is trite that failure of authorities
F to take steps which result in actual commencement of acquisition of land
cannot be permitted to defeat the purpose and object of the scheme of
acquisition under the MRTPAct by merely moving an application requesting
the Government to acquire the land, which Government may or may not
accept. Any step which may or may not culminate in the step for acquisition
G cannot be said to be a step towards acquisition.
32. It may also be noted that the legislature while enacting Section 127
has deliberately used the word 'steps' (in plural and not in singular) which
are required to be taken for acquisition of the land. On construction of Section
126 which provides for acquisition of the land under the MRTP Act, it is
H apparent that the steps for acquisition of the land would be issuance of the
GIRNARTRADERSv. STATE[P.P.NAOLEKAR,J.] 421

declaration under Section 6 of the LA Act. Clause (c) of Section 126(1) merely A
provides for a mode by which the State Government can be requested for the
acquisition of the land under Section 6 of the LA Act. The making of an
application to the State Government for acquisition of the land would not be
a step for acquisition of the land under reservation. Sub-section (2) of Section
126 leaves it open to the State Government either to permit the acquisition
or not to permit, considering the public purpose for which the acquisition is B
sought for by the authorities. Thus, the steps towards acquisition would
really commence when the State Government permits the acquisition and as
a result thereof publishes the declaration under Section 6 of the LA Act.

33. The MRTP Act does not contain any reference to Sectidn 4 or C
Section SA of the LA Act. The MRTP Act contains the provisions relating
to preparation of regional plan, the development plan, plans· for comprehensive
developments, town planning schemes and in such plans and in the schemes,
the land is reserved for public purpose. The reservation of land for a particular
purpose under the MRTP Act is done through a complex exercise which
begins with land use map, survey, population studies and several other D
complex factors. This process replaces the provisions of Section 4 of the LA
Act and the inquiry contemplated under Section SA of the LA Act. These
provisions are purposely excluded for the purposes of acquisition under the
MRTP Act. The acquisition commences with the publication of declaration
under Section 6 of the LA Act. The publication of the declaration under sub- E
sections (2) and (4) of Section 126 read with Section 6 of the LA Act is a sine
qua non for the commencement of any proceedings for acquisition under the
MRTP Act. It is Section 6 declaration which would commence the acquisition
proceedings under the MRTP Act and would culminate into passing of an
award as provided in sub-section (3) of Section 126 of the MRTP Act. Thus,
unless and until Section 6 declaration is issued, it cannot be said that the F
steps for acquisition are commenced.

34. There is another aspect of the matter. Ifwe read Section 126 of the
MRTP Act and the words11sed therein are given the verbatim meaning, then
the steps commenced for acquisition of the land would not include making
of an application under Section 126(1)(c) or the declaration which is to be G
made by the State Government under sub-section (2) of Section 126 -0f the
MRTPAct.

3S. On a conjoint reading of sub-sections (I), (2) and (4) of Section 126,
we notice that Section 126 provides for different steps which are to be taken H
+
422 SUPREME COURT REPORTS (2007] 9 S.C.R

A by the authorities for acquisition of the land in different eventualities and
within a particular time span. Steps taken for acquisition of the land by the
authorities under clause (c) of Section 126(1) have to .be culminated into
Section 6 declaration under the LA Act for acquisition of the land in the
Official Gazette, within a period of one year under the proviso to sub-section
B (2) of Section 126. If no such declaration is made within the time prescribed,
no declaration under Section 6 of the LA Act could be issued under the
proviso to sub-section (2) and no further steps for acquisition of the land
could be taken in pursuance of the application moved to the State Government
by the planning authority or other authority. Proviso to sub-section (2) of
Section 126 prohibits publication of the declaration after the expiry of one
C year from the date of publication of draft regional plan, development plan or
any· other plan or scheme. Thus, from the date of publication of the· draft ·
regional plan, within one year an application has to be moved under clause
(c) of Section 126(1) which should culminate into a declaration under Section
6 of the LA Act. As per the proviso to sub-section (2) of Section 126, the
maximum period permitted between the publication of a draft regional plan and
D declaration by the Government in the Official Gazette under Section 126(2) is
one year. In other words, during one year of the publication of the draft
regional plan, two steps need to be completed, namely, (i) application by the
appropriate authority to the State Government under Section 126(1)(c); an.d
(ii) deelaration by the State Government on receipt of the application mentioned
E in clause (c) of Section 126(1) on satisfaction of the conditions specified
under Section 126(2). The only exception to this provision has been given
under Section 126(4). In the present case, the amended regional plan was
published in the year 1991. Thereafter, the steps by making an application
under clause (c) of sub-sectfon (l) of Section 126 for issuance of the declaration
of acquisition and the declaration itself has to be made within the period of
F one year from the date of the publication of regional plan, that. is, within the
period ofone year from 1991. The application under Section l26(1)(c) could
be said to be a step taken for acquisition of the land if such application is
moved within the period of one year from the date of publication of regional
plan. The application moved after the expiry of one year could not result in
G the publication of declaration in the manner provided under Section 6 of the
LA Act, under sub-section (2) of Section 126 of the MRTP Act, there being
a prohibition under the proviso to issue such declaration after one year.
Therefore, by no stretch of imagination, the step taken by the Municipal
Corporation under Section 126(l)(c) of making an application could be said
to be a step for the commencement of acquisition of the land. After the expiry
H of one year, it is left to the Government concerned under sub-section (4) of
+
/

GIRNARTRADERSv.STATE[P.P.NAOLEKAR,J.] 423

Section 126 to issue declaration under Section 6 of the LA Act for the A
purposes of acquisition for which no application is required under Section
126(l)(c). Sub-section (4) of Section 126 of the MRTP Act would come into
operation if the State Government is of the view that the land is required to
be acquired for any public purpose.

36. The High Court has committed an apparent error when it held that B
the steps taken by the respondent-Corporation on 9.9.2002 and 13.9.2002
would constitute steps as required under Section 126(I)(c) of the MRTP Act.
What is required under Section 126(l)(c) is that the application is to be moved
to the State Government for acquiring the land under the LA Act by the
planning/local authority. Passing of a resolution by the Improvement Committee C
recommending that the steps be taken under Section 126(l)(c) or making an
application by the Chief Engineer without there being any authority or resolution
passed by the Municipal Corporation, could not be taken to be steps taken
of moving an application before the State Government for acquiring the land
under the LA Act. The High Court has committed an apparent error in relying
on these two documents for reaching the conclusion that the steps for D
acquisition had bee!) commenced by the Municipal Corporation before the
expiry of period of six months which was to expire on 18.9.2002. Further, if we
look at the letter dated 17.9.2002 which, as per the counsel for the respondent-
Corporation, is a request made by the Municipal Corporation to the State
Government under clause (c) of Section 126(1), we cannot agree with the E
submissions of the respondents. The letter itself shows that the resolution
was passed by the Municipal Corporation on 16.9.2002 whereby it was informed
that the sanction had been accorded to initiate the acquisition proceedings
for the land in question. The letter also mentioned that the authorization had
been given to the Municipal Commissioner to make an application to the State
Government as per the provisions of Section 126(1) of the MRTP Act. Under F
Section 2(19) read with Section 2(15) with Section 126(1) of the MRTP Act,
the application to the State Government under clause (c) of Section 126(1) has
to be made by the planning/local authority, i.e. the Municipal Corporation of
Greater Mumbai constituted under the Bombay Municipal Corporation Act.
The Municipal Corporation had passed a resolution delegating authority to G
Municipal Commissioner for making an application to the State Government,
but the application/letter either dated 13.9.2002 or 17.9.2002 were made to the
State Government by the Chief Engineer (Development Plan). The authority
was given by the Municipal Corporation to the Municipal Commissioner to
make an application to the State Government. No such application or Jetter
moved by the Municipal Commissioner has been produced before us. On H
+
424 SUPREME COURT REPORTS [2007] 9 S.C.R

