A 386

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THE SPECIAL LAND ACQUISITION OFFICER, DAVANGERE . . v . •

P. VEERABHADARAPPA ETC. ETC .

January 9; J984

[A. P. SEN AND E. S. VsNKATARAMIAH]

Land Acquisitio11 1894 .(/ of 1894) S. 23

Acquisition of agricUlturaf lands in 1971 and 1972-paynient of C(Jmpensation- Market value fixed n basii of capitalisation Principl?-Multiplier to be adoptedexplained. •

Co1npl1!J'{ltion-ckten11ination of-1nethod of capitalisation_:..whe1t w Qe resorted to. .

t [n the.Y:ears 1971 and 1972, several "thousand acres of agflcriltural lands in two villages were acquired by he State Governn1ent pursua1'tt to different notificatiOns issued nder section 4(1) of the Land Acquisition Act 1894. In response to notices under section 9(2), the respondents appeared before the Special Land.

Acciuisition Officer and claimed co1npensation Varying between Rs.. 15,000 to Rs.25. 000.per acre for dry and wet lands ctePending. upn the natue.and the quality of t.h.e soil, and the ·]come derived therefron1.

In some cases -compensation .was claim:ed at more than Rs. 1 lakh Per acre

0 for arecai1ut .garden lands. . .

The Special L; ihd Acquisition Officer, by his various awards adopted a multiple of fifteen and a Warded compensation.at a flat rate of'Rs 3,300 per acre for dry agricutural lands and Rs 5 000.per.acre for we_t agriulural land_s.

On feferences undc; section 18, the Civil , Tudge adopted a.1nultiple of fiftee times the net annu1T profits as there was no other method of determinillg the market valm: of the land, and enhanced the amount o( comp"ensatiOn to Rs. 19,500 per acre for wet agricul tur•a"t lands and Rs 1,10,000 for arecanut garden lands."

On appeals b.Y the Special Land Acquisition Officer,.the High Court also adOpted the capitalised value at JS years'. purchase of the net annalprofits bu~

educed the amount of 9Jmpensation to Rs. 15,000 pet acre. for t agricultural lands an4 Rs.· 25,000 per acre for arecanut gar£1.en lands. . .

G In the appeals to this Court. by the Special Land Acquisition Officer. it Was

contended relying on the unreported 'dccisioi1 of the High Court dated November 21, 1977 in MFA Nos. ssi-4/76 : . .

. I The Special Land Acquisition Officer, [Javangere v. B. Basavarajappa & ()rs thiit the proper.· multipIC for computation o( the capitalized Value should be 12!, 8.nd that the High Court was wr-ong in adopting the multiple of _15 when the rate of return in the years 197l_and 1972 was~8 per cent per a:nnum:. · .'

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LAND ACQN. OFFICER V. P. VEERABHADARAPPA 387

Allowing the Appeafs; ..

HELD : 1. The funCtion of the Court in awarding compCnsation under the Land Acquisition Act 1894 is to acertain fhe "markt va1ue" o_f the land at the datC of th~ notification under section 4(1) of the Act; and the metho9s of valuation may .he; (1) OpiniOn of expert&: (2). Tne price paid withid.a reasonable time in bona fide transactions of purchase or sale of the lands _acquired, or of the lands adjacent to these acquired and possessing sifDilar advantaes, and (3) a number of years' pu~hase of th~ actual or in1Illediately prosPective profits of the lands acquired." [392 D-E] •

2. The method 'Of-capitalising the actual or inunediately prospective profits or the rent of a nun1ber of years' purchase should nofbe reso, rted to if there is _evidence of comparable sales or other evidence for computation of the mafket

Value-.. It can be resorted to only" when no other_ n1ethod is available;. [392 E] C

3. The caqing to be placed upon the phrase"Market Value"' of the land under s.23 of the Act, is he price the land acquired could actually be sold at the relevant time i.e. on the date of the notification _under s 4(1). The owner is-entitled to_ the value of the property in its actual condition at -the time of•expropriation, " with an its advantages and with_ all its possibilities,, excluding any advantage due to the carrying out-of the scheme for the Purpose for which the Property is acquired.

D .

Its valbe is ineasured by a consideration of the prices that have been obtained9in the past for lands of similar quality and in similar positi_ons ... [394 H; 392 BC)

4. In VaIuing land or an interest in Land for piJrposes of land acquisition procOOdings, the rule as to nun1ber of years' purchse is not a theoretical or legal rule but depends upon economic factors such as the prevailing rate o_f retu_rn_ which a prlldent investor in the class of properti_cs in. questjon would expect. The return which an invstor w_in expect from investn1ent will depend upon the characteristic of income as compared to that of idle security. The niost important of such eco 'nomic factors is the prevailing rate of interest at the relevant time i.e. on the date of the notification under s.4(1). . It is first necessary to acertain the gi-oss .incofti~ from the acquired property. The nextsteP should be ascertain the net income.

Having_ asckrtained the net annual in.come, it mut be capitalized by cornputin'g the number of years' purchase. • [395 B-C] .

Vyricherla Narayana Gajapatiraju v. Revenue Divfaiona/ Officer, Vizagapatnam, LR (193'9)66 JA 104; R11sto111 Cavasjee Cooper v. Union .Or India, 1970] 3 SC!\. 530; Oriental Gas CO. Ltd & Ors v. state.of West Bengal, [1979] 1 SCR:617; Uni(Jn. of india & Aur v. S1nt. Shanti De1•i e_tc etc AIR [19~3J SC 1190; referred .to.

5 In regard to investn1ent in agricultural 1ands there are many impon.dra -. bles inasmuch as the inVestor runs a much greater risk than the risk that he run~

. G in investment in housing which corisists in vagarieS of wePther and other uricertainties. There is no security of principal, no liquidity of investntent nor any cCr- .. ta_inty 9f income.

Th~ appreciation of princip"I or in-come is also. uncertain. The reasons for these is th?.{ agricultUral lands are not rea<; lily transferable under the various l'!-nd refcirms legisJation, ex. laws relating to ceiling-on agricultural holding H and tc!iancy laws.