A being asked by this Court, as many as six documents have been produced
before us by the counsel for the Municipal Corporation who has stated before
us that these documents were also placed before the Division Bench of the
Bombay High Court. Therefore, we have permitted production of these
documents before u_s. On a minute and careful scrutiny of the documents
B produced before us, we do not find that the application under clause (c) of
Section 126(1) was moved by the officer authorized by the Municipal
Corporation, i.e. the Municipal Commissioner, to the State Government for
acquisition of the land, so that it could be said that steps as contemplated
were taken for the commencement of acquisition proceedings.

C 37. In view of our decision on the interpretation and applicability of
Section 127 of the MRTP Act to the facts of the present case, the appellants
are entitled to the relief claimed, and the other question argued on the
applicability of the newly inserted Section l lA of the LA Act to the acquisition
of land made under the MRTP Act need not require to be considered by us
in this case.
D
38. For the aforesaid reasons, the impugned judgment and order dated
18.3.2005 passed by the Division Bench of the Bombay High Court is set
aside and this appeal is allowed. As no steps have been taken by the
M!-lnicipal Corporation for acquisition of the land within the time period, there
is deemed de-reservation of the land in question and the appellants are
E. permitted to utilise the land as permissible under Section 127 of the MRTP
-. Act.

P.K. ~ALASUBRAMANY AN, J. l. Leave granted in Special Leave
Petition (Civil) No. 11446 of2005.

F 2. Civil Appeal No. 3703 of 2003 is before us on the basis of an order
of reference dated 14.10.2004 reported as Gimar Traders v. State of
Maharashtra & Ors., [2004] 8 S.C.C. 505. Civil Appeal arising out of Special
Leave Petition (Civil) No. 11446 of 2005 is before us by virtue of an order
dated 11. 7.2005 tagging the same along with the Civil No. No. 3703 of2003.
G The question in Civil Appeal No. 3703 of 2003 and one of the questions in
the Civil Appeal arising out of Special Leave Petition (Civil) No. 11446 of2005
as posed by the order of reference is whether all the provisions of the Land
Acquisition Act, 1894 as amended by the Central Act 68 of 1984, can be read
into the provisions under Chapter VII of the Maharashtra Regional and Town
Planning Act, 1966 (for short, 'the MRTP Act') for an acquisition un~er that
H Act. According to the order of reference, the decision in State of Maharashtra
GIRNAR lRADERSv. STATE[BALASUBRAMANYAN,J.] 425

& Anr. v. Sant Joginder Singh Kishan Singh & Ors., [1995] 2 S.C.R. 242 A
requires reconsideration. In the second of the appeals, this question arises
along with· a subsidiary question on the interpretation of Section 127 of the
MRTP Act.

3. _The MRTP Act· as its preamble shows, is an act to make provision
for planning the development and use of land in Regions established for that B
purpose and for the constitution of Regional Planning Boards therefor; to
make better provisions for the preparation of Development plans with a view
to ensuring that. town planning schemes are made in. a proper manner and
their execution is made effective; to provide for the creation of new towns by
means of Development Authorities; to make provisions for the compulsory C
acquisition of land required for public purposes in respect of the plans; and
for purposes connected with the matters aforesaid. This legislation is a State
enactment and according to the learned counsel for the State of Maharashtra,
is covered by the Entries 5, 6, 10, 13, 14, 17, 18, 23, 24, 28, 33, 35 of List II
and also by Entries 17A, 20, 31 and 42 of List III of the Constitution. In other
words, the attempt is to show that the MRTP Act is a legislation concerned D
with planning, local development and regulation in various fields. As is seen
from the preamble, the compulsory acquisitions of land provided for by the
-f
Act are acquisitions of land required for public purposes in respect of plans
under the Town Planning Scheme and not for acquisitions of lands for other
purposes or for public purpose as envisaged by the Land Acquisition Act. E
4. In Civil Appeal No. 3703 of 2003, revised Draft Development Plan
under the MRTP Act was prepared on 22.11.1983. The revised Draft
Development Plan was published on 6.3.1987. The land in question was
reserved for the purpose of education. The land was agricultural land. The
appellant purchased the land only on 24.2.1984, after the preparation of the F
revised draft plan. The appellant attempted to get permission to develop the
land but without success.

5. On 19.1.1989, the appellant issued a purchase notice to the Government
under Section 49 of the MRTP Act. Steps for acquisition of land were taken
for the purpose as envisaged by the Plan and a declaration under Section 126 G
of the MRTP Act published on 15.10.1991. A draft award was also allegedly
prepared. At this stage, the appellant issued another purchase notice under
Section 49 of the MRTP Act on 22.3.1994. The purchase notice was rejected.
That rejection was challenged in the High Court by the appellant and the High
Court on 3 l.3.1997, directed the authorities to initiate acquisition proceedings H
426 SUPREME COURT REPORTS (2007] 9 S.C.R

A within one year failing which the land should be deemed to be released. Based
on the earlier initiation of acquisition proceedings, a final award was passed
on 10.2.1999 and the local authority deposited the award amount on 15.2.1999.
Notice was issued under Section 12(2) of the Land Acquisition Act to the
appellant. Then. the appellant filed another Writ Petition, No. 822 of 2000
B praying for the issue of a writ of certiorari to quash the proceedings on the
ground that Section l lA of the Land Acquisition Act, 1894 as amended, had
been violated by the award not being passed within two years of the declaration
under Section 6 of the Act, and for a writ of mandamus directing the
respondents in the Writ Petition to permit the appellant to develop the
reserved land for residential purposes. The High Court dismissed the Writ
C Petition by the impugned judgment. It held, on a perusal of the documents,
that it was satisfied that the requisite steps have been taken by the Special
Land Acquisition Officer after the earlier Writ Petition was disposed of and
there was no necessity to initiate fresh action by the Planning Authority as
contemplated under Section 126{l)(c) of the MRTP Act and hence the relief
sought could not be granted. It is this decision that was challenged before
D this Court by way of a Petition for Special Leave to Appeal and leave having
been granted the matter is before us as detailed earlier.

6. In the second of the appeals, the land involved is situate in Carmichael
Road, Malabar Hill Division, Mumbai. The declaration under Section 4(1) of
E the Bombay Town Planning Act, 1954 was made on 7.7.1958. A development
plan in accordance with the provisions of Section 3(1) of that Act was
published on 9.1.1964. On 8.7.1964, a modified development plan was submitted
to the Bombay Municipal Corporation to the Government of Maharashtra for
sanction. On 6.1.1967, the Government of Maharashtra sanctioned the
development plan. The property in question was notified for development as
F open space and children's park. On l l.l.1967, the MRTP Act came into force.
The Bombay Town Planning Act stood repealed. But proceedings initiated or
taken .under that Act were saved by Section 165 of the MRTP Act. It was
notified that 7 .2.1967 would be the date on which the final development plan
shall come into force.