Jn evalu?ting the rate Or rturn which would ordinarily satisfy

a.11 investor in such a property, the risk factor ~;:is further to be-eValuated. There

ffiay. be total of partial fallure of crops throUgh the fai1Ure of rain o~ dr~ght, o~ r, i1:u1dequate r excessive rainfall:. There may be: failure of ctops on' account Of

locusts, insectS or Pests, The cost jnputs such as seeds, water, fertiHzer etc. var:Y ·· . , ' . from year to year. The fluctuations in price of agricultural pfoduce introduce a gteat deal of uncertainty. in egard to "incorrie. In vieW of thee considerations, . . an investor wold expect a .much higher rate of return so.that the risk factor is . pr?perly discounted. [ 399 B-El : •

. ' In the instant case-s, when the rate .of rettlri1 On investment was s:2s. pCr ce; nt .in the yea.rs 1971and1972, a petson investing'.his capita.I iQ. .. gric; ultu_ral lands would', ordinarily.accept .2 Pei cent tO 3 per cent more than What he could obtain from. £:ilt-edged securities or. other .forms of Safe investmeitt lnci 'therefore the proper multiplier to be applied for tl¥: purpose of capitalization could not i~ any .event

- exceeded "ten", but.since the State Government in these cases contends that proper multiple for cover shold be .12f: [399 F-Gl .

6. the multiple of l2l s"hould be ai)pied in comPµta'tion of the capitaliied value oflandS. The judgments and.-CrW of the High COurt are modified.

The

'compnsation awa.rded for <lcquisition of land reduced by one-siXth v.'heever the amount. of .coffiPenstion had. been determined .by the method of capitalization.

The. rcspqndentS 'shalJ. get solatiuin 15 % on the Compensation comPuted as afore~.

D said1a.nd also interest.

[399 H; 400 A-BJ ·· ·

- . CIVIL APPEllLATE JURISDICTION : Civil Appe11Js Nos. 290·348, 729-746, 802-805(N) oll980, 2328-31 &)!350~2388 of 1981. . ; .·

(Appeals by Special leave from the Judgmetit and decree.s of .

. E .the Karnataka High Courl daied 12.7.79, 30.10.79, 4.6.81, 22.8.80; ,..( 4.7.80, 10.7.80, 7.8.80, 24.9, SO, 21.8.79,. 27.7.79, 28.5.80, 13.6.so ..

5.2.80, 10.12.79, 9.8.79,' 20.8.79, .8.8.79, 11.4.79, 26.3.79, 9.4.79, 24-.l-79,. . ' 12.4.79, 4.6;79, 1.12.78, 6.6.79, 13.6.79, 18.6.79,. 20.6.79 .. 26.7.79, . ·" 23.10.80 & 13.7.1979 in M.F:A. Nos. 678, 681·83, 686/78, 836-841/77,

150/78, 1~8-149/78, 8-16/79, 936-943/77, 567/7'7, 222·234/78, 256/78-

F 259/78, 444-44&/78, ·. 458/78, 705~707/77, 211-217/78, 736-737/78, 923-24/77, 130-131/78; .443/78, 1313,1314,1311/79, 735f?8, 481, 482,. j-.

687. & 688/78, 1432-35/79, 377-388/7-8, io87J80, 1352/79, rn67/78~

77/SQ, 4156-98/78, 71J/77, 925/77. 622/80,:. 765/80 1702/79,' 717.-18/77, 184/79, 260-61/78, 657/77 & 914-915/77) . . .

G 1 For the Appellants

• s.N. Ka'cker, and Swaraj Kaushal

For the Respondent; :

S.S.· Jdvali, B.P. Singh and Mr. RanJit Kumar •

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LAND ACQN.- OFFICER v. P. VEE~AB~ADARAPP/I (Sen, J.) • 389

S.L. Bedikar, and K.C. Dua P.R. Ramaseslz K.R. Nagaraja, Naresh Kaushal and B. Krishna Prasad, Girish Chandra, A.V.-Rangdm . •and G. Gopa/akri.; han •.

The Judgment ofthe Comt was delivered by

SEN, J. The short qii.esiio~ .involved in this appeal by special leave and.the further appeals under s.54. of the Land Acquisitiqn Act, 1894 ('Act' forshort) direct.ed against the judgment and decrees of the .

Karnataka High Court dated January 24, 1979 and in the connect, ed appeals i~ whether there has been any error i.11 principle or in law in the. illethd of valuation arrived at by .the courts below in adcpting 'fifteen' to be the multiple fo[ computation of capitalized value cf certain .agricultural lands acquired in the. years J 97J and 1972. .Jn

t.he' connected itppeals although te point was nt ?r, ecifically taken before the High Court, but the parties were given notice that that was

the real question to be determined. These appeals have accor.dingly been heard together as they involve common question. The .issue . involved is as to t.he proper muitiplier to be applied in determii1ing the capitalized. value of the lands 'acquired. and thar depends on the rate of return on investments .in 1971 and 1972. •· ·

In these appeals thejudgments were rendered by the High Court

B •

on. appeals being preferred by the SpecfaJ Land Acqbisition Officer, Davangere against the appellate judgments and decrees of the District· E Judge, Chitradurga and of the Civil Judge, Davangere on vanous references made under s.18 of the Act.

• The facts. giving ris.e to these appeals are more or Jess simi)ar, and the essential factsmily be shortly stated. Due to the construction . of D.B. Kere Pick-up Project, several thousand. acres of agricultural land in two villaoes in the State of Karnataka videlicet Budibar village in Harihar t';, luq and SiraganahaH1>' villge ;;, Pavangere taluq got submerged and" were accordingly acquired by the State Govern, ment pursuant to different notiJkations issued u1tdn s.4(lj-0f the Act ·.published on divers<; dates. in the years 1971 and 1972 followed by the usual 11oiifications .under S.6. In response "to noticesissmd under s.9(2) of the. Act, the respondents appeared before .. the Spceial .Land .

Acquisition OfllGer, Dayangeie and. clin1cd comper1, s2tiGn varying . . . - . between. R.s. 15,000 per acre to Rs: 25,000 per acre for dry and wet lands depending Upon the. quality of the soil, the nafore of the yield . and-the income derived thcrefrO:ru. In soine cases they also claimed

I . . . • . compensation at more t[lan rupees 011e lakh per acre for arecanut .

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SUPRBME COURT REPORTS.

[19~4) 2 S.C.R. . . . garden hinds. The Special Land Acquisition Officer however by his . various awards adopted a multiple of fifteen and awarded compensa- ·

tion' at a. fiat rate of Rs. 3,300 per care for dry agricultural lands and R, s. 1, ooo per acre for wet agricultural lands. On reference under s.• I 8 of the Act in 'each of these cases,. the Civil Judge' Davangere enhanced. the amount of compensation to Rs. 19,500 per acre for wet agricultural lands and Rs. I, JG,000 for are.., nut garden lands. There was common evidence adduced by the parties in all these cases and the evidence disclosed that the acquired lanps were more or less similar in. nture and contiguously situated. On a considerntion of t.he evidence the Jearnecf Judge came to the conclusion t11at the lands affected were capable of yii°elding two crops in a year with assured facility, the first being o( pad.dy and the second of jowar, irrigation -groundnut, chillies etc. As there was no other methcd of determin.ing the market .value of .the land; the learned Civil Judge applied a multiple of 1.5 time_s. the net , annual profits ..

On appeal by the Special Lar.d' Acquisition Officer, the High Ccurt also adopted the e2pitalizccl value at 15 years' purchase of the net annual profits but reduced the amom1t of compensation to Rs. 15,000per acre for wet agricultural lands and · Rs. 25,000 per acr~ fat arecanut garden lands i.e. depending upon thenatiire of the lands acquired. It would therefore appear that the High Court and the courts below have both.adopted-fifteen to.be the proper multiplier for computaticn of the capitaliZ<d value of the lands acquired for the purpose. of determining the amount of compens<ition payable for acquisiticn thereof; t . . '

Shri Kacker, learned counsel appeerirg on behalf cf the appellant contenas that the High Court was wrong in adopting the multiple of-) 5 of the actual or immediately pro.spcctive .net anirnal profits of the lands acquired to be the .capitalized value thereof when the rate of return in the years 1971 and 1972 was 8% per annum. According to. the learned counsel, there is an error in priciple or in law in the method employed and he draws-0ur attention to the unreported decision of the High Court i'n The Special Land Acquisition Ojfi'Ccr , Davangere v.

B. Basavarajappa & Ors.<1l layi~1g down. that the proper multiple for

computation of the capitalized value should be 12t having r.egard to the rate of return afthe relevant time i.e. on the date of the notificatipn under s.4>(1) of the Act.

The contention must., i.n our opinion, prevail. • . • Tn. Basavara; appa's case, supra, a Division Bench of the High

.. (1) Misc. First Appeals Nos. 881:4/76 decided on 21.fl.19,77.

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' LAND A, CQN. OFFICER v. P. VEERABHADRAPPA (Sen, J.) 391 • • Court while dealing with the determination of compensation payable for similar agricultural lands in the neighbourhood of the same two villages acquired at or about the same time adopted the multiple of 12t times the net annual profits for purposes of determining the . capitalized value thereof.· 11) c.oming to that conclusion, the. Hig~

Court observed :

"The rate of return from Government Security, which is Gilt-edged Security:, was around 6% ii1 the year 1971-72.

A person investing his capital in irrigated land would expect a return of about 2 % more than what he obtains from Government Securities. That cans, a return of 8 % would be the the normal return expected by an agriculturist investing in . purchase of wet lands. If 8 %. was the return expected, the . nµmber of years' purchase value comes to l2t," ·

We regret to find that in these cases the High Court instead of having adopted the multiple of 12t times observed that the decision in Basa.varajappa's case, supra, was not applicable because. the lands acquired in these cases were for superior for which there is no rational basis. If the lands acqt1ired were of a superior quality, the actual or

immediately prospective net annual profits would be more and when multipled by the proper multiplier arrived at on the rate of return at the relevant time i.e. an the date of the notification under s.4(1) of the Act, the a'niount of compensation for acquisition of such lands would necessarily be more. The quality of the soil has no relevance . . to the proper"multiplier to be adopted in determining the capitalized value.

In Vyricherla Narayana Gajapatiraju v . . Revenue Divisional Offiter; Vizagapatnam11 > the Privy Council adopted ihe traditional legal definitfon of value as the pric.e at which. th~ property would sell "as between a willing buyer and a willing seller".· In its narrowest sense it is designed to preclude a valuation based on an assumed forced sale; the property must be appraised at what it would probably bring if the. owner allowed a rasonab!e opportunity for negotiatiOQS.

But the Courts have invoked a mythical willing buyer to justify a valuation highe.r than any attainable sale price. According to the Privy Council, "market value" of the land within the meaning of

s.i23 of the Act is the price the property may fetch in the open market if sold by a willing vendor unaffected by the special needs of a parti-

(1) LR [1939] 66 IA 104

~· . . .

. [1984) 2 S.C.R.

cuiar purpose .. The owner: is. eutitled to. the value of the property A . in its actual condition at the time of expropriation, with all its ail vantages and with all. its possibilities, excluding any advP;>tage due t~ . the ·.carrying out of the scheme for the purpose for which ihe propei:fy

is acquired. It is not only realized possibilities but also the future possibilities that must .be taken into consideraiion.

The Privy Coun: . c:il further observed that there is not in general ariy market for land in .the sense that_ one spoaks of market for shares or commercial g0ods.

 The v~I lie o( any such ar!icle at any particular time cari readily be ascertained by the prices being .obtained for. siinilar artiCles i11 the: • mrket. . fo the case of land, its value can also be ruea$ured by a consideration of _the prices that have been obtained in the past for .lands of'similar quality and in similar positions; and that. is what must be 1fr, ant in g.eneral by the "1i:Jarket value" _in s.23. ·

The function of the Court. in awarding compensation. under the Act is to ascertain the .market value of the I arid at the date of the notification under s.4(1) of the Act and the methods. of vnluation D • may be : (I) Opinion of experts.' (2) The prices pi\i.d within a reaso- "'- nable time in bona fide transactions of purchase or sale of the. lands. acquired or of the lands adjacent to those acquired and possessing siniilar advantages. . And (3) A number of years•· purchase of the actual of immediately prospective profits of ihe lands acquired-.. _Nor- . · mally; the inethod.of capitalizing the actual or-immediately prospective E 1 profits or the rent ofll ; lU•nber of years' purchase should not.be resorted to if there is evidence of comparable sales or othe!' evidence for computation ofthe market value: It can be tesortedto nly when no other

ff.

method is available. . .