G 7. On 6.l.1979, a declaration under Sections 126 (2) and 126(4) of the
MRTP Act was made in respect of an extent of2593.36 square meters of land.
On 24.9 .1984, the Land Acquisition (Amendment) Act 68 of 1984 came into
force. On 16.9.)991, the revised development plan sanctioned by the State
Government on 6.7.1991 came into effect. On 2.8.1993, ·the Municipal
H Commissioner, Greater Bombay wrote to the Special Land Acquisition Officer
GIRNARlRADERSv.STATE[BALASUBRAMANYAN,J.] 427

stating that the Bombay Municipal Corporation has decided to give priority A
for acquiring the property in question. The letter also requested Land
Acquisition Officer to move the State Government for acquisition of the
property forthe purposes envisaged by the MRTP Act. The Land Acquisition
Officer asked for submission of fresh proposals by taking a stand that an
earlier notification for acquisition of the property issued had lapsed on B
23.9.1986. On 3.2.1998, the appellant issued a purchase notice, inter alia,
asking. for re-notifying the property and to pay compensation as per the
prevailing market rate or otherwise to release the property from reservation
and accord sanction for development of the property. The Municipal
Commissioner thereupon wrote to the State Government indicating that
purchase notice issued was invalid as IO years have not expired since the C
sanction of the revised development plan which came into effect only on
16.9.1991. On 18.10.2000, the appellant again issued a purchase notice under
Section 127 of the MRTP Act to the Municipal Commissioner. Again, the
appellant was informed that since 10 years have not expired, the notice was
invalid. On 15.3.2002, the appellant issued yet another purchase notice under
Section 127 of the Act calling upon the authority either to acquire the land D
or to permit the appellant to develop the same. According to the Municipal
Corporation, on 9.9.2002, it passed a resolution deciding to request the State
Government to acquire the land. On 13.9.2002, the request was sent to the
State Government. On 20.11.2002, a notification under Section 126(4) of the
MRTP Act read with Section 6 of the Land Acquisition Act was issued E
declaring that the property in question was needed for the purpose for which
it has been reserved. The appellant filed a Writ Petition on 19.9.2003 seeking
to have the notification dated 6.1.1967 and the declaration dated 6.1.1979
quashed and for a mandamus directing the respondents to accord sanction
to the appellant for developing the property or in the alternative to re-notify
~- the land and pay the market value as compensation. On 24.6.2004, the High F
Court disposed of the Writ Petition leaving the appellant to pursue the
remedies that may be available in accordance with Jaw. The appellant thereupon
submitted a revised plan for development of the property purporting to be in
the light of the direction of the High Court in the Writ Petition. The proposal
was rejected. Another Writ Petition was filed by the appellant seeking G
permission to develop the land and for payment of enhanced compensation
and for quashing the notification dated 20.11.2002 issued under Section 126(4)
of the MRTP Act. After the pleadings were completed and the appellant
sought and obtained an amendment of the Writ Petition, ultimately the High
Court dismissed the Writ Petition relying on the decision in State of
Maharashtra & Anr. v. Sant Joginder Singh Kishan Singh & Ors. [supra]. H
428 SUPREME COURT REPORTS (2007] 9 S.C.R

A The appellant thereupon approached this Court and got its Petition for Special
Leave to Appeal tagged to Civil Appeal No. 3703 of 2003.

8. The main contention urged on behalf of 'the appellant~ ~n the first
aspect is that the MRTP Act has adopted the Land Acquisition Act, 1894 by
reference and consequently, any amendment in the Land Acquisition Act,
B 1894 would automatically be attracted in any proceedings for acquisition
under the MRTP Act. Since Section l lA introduced into the Land Acquisition
Act by Act 68 of 1984 provided that acquisition wo~ld lapse if an award is
not passed within two years of the declaration under Section 6 of the Act,
the entire proceedings for acquisition in both these cases have lapsed since
C awards were not rendered within two years of the declaration. On the second
aspect arising in the latter appeal, the contention is that on receipt of the
purchase notice, the proceeding for acquisition itself was not started within
six months of the receipt of the notice and consequently the acquisition and
the reservations have lapsed under Section 127 of the MRTP Act. The further
submission is that taking of some step like writing to the Government for
D acquiring the land, is not a step as contemplated by Section 127 of the MRTP
Act and the step must be a step under the Land Acquisition Act, namely,
issuance of a declaration under Section 6. of that Act so as to enable the
)-.
authority to acquire the land in term-s of the MRTP Act. These contentions·
are met by learned counsel for the State of Maharashtra and the authorities
E by contending that there was no incorporation by reference of the Land
Acquisition Act of 1894 in the MRTP Act; that the MRTP Act had adopted
the Land Acquisition Act only for limited purposes and since there was no
provision in the MRTP Act for lapsing of an acquisition as distinct from the
lapsing of the scheme itself, Section I IA of the Land Acquisition Act had
no application. It is also contended that in any event the amendment brought
F in by introduction of Section 11 A into the Land Acquisition Act by the
Amendment Act 68 of 1984 cannot be read into the MRTP Act which adopted
the Land Acquisition Act as it then stood in the year 1966, on which date
Section 11 A was_ not in the statute book and hence there was no question
of the acquisition lapsing in terms ·of Section I IA of the Land Acquisition
G Act. It is submitte~ that the decision of this Court in State of Maharashtra
& Anr_ v. Sant Joginder Singh Kishan Singh & Ors. [supra] covers this
question. On the latter question, it is submitted that what Section 127 of the
Act contemplates is only a step under the MRTP Act as distinct from the
Land Acquisition Act and the writing of the concerned authority to the
Government to acquire the land for the purpose for which it has been reserved
H under the revised plan within time would be a step in terms of Section 127
GIRNAR TRADERSv. STATE[BALASUBRAMANYAN,J.] 429

of the Act. It is submitted that the High Court has rightly relied upon the A
decision in Municipal Coproration of Greater Bombay v. Dr. Hakimwadi
Tenants' Association & Ors., (1988) Suppl. SCC 55) to negative the plea.