Itds axiomatic that the best evidence to prove what a willing p11rchaser would pay for .the la1id under . acquisition would be the evidence of sales of comparable .properties, proxi1riate in time to •the date of acquisition,· .similarly situate, and possessing the same or similar advatages ad sUbject to tlie Same or sim_ilar disadvantages.

hrket value is the price the property may fetch in the open market if so.Id by a willing seller untfected by the special need.sofa particular purchase. Wh¢re definite material is not forthcomig either m tl.e . shape of sales of similar. lands in the nei_ghbourhood at .of abo_ut the

date qf notification under s.4(l) or oiherwise, the Court has no oth~! alternative but to fall back on the method of valuation by cajJitalization. Iii valuing land or an interest in land for purposes of 1and acquisition proceedings. the rule :as to number of years' purchase is

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LAND ACQN. _OFFICER v. P. VEERAB~ADRAPPA. (Sm, J.) . 393

not. a theoretical or legal .rule but depends upon economic !actors such as the prevailing rate .. of interest in money invesiments. The return which an investor will expect from an investment wil!"depend upon the characteristic of income as .compared to that of idle security: The main features are : (I) Security of the income; (2) fluctuation ; .

(3) chances of increse; (4) cost of collection etc.· The most difficu)t and yet the most important and crudal part cif ihe whole exercise is the determination of the reasonale rate of return in respect of investment in various types 9f properties. Or:ce. this rate of return and'.

accor<lingly the rate of -capitall~£tion are .determied, there is- no. problem in valuation of the prape1iy.

The traditional concept of capitalizati"on was indicated by this Court in Rustom Cava<jee. Coopei .v. Un.ion of India. <1>. It was stated

to be:

• . "Capitalization of the _net annual profit ouf of the property at a rate equal in normal cases to ihe return from gilt edged securities: . Ordinarily value of the property may be determined by capitalizing the net annualvalue obtainable in ihe market at the date of the notice of acquisition."

. . . rt is thus clear from th'" " 11ne enunciation that the method of d'termining t)Oe value of the property by_ application of a multiplier to the. net annual income or profit should only be adopted when. there.is no evi<\ence of comparable sales of similar lands in or about the neighbourhood at the relevant time i.e. on the date of the notification under. s.4(1) of the Aot. In certain circumstances however the Court h~~ no other alternative but to all back on the capitalized value.

' Alfred D. fahr in "Law of Emi1ient Domain" (1953 edn:) after a general discussion regarding the valuation of property, sums up at . pp. 100-101 . . .

"!t is evident, therefore, from the foregoing definitioi1s . . . as well as from numerous other definitions whkh may be cited, that the fair market value of property taken by eminent d amain is the price that the property will bring. when offered for sale by one desiring, but riot .obliged, to sell; and purchased by one desiring to purch.ase but u11der no necessity

• (I) [1_9YO] 3 s.c.R. 530.

 SUPREME GOURT REPORTS • [1984] 2 s.'c.R.

of buying. It is. the price which a piece of property will . bring in the market when offered for sale' and. purchased by

another, taking into consideration all the elements of the availability of the property, its use, potential or prospective, . and all other elements. which combine to give a piece of . properti a market value."

• The learned author then deals with the fixation of market value. ' on the basis of rental income at pp. :226-.229 and states : ·

"It is. far sounder practice to avoid the use of rental value capitalization, if better twidence of market value is available.

In any event, the courts are inclined to give a greater weight to sales of similar. properties in the market than to evidence of lease hold rentals." · •

Jahr then deals with the method of capitalization of income and says at p, 230 :

"It is quife evident 'from the formula that the lower the . rate of return applied~ the higher the capitalized sum will be.

Ho\v ever, the rate of return on .money invested is depend ent. , upon many varied factors; (!) safety of principal; (2) liquidity of investment; (3) certainty of income; (4) possible market fluctuations; (5) appreciation of principal or income; and undoubtedly other elements too numerous to mention.

The interest rate current in the security market must 'be considered, as well as the fovestment rate to be obtained from high grade bonds .or common stocks and commodities traded on the several 'exchanges."

The principle ded.ucible from the above passage Is that the basic factor in applying the method of capitalization of income for ascertaining the market value of property is the rate of return that an ordinary investor would .. reasonably get. on his investment, having due regard to all the relevant circumstances.

. In the classical economic sense, as adopted by the. :Privy Council in Vyricherla's case, supra, the meaning to be placed upon the phrase

"market value" of the land under s . .23 of the Act is the price at which the land acquired could actually be sold at the relevant time i.e .. on the date of the notification under s.4(1) of the Act by a fictitious willing . buyer in a hypothetical market, with. the qualification that a forced ..

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LAND ACQN. OFFICER v: p. YEERABHADl!.APPA (Sen, J.) 395

.sale is not to be assumed. The pric~ at which the property would . sell "as between a willing buyer and a willing seller" raises the problem ·

of valuation. The value of any object of wealth is simply a capitalization of the services or income which.· act'!al or potential owners of . the property expect to derive from it i.e.' earning power as a. basis ·

of valuation. The .rule of number of years' purchase is not a .iheoretical.or legal rule, but depends upon the economk factors such as the.

prevailing rate of return which a prudent il'vestor in the dass of properties. fo question would expect. The most important of such economic factors is the prevailing rate of interest at the releant time i.e. on "the date .of the notification under s,4(1) of the Act. It is first. necessary to ascertain the gross income from th._. acquired property. The next step should be, to ascertain the net income. Having ascertained the net annual income, It inust be capitalized by computing the number of years' purchase.

During the Imperial. days, investment in gilt-edged securities was looked upon as the only safe form of investment. But after

the attainment of independence, the country has taken long strides D in the gro~I!!· of. commerce and trade .. Due to growth .of indstries

both in the public as well as in the private sector investment of capital in such industries, if not anymore secure, have cbmc into the law merchant and such other alternative available securities have attnfcted persons who ate 'inclined. to invest, rather"than gilt:edged securities alone, apart from mking Jtxed deposits' ii1 the scheduled banks. This E accounts for the variation of the , proper multiple to .be ; adopted. ' The line of inquiry in such ca&es must therefore be : What was the pre- . vailing rate of interes.t on long .term deposits with scheduled banks

or in the public or private sector ?

At !he turn of the century, it was not uncommon for the Courts to adopt a rule of .c.!O years' purehase for arriving at the capitalized value of agricultural lands. It had long been the practice in the Courts of the then Madras Presidencrto calculate the profits J'rom any form of landed property as equal to :the profits made by investing

of. money in the gilt-edged secuties.. Till the early SO's, the Coiirts Of the then Madras Presidency held that the capitalized value of agricultural lands should be arrived at :20 years' purchase having regard to the rate of interest on gilt-edged , securities at five per cent per annum. It was, however, observed that with respect to mell)'aram interest in a zamindari land or a vacant sjte, it was dilliculno acl:ept ., the current rate of interest on gilt-edged secutries as a safe guide to the multiple to be applied to ihe annual profits on 'ryotwari land. The

....

• G

landlord .in sue~ cases would not on!) xpect to get a return on the capital invested on the. Jand but also something in a<ldition tci that as compensation for his tro, rible in attending to the land and for the risks involved in thecultivation of land. It was observed. ttiat althou.gh the tenants might have , af!; reed to pay him a fix<d rent in mone.y, yet if a full crop was not niised on the land either through failure of rain or because .of pests or for any other 'reason, it was extremely difficult for the landlord \o realize the rent.. For. these reasons.: the landlord naturally expected an appreciably lirger. return than he would expect froin gilt-edged securities which he lefts in the bank and for the realization of the interest of which h' is put to .no trouble whatsoevr.

It. ould be unrea{is; ic to adhre .to the traditional view of'""', capitalized value being linked with gilt-edged securities when invest- . ment in fixed deposits with 11ationalized banks, Natio1ial :savings , Certificates, Unit Trusts and other fonils of Government secmities

. and even in the share market in the shape of blue chips conimand a

, muh greater return. More secure the capital and regular the return,

lesser the rate of interest .. Most secured kind of investment is Government securities or deposits with scheduled banks ,, Unit Trust .. or National Savings Certificates. The rate ofinterest 6 Government of India bonds for a period of JO years in 1972 yielded 5. 75 % per annum. As per the Governn1ent of Karnataka publication called . ·"Finance Accounts cif 1972-73" the rate of interest on the Mysore . State Developniertt Loans issued in the ytiars 1967, 1968, 1969, 1970,

1971 and 1972 was uniformly 5.3/4 % return. The rate of interest on fixd depoSits with State Ba11k. of India for a period ranging from .. 3 years upto 5 years yielded 7% while the rate on fixed deposits above .~ S years was 7.,25 %. '.The rate of dividend payable. on unit trusts in,

.197~ was 8.25% per annum .. National Savings Certificates; 7 years,..

2nd issue yielded tax-free interest af 6% on maturity, 7 years; 3rd i'ssue 6% tax-free payable annually and 7 years, 4th issue 7.5% payable" j annually but subject to income-tax. . .

.. In Oriental Gas Co: Ltd. & Ors. v. State of West Bengal.'"Jhis . Ccmrt held for the acquisition of ii, n. industrial undertaking in ·:the

State of' West Beng!ll that if 12! % of the capital invested was the annual return; the adoption of mu]iplier of "eight" could not be unreasonable in the year .1962. Thet cimtention based on the iraditional view expressed by Shah, J. in Cooper's case, supra, that the multiplier must be. related to the rate of interest on gilt-edged securities .. . . . ..

(I) [19791 1 s.c.R. 6j.1. •

~.

. LAND ACQUN .. QFF!CER v. P. VEERAB!:IADARAPPA ( S!•n, J.)' 397

was repelled by Chinnapa Rddy, J. H was stated .that the .observ.a- A. tions of Shah, J. in Cbopel"'s case that.'capifalization of the net annual value of the property, at a rate <:qua! in normal cases .to the return from gilt-edged securities' was all' important method of.determination of compensation, did not lay ddwn a rule of law of universal applica, tion.. It was observed :

"'Thevery use of th.e word "normal" by Shah, J. indicates . that it was not intended to lay down any invar.iable rule .that whenever a method of capitalization of net.profit was adopted,· the return from gilt-edged securities was to be thebasis .. Thai should depend on a vaiety of circumstances such as the . nature of the pro, rty, the norn1al return which may be expected on like investment, the state .of the ca.pital market' .and several such factors.,, .

' In Union of India & A.nr. v, Smt. Sh.anti.Devi etc. etc. cv this Court recently had occasion to' lay down the<;!ijnciple as to the true' multiplier · of "thirteen" applicable in determining the capitalized .value of about . D: • ' 70,000 acres of agricultural land located In .the Kangra ".alley in the.

State of Himachal Pradesh where the notification under s.4(1) of the Act had bee1i. issued in the years 1962 and, 1963, and' where there was no eyidence of comparable sales of similar.lands in the Kangra valley.

After referring to the judgment of this Court in 'Oriental Gas CO:- Ltd.'s case,. supra, and several other dec.isions, one of us (Venkata- . ramiah J .) observed :

, "The number of years' purchase has gradually decreased as'the prevailing rate of interest realisa):ile from safe investments has gradually increased-the higher the rate. of interest, the lower the number of years"purchase. This method of valuation involves capitalizing the Ile! inco1ne that the property. can. fairly be expected to produce >Ind the rate of capitalization is the percentage ofreturn.n.his investment that a.willing buyer would expe.ct from the property during the relevant period.'' ·

. The Couri explained that although at one time it was felt .th.at . interest on gilt-edged securities or Gover1lment bonds s!lould alone

be taken into consideration, having regard to the safety .and liquidity of investment, but 'the circums.tances have now changed during the

(I) AIR 1983. SC IJ90

- JI..

•. ,_.

398 (.1984) 2 s.C.R .. ·

A recent years and deposits with the Stale Bank . of. India and hther

. nationalized banks and even in the share market there are many blue \- chips which command stability and other attendant benefits such as

issue of bonus ehares et cetera, and added : .