9. We may first notice the scheme of the MRTP Act. We have already
referred to the preamble of the MRTP Act which indicates that the main object
of the Act is to make provisions for planning the development and use of land B
in regions established for the purpose. Different purposes are contemplated.
Provision is also made for acquisition of land but as the preamble suggests
it is for compulsory acquisition of land required for the purposes in respect
of the plans and not merely a public purpose as understood under the Land
Acquisition Act. Thus, it is clear that the acquisition of land under the MRTP C
Act is incidental to the main objective of bringing about a planned development
of the different regions and areas in the State of Maharashtra and the use of
various lands reserved in the development plan for the purpose for which it
is reserved. Chapter VII deals with land acquisition. Section l '25 provides for
any land required, reserved or designated in a Regional plan, Development
plan or town planning scheme for a public purpose or purposes including D
plans for any areas 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. In other words, the moment a Regional development
plan or town planning had been ·notified, Section 125 would operate as a
notification corresponding to a notification under Section 4( I) of the Land
E
Acquisition Act. Section 126 provi~es for acquisition of land so required in
terms of the plan and three modes are prescribed for such acquisition. One
is by agreement by parties by paying an amount agreed to, or by paying the
compensation as provided in clause (b) or by making an application to the
State Government for acquiring the land under the Land Acquisition Act. The
acquisition under the Land Acquisition Act is contemplated by the authority F
making an application to the State Government for that purpose. In other
words, it is not the authority that has to take steps for the acquiring of the
land under the Land Acquisition Act but it is to apply to the State Government
to make an acquisition under the Land Acquisition Act. On receipt of such
an application if the State Government is satisfied that the land specified in G
the application is needed for the specified public purpose or that land is
included in the plan and it is needed for any public purpose indicated, it may
make a declaration, in the manner provided under Section 6 of the Land
Acquisition Act. The declaration so published is deemed to be a declaration
duly made under Section 126 of the MRTP Act. The proviso indicates that
declaration shall be made before the expiry of one year from the date of the H
430 SUPREME COURT REPORTS

A draft regional plan, development plan or any other plan or the scheme. On
publication of the declaration under Section 126, the Collector shall proceed
to make an order for acquisition of the land under the Land Acquisition Act
and the provisions of the Land Acquisition shall apply to the acquisition of
the said land subject to the modification that the relevant date for determining
B the market value to be paid as compensation shall be the date of declaration
under Section 126 of the MR TP Act. The section also provides that if a
declaration is not made within one year, the State Government may make a
fresh declaration for acquiring the land subject to the modification that the
market value of the land is to be paid with reference to the date of the
subsequent declaration. In other words, on a declaration under·Section 126
C being made, the authority under the MRTP Act has to apply to the government
to acquire the land. The Government has to issue a declaration as -contemplated
by Section 6 of the Land Acquisition Act. The compensation is to be paid
with reference to the date of such declaration. A declaration has to be made
within one year of the request for acquisition. But in case it is not so made,
a fresh declaration would be made in which case the compensation has to be
D adjudged with reference to the market value on the date of the second
declaration. Section 126 of the MRTP Act does not provide for the lapsing
of the acquisition. On the other hand, the acquisition, notwithstanding the
default to act in terms of sub-section (2) of that Section can be proceeded
with by issuing a fresh declaration and the compensation has to be determined
E with reference to the date of that fresh declaration. Section 127 provides for
lapsing of reservations. Since interpretation of Section 127 is also involved
we think it proper to extract the said, provision.

"127. If any land reserved, allotted or designated for any purpose
specified in any plan under this Act is not acquired by agreement
F within ten years from the date on which a final Regional plan, or final
Development plan comes into force or if proceedings for the acquisition
of such land under this Act or under the Land Acquisition Act, 1894;
are not commenced within such period, the owner or any person
interested in the land may serve notice on the Planning Authority,
Development Authority or as the case may be, Appropriate Authority
G to that effect; and if within six months from the date of the service
of notice of such notice, the land is not acquired or no steps as
aforesaid are commenced for its acquisition, the reservation, allotment'
or designation shall be deemed to be released from such reservation,
\
allotment or designation and shall become available to the owner for
H the purpose of development as 'otherwise, permissible in the case of
GIRNARTRADERSv.STATE[BALASUBRAMANYAN,J.] 431

adjacent land under the relevant plan." A
I 0. The reservations are provided by the Act for a period of ten years.
If the land is not acquired within a period of ten years by agreement of parties
or if proceedings for acquisition of the land are not commenced within ten
years, the owner could serve a notice on the planning authority or the
development authority and if within six months from the date of the service B
of such notice the land is not acquired or no steps are commenced for its
acquisition, the reservation, allotment or designation shall be deemed to have
lapsed and the land shall be deemed to be released from such purpose,
allotment or designation and shall become available to the owner for the
purpose of development as pennissible in the case of lands lying adjacent to C
the land in question under the relevant plan. In other words, ifthe reservation
lapses, the land owner could use the land for the purposes for which the
adjacent lands are permitted to be used under the development plan or
revised plan.

11. This section also does not appear to deal with lapsing of any D
acquisition for which steps have been taken in tenns of Section 126 of the
MRTP Act by applying to the State Government for acquiring the land for the
purpose for which it is reserved in the plan. But this Section contemplates
the lapsing ofreservation itself if the conditions laid down thereunder are not
complied with. If no acquisition is made within 10 years of the notification
under Section 125 of the Act, the land owner is given the right to issue a E
notice calling upon the authority to acquire the land for the purpose for which
it is eannarked in the plan. If on service of such a notice no steps for
acquisition are taken within six months, the reservation would lapse. This
section also does not contemplate a lapse of the acquisition as such. Section
128 confers power on the State Government to acquire land for a purpose F
other than the one for which it is designated in any plan or scheme. Section
129 confers power to take possession of the land in case of urgency at any
time after the declaration under Section 126(2) of the Act is notified, on
condition that before taking possession, the Collector has to offer to the
person interested, compensation as provided in that section.
G
12. On an analysis of the provisions in the context of the questions that
are before us, what emerges is that the publication of the plan with the
reservation therein itself operates as a notification like the one under Section
4( 1) of the Land Acquisition Act, that a declaration has to be made akin to
a declaration under Section 6 of the Land Acquisition Act, the compensation H
432 SUPREME COURT REPORTS [2007] 9 S.C.R.

A has to be paid not with reference to the date of the notification under Section
I 25 of the Act but with reference to the date of declaration under Section 126
of the MRTP Act and that a declaration under Section 126 of the Act had to
be made within one year of the application for acquisition made by the
authority under the MRTP Act. But in case the declaration was not so made,
a fresh declaration has to be issued and compensation has to be· paid with
B reference to the date of the fresh declaration and the authority had also the
power to take prior possession in case of urgency on the conditions stipulated
under Section 129 of the MRTP Act. The MRTP Act provides for lapsing of
. reservations but does not provide for lapsing of the acquisition. The
reservation lapses on the expiry of ten years and on the expiry of six months
C after a purchase notice is issued by the owner of the land unless steps are
taken in the meanwhile to proceed with the acquisition. If there is no agreement
regarding compensation and acquisition then the State Government has to .be
approached ·"for acquiring such land under the Land Acquisition Act, I 894."
-'
13. Under the Land Acquisition Act, a notification under Section 4(1)
D of the Act is followed by a declaration under Section 6 of the Act. The
amendment introduced by Act 68 of I 984 provides that no declaration under
Section 6 shall be made ·after the expiry of one year from the date of publication
of the notification under Section 4( I) of the Act. It further provides that the
Collector, after the declaration is made, has to take an order for acquisition,
E mark out the land available, issue notice to persons interested in the land to
be acquired and for, passing an award containing the true area of the land
acquired, the compensation that should be allowed for the land and the
apportionment of the compensation among the claimants, if there are more
than one. Section I lA introduced by Act 68 of 1984 provides that the
Collector shall make an award within a period of two years from the date of
F pub Iication of the declaration and if no award is made within that period the
entire proceedings for the acquisition of the land shall stand lapsed. Thus,
the Land Acquisition Act, as amended in the year 1984 provides for two
lapses of the acquisition; one, in a case where a declaration under Section
6 is not made within one year of the publication of the notification under
G Section 4(1) of the Act and; two, the award itself not being made within a
period of two years from the publication of the declaration.

14. The question we are called upon to decide is whether in spite of the
MRTP Act not having provided for the lapse of an acquisition and in spite
of having adopted a scheme for lapsing of the reservation itself, the stipulation
H in Section I IA of the Land Acquisition could be invoked to hold that an
GIRNARTRADERSv.STATE[BALASUBRAMANYAN,J.] 433

acquisition commenced after a declaration under Section 126 of the MRTP Act A
would lapse on the basis that the award had not been made within a period
of two years from the date of declaration.

15. It is clear that when the MRTP Act was enacted, the Land Acquisition
Act that was referred was the unamended Act of 1894. That Act did not
contain either a provision for lapsing of the acquisition on the non issue of B
a declaration under Section 6 of the Act within one year of a notification
under Section 4(1) of the Act or by the award not being rendered within two
years of a declaration under Section 6 of the Act. These two time limits were
prescribed by Act 68 of 1984. Thereafter, the State Legislature amended the
MRTP Act by substituting the proviso to sub-Section (2) of Section 126 C ,
providing that a declaration shall not be made after the expiry of one year from
the date of notification under Section 125 of the MRTP Act. Simultaneously,
sub-Section (4) was amended providing that notwithstanding the fact that a
declaration had not been made within one year, the Government could make
another declaration under Section 126 of the MRTP Act in terms of the Land
Acquisition Act in the manner provided by sub-sections (2) and (3) of Section D
126 with the only consequence that the compensation payable shall be the
compensation as on the date of the fresh declaration. Significantly, the State
Legislature did not introduce any provision either for the lapse of an acquisition
or for lapsing of the proceedings for acquisition if an award is not made within
two years of the declaration under Section 126 of the MRTP Act read with E
Section 6 of the Land Acquisition Act. According to learned counsel for the
State and the Authorities, this has significance in that the MRTP Act did not
intend the lapsing of an acquisition at all, and consequently for _non complia:tct;
with the requirement of Section I IA of the Land Acquisition Act.

16. It is in this context that learned counsel for the appellants contended F
that the Land Acquisition Act is incorporated by reference in the MRTP Act
and the consequences of such incorporation by reference is to make all
subsequent amendments to the Land Acquisition Act applicable to cases of
acquisition under the MRTP Act. Learned counsel submitted that the
consequences of incorporation by reference cannot _be ignored while dealing
with the contention raised on behalf of the State. G
17. Learned counsel for the State in answer submitted that the MRTP
Act was a legislation under the State List and the Land Acquisition Act was
a legi!>lation under the Union List. In other words, one was State Legislation
and the other was a Parliamentary Legislation. Learned counsel submitted that
434 SUPREME COURT REPORTS [2007] 9 S.C.R.

A the invocation of the theory of incorporation of reference when a State Act
refers to a Central enactment and applying the rules in that behalf, would
mean that the State Legislature would be taken to have surrendered its right
of legislation to the Parliament, a situation that cannot be readily envisioned.
According to him therefore, every amendment to the Central Legislation
B cannot automatically be adopted into the State Legislation in view of such
a grave consequence. This is an aspect which appears to warrant serious
consideration.

18. We shall now deal with some of the decisions that are gennane to
the issue. The first of the decisions is that of the Privy Council in Secretary
C of State v. Hindustan Cooperative Insurance Societies Ltd, AIR (\931) P.C.
149]. In that case, the provisions of the Land Acquisition Act, 1894 were inade
applicable for acquisition of land under the Improvement Act. Under the Land
Acquisition Act, against an award an appeal lay to the High Court under
Section 54 of that Act. The Privy Council had held in Rangoon Botatoung
Company v. Collector ofRangoon, 39 Indian Appeals 197] that under Section
D 54 of the Land Acquisition Act, no further appeal lay to the Privy Council
from the decision of the High Court in an appeal under Section 54 of the Act. -
The Land Acquisition Act was amended providing that the award passed
thereunder would be deemed to be a decree. The ai:nendment was of the year
1921, after the Land Acquisition Act, 1894 had been adopted by the
E Improvement Act. The question before the Privy Council was whether by
virtue of the amendment brought about in the year 1921 in the Land Acquisition
Act deeming an award to be a decree, a further appeal would lie to the Privy
Council from the decision of the High Court in the case of an acquisition
under the Improvement Act. It was argued before the Privy Council that it was
a case of incorporation by reference and therefore the amendment would
F automatically be attracted and consequently the award would be a decree and ~
an appeal lay to the Privy Council. The Privy Council negatived the said
contention thus:

"But their Lordships think that there are other and perhaps more
cogent objections to this contention of the Secretary of State, and
G their Lordships are not prepared to hold that the sub-section in
question, which was not enacted till l 921, can be regarded as
incorporated in the local Act of 1911. It was not part of the Land
Acquisition Act when the local Act was passed, nor in adopting the
provisions of the Land Acquisition Act is there anything to suggest
that the Bengal Legislature intended to bind themselves to any
H
·- GIRNAR lRADERSv. STAlE[BALASUBRAMANYAN,J.] 435
future additions· which might be made to that Act. It is at least A
conceivable that new provisions might have been added to the Land
Acquisition Act which would be wholly unsuitable to the local code.
Nor, again, does Act 19 of 1921 contain any provision that the
amendments enacted by it are to be treated as in any way retrospective,
are to be regarded as affecting any other enactment than the Land
Acquisition Act itself. Their Lordships regard the local Act as doing a
nothing more than incorporating certain provisions from an existing
Act, and for convenience of drafting doing so by reference to that
Act, instead of setting out for itself at length the provisions which it
was desired to adopt.

Their Lordships have not been referred to anything in the General
c
Rules of Construction embodied in the General Clauses Act, 1897,
which supports the contention of the Secretary of State, nor to any
authority which favours it. In this country it is accepted that where
a statute is incorporated by reference into a second statute, the repeal
of the first statute does not affect the second: see the cases collected D
in "Craies on Statute Law," Edn. 3, pp. 349-50. This doctrine finds
-+ expression in a common form section which regularly appears in the
Amending and Repealing Acts which are passed from time to time in
India. The section runs,

"The repeal by this Act of any enactment shall not affect any Act E
'\ . in which such enactment has been applied, incorporated ·ot::
referred to:"

The independent existence of the two Acts is therefore recognised;
despite the death of the parent Act, its offsprinig survives in the
incorporating Act. Though no such saving clause appears in the F
General Clauses Act, their Lordships think that the principle involved
is as applicable in India as it is in this country.

It seems to be no less logical to hold that where certain provisions
from an existing Act have been incorporated into a subsequent Act,
no addition to the former Act, which is not expressly made applicable 0
to the subsequent Act, can be deemed to be incorporated in it, at all
events if it is possible for the subsequent Act to function effectually
without the addition. So Lord Westbury says in Ex parte St. Sepulchre
(1864) 33 L.J. Ch. 372:
'If the particular Act gives iil itself a complete rule on this subject H
436 SUPREME COURT REPORTS [2007] 9 S.C.R.