"A return of 10% per annum _on such safe investments is almost assured. Today nobody thinks of investing oii land which would yield a net income of just 5% to 6% per annum . .:.

A higher return of the order of 10% is usually anticipated.

Even in the years 1902 and 1963 an investor in agricultural -'land expected annual net return of at last 8 %· It means that if the lai1d yielded a net annual income of Rs. 8 a

willing buyer of land would have paffl for it Rs. 100 i.e." a little more than 1.2 times the annual net income.'.'.

. . .

There are. certain "general considerations which investors cif all types take more or less into acccount : yield and appreciation possibilities, the ability .readily to di$ose of-the investment (marketability)' and' safety.· Investments differ with respect to assural)ce of income and safety of principal. In the investment market, the quality of . investment is evidenced_ by the yield or return that is produced in relation to market price higher the quality, the lower the yield. Invcs- . tors. must take in(o account various: types of risks associate'd with

different investment 1nediums and therefore adopt a type of investment that is appropriate to their resources and particular investment objec- . tivcs.

As_ already stated, some. 20 to 30 years back i.e .. tiJI the early '50s, it was taken as a settled rule of practice, that the capitalized value. of agricultural ·(ands should be arrived at 20 years' purchase having regard to the rate of interest on gifr:edged securities at five .per cent. That rule no longer can be adhered to in view of the changed . economic situation. In the early-'70s, people believed that investment in housing was more secure. than other forms of .Government securities in respect of safety of inves"tment. Investment in housing involves certainly" of lbour and etfot such as maintenance, collection of ren\, payment of taxes et cetera. The rate of return expected therefore was 1.1/2% to 2.1/2% more than what was expected from

i!Hdged securities. A person investing his capital in agricultural rands would ordinarily expect a return of 2 % to 3 % more tha~ what he could obtain froQJ. gilt-edged . secu_rities or other forms. of afe . t t 1 °" fixed deposits in scheduled banks. Nat10nal Savmgs 1nves 1ncn .sue t n.) - • • k d Certific1tcs, Unit Trusts ·"' etera i!r on blue chips i.e. n stoc s an

.. .

·~ . . .

~ ..

- LAND ACQUN. OFFICER 1', p., VEERABHADARAPPA (Sen, J.) 399 .

shares in the public or private sector which )ield a much greater return.. A

~ Ia regard to investment in agricultural lands, there are many imponderables in as mucl:i as the.investor runs a much greater risk than the risk that He run.s in investment in housing which consists in vagaries of weather and other uncertainties., There. is no security of principal, no liquidity of investment nor any .certainty of income.

The appreciation of Principal or income is aiso uncerain. The reaSons . [or these is that agricultural 1ands are not readily transferable under

the various land reform legislations e.g. laws relating to ceiling on agricultural holdings under the existing State laws and tenancy laws. I

which place restrictions on transfer of such lands with concomitant danger of effacement of the rights f the absentee-landlors and""ihe c . creation of rights in the tillers of the soil. lri evaluating the rate. of return which would ordinarily satisfy ah investo1' in such a .Prperty, the risk factor has further to be evaluated. There may be total or partial f!iJure of crops either.tllfough failure of rain or drought, or inadequate or excessive rainfall. Ther.e . may be a failure 'Of crs

on account' of locust i)'ivasion or insects or pesis, The cost inputs such as seeds, water, fertilizer~ laboWI charges etc. would vary from year to yca, r. lf the, overall cost goes up, the income from agricultural produce would be comparatively Jess. The fluctuations in price of agricultural produce introduce a great deal of uncertainty in regard to the income that can be expected from the sale of the.produce.· If the yield of the .crop in .other producing countries is large, or the market prices prevailing in such countries are low, the prices of such agricultural produce in India would go down. In view of these considerations, an investor 'would expect a much higher 'rate of return so that the risk factor is properly. discounted. . • . . .

In the premises, when the rate of return .on investment was

F 8.25% in the years 1971 and 1972,. a person investing his capital in. agricultural lands would ordinarily expect 2 % to 3% more than what he could obtain. from gilt-edged securities or other forms Of safe investment and therefore the proper multiplier to be applied for the purpose of capitaliiation could not, in any event, exceed "ten": In

the present case, the State Government however contends that the G proper multiple to be. applied.· should be 121, in computation of the capitilized value of the lands in these cases having regard to the rate <; if return of 8 % at the relevant time i.e. on the date of the notification under s.4(1) of the Act. 1n view of this, it must be held ihat the multiple of 12i shouliJ be applied in computation of the capitalized H value of the lands. '

\.-.

A In the result,· the appeals must succeed ad are .allowed, The judgments and decrees of the. High.' Court are modified by d.irecting that the compensation awarded for acquistion. of land should be reduced by one-si; x:th, in these cases wherever tl\e amount of com-· pensa:tion has been d.etermined by the method of capitaiiiation: The respondents shall get solatium.@15%.on the compensation com.

B puted on the above basis and shall be paid intere.st aHhe rate decreed . by the courts bel<?w

. .

j .. · The costs shall be borne by tbe parties throughout as incurred.. ~

N.V.K. •

Appeals allowed. ' ...

• • .:., r ' .. • • •

.. I' •

• •

. .

P. VEERABHADARAPPA ETC. ETC

A. P. SEN

S. 23

section 4(1)

Land Acquisition Act 1894

section 9(2)

section 18

section 4(1)

s 4(1)

s.N. Ka'cker

Swaraj Kaushal

S.S.· Jdvali

B.P. Singh

RanJit Kumar

S.L. Bedikar

K.C. Dua P.R. Ramaseslz K.R. Nagaraja

Naresh Kaushal

B. Krishna Prasad

Girish Chandra

A.V.-Rangdm

G. Gopa

SEN

Land Acquisitiqn Act, 1894

s. 15

SUPRBME COURT

Special Land Acquisition Officer

s. 1

Davangere

Kacker

Basa.varajappa

Alfred D. fahr

Jahr

Vyricherla

Madras

State of' West Beng!ll

Shah

Cooper

LAND ACQUN

Chinnapa Rddy

Cbopel

Oriental Gas CO:- Ltd.