A matter, the expression of that. rule would undoubtedly amount to an
exception of the subject matter of the rule out of the general Act:' see
also London, Chatham and Dover Railway v. Wandsworth Board of
Works (8 C.P. l85)." (emph.asis supplied)·

19. As we understand this decision, their Lordships have indicated that,
B in the absence of anything to suggest that the State Legislature intended to
bind themselves to any future additions, which might.be made in the Central
Act, it would not be proper to infer that all amendments subsequent to the
adoption would automatically apply. Their Lordships have also _indicated that
in such a situation, it would only be a case of a State Act incorporating
C certain provisions of an existing Central Act and nothing more. These reasons,
we consider weighty. In Chairman of the Municipal Commissioners ofHowrah
v. Shalimar Wood Products & Anr., [1963] 1 S.C.R. 47, this.Court quoted with
approval the concerned observations. In Ujagar Prints & Ors. v. Union of
India & Ors., [1989] 3 S.C.C. 488, this Court observed:
1.
D "Referential legislation is of two types. One is where. an earlier Act or
some of its provisions are incorporated by reference into a later Act.
In this event, the provisions of the earlier Act or those so incorporated,
as they stand in the earlier Act at the time of incorporation, will be
read into the later Act. Subsequent changes in the earlier Act or the
incorporated provisions will have to be ignored because, for all
E practical purposes, the existing provisions of the earlier Act have
betn re-enacted by such reference into the later one, rendering
irrelevant what happens to the earlier statute thereafter. Examples of
this can be seen in Secretary of State v. Hindustan Cooperative
Insurance Society, AIR (1931) PC 149, Boiani Ores Ltd. v. State of
Orissa, [1947] 2 S.C.C. 7_77, Mahindra and Mahindra-Ltd. v. Union of
F
India, [1979] 2 S.C.C. 529. On the other hand, the later ~tatute may not
incorporate the earlier provisions. It may only make a reference of a
broad nature as to the law on a subject generally, as in Bhajiya v.
Gopikabai, [I 978] 2 S.C.C. 542, or contain a general reference t~ the
terms of an earlier statute which are to be made applicable. In this case
G any modification, repeal or re-enactment of the earlier statute will also
be carried into in the later, for here, the idea is that certain provisions
of an earlier statute which become applicable in certain circumstances
are t~ be made use of for the purpose of the later Act also. Examples
of this type of legislation are to be seen in Collector of Customs v.
Nathe/la Sampathu Chetty, [1962] 3 S.C.R. 786, New Central Jute
H
GIRNARTRADERSv.STATE[BALASUBRAMANYAN,J.] 437

Mills Co. Ltd v. Assistant Collector of Central Excise, [1970] 2 S.C.C. A
820 and Special Land Acquisition Officer v. City Improvement Trust,
[1976] 4 S.C.C. 697. Whether a particular statute falls into the first or
second category is always a question of construction."

20. A three judge Bench of this Court in U.P. Awas Evam Vikas Parishad
v. Jainul Islam & Ors., [1998] 2 sec 467 after referring to and quoting from B
the decision of the Privy Council in Secretary of State v. Hindustan
Cooperative Insurance Societies Ltd. (supra) held that the provisions of
Section 55 of the concerned Adhiniyam were on the same lines as those
contained in the Calcutta Improvement Act, 1911 and the principles laid down
by the Privy Council are equally applicable to that case. This Court stated: C
"The amendments introduced in the Land Acquisition Act by the 1984
Act were not part of the Land Acquisition Act as applicable in the
State of Uttar Pradesh, at the time of passing of the Adhiniyam. The
provisions of the Land Acquisition Act, as amended in its application
to U.P., with the modifications specified in the Schedule to the D
Adhiniyam, have, therefore, to be treated to have been incorporated
by reference into the Adhiniyam and became an integral part of the
Adhiniyam and the said provisions would remain unaffected by any
subsequent repeal or amendment in the Land Acquisition Act unless
any of the exceptional situations indicated in State of MP. v. M V.
Narasimhan can be attracted." E
Their Lordships also observed that the Adhiniyam contains prov1S1ons
regarding acquisition of land which are complete and self contained. Nor can
the provisions in the Adhiniyam be said to be in pari materia with the Land
Acquisition Act because the Adhiniyam also deals with matters which do not
fall within the ambit of the Land Acquisition Act. It cannot also be said that F
the Act 68 of 1984, expressly or by necessary intendment, applies the said
amendments to the Adhiniyam. In Nagpur Improvement Trust v. Vasantrao
& Ors., [2002] 7 S.C.C. 657, yet another three Judge Bench of this Court after
quoting the observations of the Privy Council held that subsequent amendments
to Section 6 of the Land Acquisition Act by Act 68 of 1984 have no effect G
on acquisitions under the State Acts of Uttar Pradesh, Punjab and Nagpur
and that only the benefits conferred by Act 68 of 1984 relating to quantification
of compensation alone would be applicable in the case of acquisition under
the Town Planning Acts. Their Lordships repeated that it was also well settled
· that the question as to whether a particular legislation falls in the category
of referential legislation or legislation by incorporation depends upon the H
--y_
438 SUPREME COURT REPORTS [2007) 9 S.C.R.

A language used in the statute in which the reference is made to the earlier
decisions and other relevant circumstances. This decision is a clear authority
for the position that amendments brought about in the Land Acquisition Act,
1894, subsequent to the incorporation thereof by the State Act, could not
apply to acquisitions under the State Act.

B 21. But, both in U.P. Awas Evam Vikas Parishadv. Jainul Islam & Ors.
(supra) and Nagpur Improvement Trust v. Vasantrao & Ors. (supra), this
Court has taken the view that the Compensation payable has to be calculated
in tenns of the Land Acquisition Act as amended by Act 68 of 1984. If the
amendment has not to be taken to be incorporated, would this conclusion be
C justified, is one aspect to be considered.

22. But then, the Court in Nagpur Improvement Trust and Anr. v. Vithal
Rao & Ors., [ 1973] 1 SCC 500 had upheld the decision of the Bombay High
Court which had struck down certain provisions relating to the payment of
compensation for acquisition of land under the Improvement Trust Act. This
D Court summarised the decision of the High Court thus:

"The High Court held that as the acquisition is by the State in _all
cases where the property is required to be acquired for the purpose
of scheme framed by the Trust and such being the position, it is not
pennissible without violating the guarantee under Article 14 of the
E Constitution for the State to acquire any property under the provisions
of the Land Acquisition Act as amended by the Improvement Trust
Act insofar as they relate to the basis of detennination and payment
of compensation. It must, therefore, be held that the provisions of
Paragraph 10(2) and 10(3) insofar as they add a new clause (3)(a) to
Section 23 and a proviso to sub-section (2) of Section 23 of the Land
F Acquisition Act are ultra vires as violating the guarantee of Article
14 of the Constitution."

This Court stated:

" ............... .It seems to us that ordinarily a classification based on the
G public purpose is not permissible under Article 14 for the purpose of
determining compensation. The position is different when the owner
of the land himself is the recipient of benefits from an improviement
scheme, and the benefit to him is taken into consideration in fixing
compensation. Can classification be made on the basis of the authority
H acquiring the land? In other words can different principles of
GIRNAR TRADERSv. STATE[BALASUBRAMANYAN,J.] 439

compensation be laid if the land is acquired for or by an Improvement A,
Trust or Municipal Corporation or the Government? It seems to us
that the answer is in the negative because as far as the owner is
concerned it does not matter to him whether the land is acq~ired by
one authority or the other.

It is equally immaterial whether it is one Acquisition Act or another B·
Acquisition Act under which the land is acquired. If the existence of
two Acts could enable the State to give one owner different treatment
from another equally situated the owner who is discriminated against,
can claim the protection of Article 14."

Thus, it was held that differing compensations could n~t be paid for acquisition C
of land. It is relevant to notice that the decision was not based on a theory
of legislation by reference but based on discrimination. The implication of this
decision might justify the approach made in the earlier two cited decisions.

23. The decision in State of Kera/a & ors. v. T.M Peter & ors. (1980]
3 S.C.C. 554, saved the relevant provision by reading into it a provision for D
payment of solatium. There, this Court was dealing with the Town Planning
Act, 1932 (originally Travancore Act 4 of 1108 ME) and the Kerala Land
Acquisition Act, 1961. The High Court had struck down Section 34(1) and
Section 34(2A) cif the Town Planning Act and the appeal was against that
decision. This Court stated: E
"We regard this grievance as mythical, not real, for more than one
reason. The scheme is for improvement of a town and, therefore, has
a sense of urgency implicit in it. Government is aware of this import
and it is fanciful apprehension to imagine that lazy insouciance will
make Government slumber over the draft scheme for long years. F
Expeditious despatch is writ large on the process and that is an in-
built guideline in the statute. At the same time, taking a pragmatic
view, no precise time scale can be fixed in the Act because of the
myriad factors which are to be considered by Government before
granting sanction to a scheme in its original form or after modification. G
Section 12 and the other provisions give us some idea of the difficulty
of a rigid time-frame being written into the statute especially when
schemes may be small or big, simple or complex, demanding enquiries
or provoking discontent. The many exercises, the differences of scale,
the diverse consequences, the overall implications of developmental
H
440 SUPREME COURT REPORTS [2007] 9 S.C.R.

A schemes and projects and the plurality of considerations, expert
techniques and frequent consultations, hearings and other factors,
. precedent to according sanction are such that the many-sided
dimension of the sanctioning process makes fixation of rigid time
limits by the statute an impractical prescription. As pointed out earlier,
city improvement schemes have facets which mark them out from
B other land acquisition proposals. To miss the massive import and
specialised nature of improvement schemes is to expose one's innocence
of the dynamics of urban development. Shri Raghavan fairly pointed
out that, in other stages, the Act provides for limitation in time (for
example, Section 33 which fixes a period of three years between the
c date of notification and the actual acquisiton). Only in one minimal
area where time-limit may not be workable, it has not been specified.The
statute has left it to Government to deal expeditiously with the scheme
and we see sufficient guideline in the Act not to make the gap
between the draft scheme and governmental sanction too
procrastinatory to be arbitrary. We need hardly say, that the court is
D not powerless to quash and grant relief where, arbitrary protraction or
mala fide inaction of authorities injures an owner."

While upsetting the decision of the High Court and upholding the validity
of the provisions, this Court held that even then, solatium also will be payable
E to the land owners as provided under the Land Acquisition Act, even though
the acquisition is under the Improvement Act.

24. In State of Maharashtra & Anr. v. Sant Joginder Singh Kishan
Singh & Ors. (supra), this Court was dealing with the MRTP Act and two
learned judges of this Court after referring the distinction between legislation
F by incorporation and adoption by reference proceeded to hold that Section
11 A of the Land Acquisition ~ct on which reliance is placed before us was
not applicable to acquisitions under the MRTP Act. Of course, it is the
correctness of this decision that has been doubted by the Bench referring the
matter to a larger Bench since their Lordships were not inclined to agree with
the position adopted in State of Maharashtra & Anr. v. Sant Joginder Singh
G Kishan Singh & Ors. (supra) that Section 11 A is only a procedural provision
and the same introduced by Act 68 of 1984 cannot be read into the MRTP
Act which adopted the Land Acquisition Act prior to the said amendment.
Suffice it to notice that this decision is directly concerned with the MRTP Act.

25. Learned counsel for the appellants commended to us the reasons
H
GIRNARlRADERSv.STATE[BALASUBRAMANYAN,J.] 441

given in the order of reference for overturning the decision in State of A
Maharashtra & Anr. v. Sant Joginder Singh Kishan Singh & Ors. (supra).
Of course, we could consider or reconsider the correctness of the decision
in State of Maharashtra & Anr. v. Sant Joginder Singh Kishan Singh & Ors.
(supra) because that was rendered only by two learned judges. But, we find
from the various arguments raised that there are at least two, three Judges
Bench decisions which have recognised principles which may have to be B
considered or reconsidered while considering the aspects posed by the order
of reference. In that context, we think that the whole question requires to be
looked into considering the impact the answer to the questions may have on
various City and Town Improvement Acts governing the planning of cities
and towns and incidentally dealing with acquisitions of lands for the purpose C
for which the land is earmarked in the finalised plan or town planning scheme.
We also feel that the question whether anything turns on the fact that one
is a State enactment and the other a Parliamentary legislation as noticed by
the Privy Council while considering whether a subsequent amendment to the
parliamentary legislation can be read into the State enactment by invoking the
theory of legislation by reference has to be authoritatively considered. If one D
were to hold that the subsequent amendment would not be applicable, then.
how far one would be justified in importing the provisions as amended, for ·
determination and payment of compensation, may also have to be considered.
In this context, we also think that the propositions enunciated in The State
of Madhya Pradesh v. M V. Narasimhan, [1975] 2 S.C.C. 377 may also have E
to be examined afresh so as to authoritatively pronounce upon the principles
to be settled for application of the theory of incorporation by reference and
importing into the original law the amendments made to the Act that is
incorporated by reference. We also think that the question is of general
importance and it will be appropriate if the gamut of questions rising is settled
by an authoritative pronouncement of a Constitution Bench. F
26. Under our Constitution, there is a distribution of legislative powers
between the Parliament and the legislatures of States. Under Article 246 (I)
of the Constitution, Parliament has exclusive power to make laws with respect
to any of the matters enumerated in List I of the Seventh Schedule to the
Constitution. Under Article 246 (3) of the Constitution, State has exclusive G
power to make laws for the State with respect to any of the matters enumerated
in List II in the Seventh Schedule to the Constitution. Of course, under Article
246(2) of the Constitution, in respect of matters enumerated in List III in the
Seventh Schedule to the Constitution, both the Parliament and the State
Legislatures have the power to make laws. The legislative fields thus are well H
t
442 SUPREME COURT REPORTS [2007] 9 S.C.R.

A defined subject to some overlapping here and there. Therefore, in the context
of the Indian Constitution and what can be called the separation of legislative
powers, the question arises as to how far it is open to adopt the theory of
legislation by reference and to adopt the consequences flowing therefrom. No
doubt, as on that day, the legislature had chosen to adopt the parliamentary
B legislation. Actually, when a State Legislature incorporates the provisions of
a parliamentary enactment as part of its own legislation, it is enacting it as
on that day as its own legislation. The effect thereof can be conceived to be
a case of the legislature re-enacting the parliamentary enactment in respect
of a subject matter which is exclusively within its legislative field. As stated
in Craies on Statute Law, 7th Edn., page 223,
c "The effect of bringing into a later Act by reference, Sections of an
earlier Act is to introduce incorporated Sections of the earlier Act into
the later Act as if they had been enacted in it for the first time."