Venkata- . ramiah

India


401 A

,•-·

BHASKAR -TEXTILE MILLS LTD.

JHARSUGUDA MUNICIPALITY & OTHER.

january, fl, !984

[R S. VENKATARMIAH AND .R. B. MISRA; JJ; J

Octroi dufy1 imposition of-Validitf of-teiposition of Octroi. duty 'under secfio"n 131(1)(kk) OJ-the Orissa Municipal Aci, 1950 to. a-village constituted as a Grama earlier under Section 3 .of the Orissa Gram P!Afi:hayat Act, 1964_ but la,_ter

, C included in an.area of a MuniCip'ality under Section 4 of the-1950 Act-Constitution oflqJfia, 1950, Article 19(1)g. • ' -

The appellant Textile Mills is a COn1pan; duly.incorporated uder tfe Indi.an' Companies Act 1956, having its mil~ located at Village Ektali ui:ider the" Jharsuguda police station in distriCt Sambalpur, Orissa. The company mainly carries on. sPinning of Cotton which in the 'Il"Ui.nUfacturing process is. transformed from IoOse fibfes into finished yarll The area undeir the Ektali village 1n which the appellallt's factory .was located was earlier.OOnstituteci as a Graa by a declaration mad(:der Section 3 of the OriSsa Grama Panch3.yat Act 1964.~ .On or about March 25, 1976 Jhauguda Municipalit)' passed a resolution for ihe inciusionof the Ektali and other villages within ts jurisdiction: After considering the objec~ tiOns aad representations aganst. the inclusion of EktaH viliage in the Municipal Limit and after follo\ving once again the othC_r statutory requireriient of furtheF notice.etc., .the stite 9overnment pbliscd.:in the O.rissa Gazette "dated 1i;8.1975 a notification aiJl)rovirig. the inclusion. Soon thereafter on September .1. 1975. the said Jharsuguda MnicipalitY. sent a-)etter to' the appellallt 'dirdcting. it to .pay octroi dty at the rate of .1_ percent ad valorem on cotton as son as it entefed the Municipal check µOst for the purpose of its being spun into yarn;

The lvy of octroi was challenged b; :tiling. a ."j, etitin under Ar.ts. 226 cind 227 of the Constitution on Various grounds. but :the writ PetitioO: .was, dismissed.

Petition .seeking :Permission for issu8J?.~ of a ce-rtificate under Article 133(1) of . the Constitution was also dismissed. Hence the appeal aftci: phtaining SpeCiaI Leave of the Court. - -

Dismissing the apPeal the Cou.11.

HELD : 1 .. cOnSidering fhe case from any -aspect" the imposition of octroi duty under sOOtion 5 of the. Orissa Municipal Act, .1950 does not stiffer from any

infirmity

[ 413 HJ ·

2; The levy~ being neither an unrea"so.Oable one nor alsO exeessive, cailnot

- 'he cbllnged on the grourld that there is violation o.f Article 19(1)(g) .of the Con H stitution. [4130]- ·

402 ..

.. S.UPRBME COURT.REEPORTS [1984] 2 s.c.R, .. . :

3. It is tr.ue that when a duly constituted Grama unde; sub-section (1) of

Sectio~ 3 of the Grama Panchayat Act is to go out of existence an order of the Magistrate cancel_lin, g the Notification in tenns of sUb-section (2) of Section 3 of the said Act is a pre-requisite. But in the instant case the Grain Pallchayat Dever challellged the Noification of inclusion of the Village Ektali in Jharsuguda Municipalit)'. Rather .. on the. other and the grain panChayat was -0onsUiteci•before the fmpugned notifi"¢ation dated 12th August 1975 was issued.' [ 406 H; 407 .Al ..

4. rhe prOviso. to sub-section 1 of Scctioil' 4 o( the Orissa Municipal Act, 1950 has no application to the present 9ase and th(lt cannot be taken to be a ground rOging thC.No-tific-ation fo2 inclusion of Village Ektau "in th; JhITTsgUda Municipality..

A bare pcrsUal of the proviso clearly indicates that the requircme.nt is that t"'.Othirds of the adult .. , in1l~ population of theto\v"n to which it ; efers should be engaged in nonagricultural pursuits The proViso applies not to all the caluses of sU.b-section (1) of sccton.fit.' but it applies only to clau~ (a) of subsection (1) of Section 4, bocause it is clause (a) ofsection4 (1) which talks of town. [408 E-Fl . .

The contention that the .bjection"'faised by the appellant agaimfi; fthe

incluio2,_ of the. village in qustin ito Mnicipality has nOt beei1 consider_ed by the Stas no , force. The obJectlon 1S required to be made through. the Magistrate of the Ditrict. Naturally the District Magistrate. while f0rwarding the objection to. the State GOvernmerit made his comment. The Revenue Divisional Officer who intervenes. in the ch.annal of communication between the District Magistrate-and the Stat.e Government.had an occasion to processthe n1atter. The tate Government while dealing Withthe matter_ consulted the panchayai Raj Departrnent and ... ultimately notified in terms of the notification dated August 12, 1975. [408H; 40!lA-Bl

. . -

6. Section 131(1} of the Municipal Act e1npower the Municipal Council to impose various kinds of taxes which includes octroi as provided in Clause (kk) E witli the sanctio~ of the Govern1nent sice the.gods 3.re brought into the municipal

limits at least for the purpose of use" ne of the three conditions laid down in

clause(k -theimpositionofoctroi is valid.· . .- . . .