(emphasis supplied)
D One possible view is that you cannot incorporate as your own a Section that
did not exist as on the day of incorporating another Act by reference. In that
context, can it be said that, if there is a future amendment to the Parliamentary )
enactment that has been incorporated by the State Legislature, those
amendments would also automatically become applicable in the case of the
E State enactment? This would be postulating a position of surrender of its
legislative function or legislative power by the State Legislature to Parliament.
In the context of the Indian Constitution, is such a position permissible? Is
it open to the court to readily accept a surrender of its legislative power by
the State Legislature in such circumstances by construing the enactment as
F a legislation by reference? In our view, it cannot be readily inferred that the
State Legislature has made such a surrender of its legislative powers when
it adopts a parliamentary enactment as on the date it existed, by referring to
it in its enactment or by incorporating it in _its enactment. With respect, we
think that this aspect requires consideration by a Constitution Bench
considering that it also involves an interpretation of the Constitution and the
G Constitutional Scheme of Legislation.

27. The second of the questions, of course, relate to the interpretation
of Section 127 of the MRTP Act. The question has to be considered in the
light of the decision in Municipal Corporation of Greater Bombay v. Dr.
Hakimwadi Tenants' Association & ors. [supra] and the expression used in
H Section 127 of the Act which speaks of the land not being acquired or no
-t-
GIRNAR TRADERSv.STAIB[BALASUBRAMANYAN,J.] 443
steps as stated earlier are commenced for its acquisition. Obviously, under the A
MRTP Act, in a case where it is not acquired by negotiation, the authority
can only request the State Government to acquire the lands. In the context
of Sections 126 and 127, the question is whether it is not sufficient if the
authority within six months of receipt of the purchase notice issued by the
owner, applies to a State Government for acquiring the land as a step
contemplated by Section 127 of the MRTP Act. This is also a question which
B
is of considerable importance in the context of the Town Planning Acts and
the lapsing of schemes as distinct from the lapsing of acquisition. I feel that
this is also an important question which requires an authoritative
....
pronouncement, in the context of the argument on behalf of the appellant that
the step contemplated by Section 127 of the Act is a step under the Land c
Acquisition Act and not a step under the MRTP Act.

28. But I find that my learned brothers are inclined to decide this
question here and now. I find it difficult to appreciate why we should do so
when the main issue invoived herein also is being referred to a Constitution
Bench. But since my learned Brothers have chosen to pronounce on it, I have D
necessarily to express my views. I find myself unable to agree with the view
taken by them on the interpretation of Section 127 of the MRTP Act. Under
Section 126(1) of the Act the authority under the MRTP Act can only make
an application to the State Government for acquiring the concerned land
under the Land Acquisition Act, 1894. This is clear from Section 126(l)(c).
And clause (c) applies, when the acquisition cannot be made in terms of
E
clauses (a) and (b) of Section 126(1). What I want to emphasise here is that
the authority under the MRTP Act cannot be set in motion proceeding under
the Land Acquisition Act while acting under Section 126(1) of the MRTP Act.
It can only request the State Government to acquire the land and the State
Government initiates steps to acquire it when it is satisfied that the land, the F
acquisition of which is sought for, is needed for the public purpose specified
in the application made by the authority under the MRTP Act. It is not as
if the authority under the MRTP Act can issue a declaration in the manner
provided for under Section 6 of the Land Acquisition Act read with Section
126(2) of the MRTP Act.
G
29. When we i1'terpret Section 127 of the Act, it is not possible to forget
the impact of Section 126(1) of the Act. Obviously, the provisions have to be
~ read harmoniously. The court can only postulate the question whether the
authority under the MRTP Act has done which it possibly could, in terms of
the statute. Therefore, while reading Section 127, we have to take note of the H
-r
I

444 SUPREME COURT REPORTS [2007] 9 S.C.R.

A fact that the authority under the MRTP Act can only make an application for
acquisition under the Land Acquisition Act and nothing more. Therefore,
when Section 127 of the MRTP Act says that "if within six months from the
date of the service of such notice, the land is not acquired or no steps as
aforesaid are commenced for its acquisition" the reservation shall be deemed
to lapse. We have to see what the Authority under MRTP Act has done. The
B first part of the provision above quoted is unambiguous and that is a case
where the land is actually acquired. Or, in other words, the acquisition is
complete. The second limb above quoted shows that it is possible to avert
the lapse of the scheme if steps as aforesaid are commenced for its acquisition.
The step that the authority under the MRTP Act can commence, is the step
C of applying to the State Government to acquire such land under the Land
Acquisition Act. After all, the legislature has given the authority a locus
poenitentiae for invoking the machinery for acquisition under the Land
Acquisition Act. Therefore, when a purchase notice is received by it, in all
reasonableness, what it can do is to make an application to the State
Government to make the acquisition within six months of the receipt of the
D purchase notice. Is it necessary or proper to whittle down the locus
poenitentiae given to ensure that even at the last momerit the lapsing of the
scheme can be averted by the authority under the MR TP Act or even after
ten years it can seek the acquisition of the land on the receipt of the purchase
notice? It is in that context that in Municipal Coproration of Greater Bombay
E v. Dr. Hakimwadi Tenants' Association & Ors. (supra) this Court approved
the view of the Bombay High Court that it is enough ifthe application is made
by the Authority for acquisition of the land. Suppose, immediately on receipt
of a purchase notice, the authority under the MRTP Act makes an ·application
to the Government to acquire the land and for administrative reasons or
otherwise it takes the Government time to initiate the proceeding and the six
F months expire in between, can it be postulated that the reservation has
lapsed? In that case we will be compelling the authority under the MRTP Act
to do something that it has no power to do. According to me such an
interpretation of the provision would be unreasonable and should be avoided.
Here, the application has been made according to the respondents by the
G Chief Engineer as authorised by the local authority and to say that the letter
written by him is unauthorised or is not adequate compliance of Section 127
of the MRTP Act appears to me to be unwarranted especially when we keep
in mind the laudable objects of the MRTP Act.

30. The MRTP Act serves a great social purpose and the approach of
H the court to an interpretation must be to see to it that the social purpose is
GIRNARTRADERSv. STATE[BALASUBRAMANYAN,J.] 445

not defeated as far as possible. Therefore, a purposive interpretation of A
Section 127 of the Act so as to achieve the object of the MRTP Act is called
for.

31. I would, therefore, hold that there has been sufficient compliance
with the requirement of Section 127 of the MRTP Act by the authority under
the Act by the acquisition initiated against the appellant in the appeal arising B
out of SLP(C) No.11446 of 2005 and the reservation in respect of the land
involved therein does not lapse by the operation of Section 127 of the Act.
But since on the main question in agreement with my learned Brothers I have
referred the matter for decision by a Constitution Bench, I would not pass any
final orders in this appeal merely based on my conclusion on the aspect C
relating to Section·l27 of the MRTP Act. The said question also would stand
referred to the larger Bench.

32. I therefore refer these appeals to a larger Bench for decision. It is
for the larger Bench to consider whether it would not be appropriate to hear
the various States also on this question considering the impact of a decision D
on the relevant questions. The papers be placed before the Hon'ble Chief
Justice for appropriate orders.