Burmah Shell Oil-Storage & Distribution Co. v. The Belga1n.JJ.orough .\1un1c1pal1ty [1963) Sapp 2 SCR 21~ referred to and held inapplicable. [409 D-EJ

7:1. .. Tere is a statutory presumption under .section 392.of the Orissa Municipal Act. 1950 that the publication of the rules or regulations or bye laws in the Gazette shall be evidence , that' the rule or regulation or bye law has been. made as required by the section Therefore the court wiil assu1ne that the bye Jaw has been made in acCordance with law in the absence of anything inofe fom the si l of the appellant .. [410 F-GJ

 7:i. The argument tht even assuming that tQ.c. bye.:.Iaws yvhen initially eh{orced Might be presumed to be in accordance With law ill the absence of similar

teps being taken at the time of extcrttion of bye laws to the newy added area, te bye laws are not enforceable in the new areas is not correct as it has, proceeed tn . utter obliVion of the pfoisions of secti(Jn S of th Municipal Act. [410 H; 411 A]

Vishakhapatnam:-Municipqlity ~- Kandregu/a Nukarajau & Ors. [1976] ,1 ~-C~R. 544;.Atlas Cycle Industries Ltd. v. State of Haryana and Anr:, [1912] l S.C.R. 127; Bagalkot City.Municipality v Baga/kot Cement, [1963] 2 Supp S.C.R. 710; distinguished

. llHASKAR TEXTILE v .. IHARSUGUDA MUN!CIPALJTY (Misra, J.) . 403

CJ\\'1r: APPELLATE JuRISDICTION : Civil Appeal No; 487 of 1977.

' . ' . -f Appeal by Special leave from the Judgment and Order dated

. the 5th January, 1977 of the Orissa High Court in O.J.C. No. 810

o( 1976 .. •

V.S. Desai, Parveen Kumar and A.shok Mathur for the Appellant.

C. V. Murty, Y. Prabhakar Rao and C.'¥. Murty for the Respondents.·

R.K. Mehta for Respondent No. 3.

B.D. Sharma for Respondent No. 2. . . .

The Judgment of the Court. was delivered by

~· MISRA J. The present appeal by special ieilve is directed against the judgment of the High Court of Orfasa dated 5th January 1977 D dismissing a petition under Arts. 226 and 227 of the Constitution for quashing imposition of octroi under s. 131(1)(kk) of the Orissa Municipal Act, 1950 (hereinafter referred to as .the 'Act') and for . a declaraiion that the notifications dated 31st July 1973 and 12th August, 1975 issued by the State Government in exercise of powers •· vested under s.4 of the Act arc illegal and unenforceable and for a E further declaration that the Octroi Bye-laws of the Jharsuguda Muni-

/~ -.. -¥

cipal Council are also void and inoperative. .

• · Jharsuguda MuniCipality; respondent No. I, is a municipality incorporated under the Act. In March 1962 the. Stat~ Government accorded sanction for the imposition. of octrc°i in terms of s.131(1) of. the. Act. A set of octro( bye-laws were framed by the Municipal Council in terms of s.388 of the Act and the same were also appro.ved by the State Government in exercise of powers under s.390 of the Act on 19th March, .1968. Octroi was levied. for the first time after 31st March 1962 when the State Gvernment accorded sanction under sJ3l{i)(kk) of th' Act.

The appellant is a company duly incorporated under the Indian Companies Act, 1956 having its mi!Js located at viJJagc Ektali under the Jharsuguda poli.ce station ii) District Sambalpur, Orissa. The said area of the village was included within the Ektali Panchayat.

The company mainjy ca.rries on fillinning of cotton which in the manu

. facturing proc.ess is transformed from loose fibres into finished yarn.

The area under the Ektali village in which the appellants' fatory was located was constituted, along with other viJlages as a Gram by . a declaration made under. s.3 of the Oris'sa Grama Panchayat. Act, . 1964 .. On or ab0ut. 25th Much, 1970 Jharsuguda Municipality'. passed a resolution for the inclusion of Ektali and other viilages in the Jharsuguda Munfcipality and t.hus extending the area of the said . Munic'pality. Against the proposed extension t.he appellant made a r.epresentation to the state Goveniment inter alia on the ground that the said village Bkta!i could not und.er the relevant rules be included in the Municipaiity under s.4(I)(c) of the Orissa Municipal

1 Act; 1950 in view of the proviso to s.4(1) which contemplates that a declaration shall not be made under this, sub-section unless the State

Gove.rnment.re satisfied tha1 !wo-thi.rds ofthe ad, ultmale population of the town to which it refers are chiefly employed in pursuits other than agriculture and that .such a town contains not less than 10, oOO inhabitants and an average number of not less than 1000 inhabitants .. to a square mlle of the area of such a town: The. appeliant alleged that the male population of the ; aid village Ektali was 2640 as. per

1971 census report; out of which only 1586 were cniefly employed

- in pursuits other than agriculture and ths twc-thirds of such male population were not employed in non-agcicultural pursui5s. ·

 : The State Government,. however, by a notificafon dated 31st July 1973 dedarcd their intention under s.4(I)(c) of the Municipal Act, 1950. t1 include withi11 the Jharsuguda Muicipality, the local area of a number of viilages including the village Ektali. By the said • notification published in Orissa .Gazette Extraordinary dated 22nd August,· 1973 tlle Govrnment iilvited objctions within_ six week$ from the date of pubiication. - The appellant did. file objection to. : the said notification. Objection was also filed by Grama Panchayat

of __ Ektali. to. the effect that the Ektali Grama was duly constitutted by the State .Government in Com1nunity Development and Panchayat Raj Department in exercise of powers under s.3(1) of the Orissa Grama .

Pnchayat Act and in the absence of any notification µnder s.3(1) and s.149 of the Grama Panchayat Act, village f\ktali .still continues to be a Grama. · • The objections were examined by the District Magistrate, 'Sambalpur and the Revenu~ Division Commissioner.Northern Divisio'n,

Sainbalpur an<j the'.same were rejected.· On 12th August, . 1975e, notification :under s.4(3)(b) declaring the•inclusion. of the said vj1!agsa

•·-

...

- . '1

' . -

' ....

....

BHASKAR. TEXTILES v. JHARSUGUDA MUNJCIPAUTY (Mirsa, J.) 40?

including the villae Ektali, into Jharsuguda Municipality was iSsued. . Sooil thereafter on 1st 'September, 1975 the said Jharsuguda' Municipality sent 'a letter to the appellant directing it t<; pay octroi as per provisions of s.5 of the Orissa Municipal Ac.t.. Tie said octroi was payable at the rate of 1 per.cent_ ad-va!tJ1:em on cotton as soon as it entered the municipal check-post for the purpose of its being spun. into yarn.

The levy of octroi duty was challenged_ by filing a petition -under Arts. 226 and 227 of the Constitution 0•1 various grounds viz.,(a} the inclusion. of village Ektali in the area of Jharsuguda Municipality was illegal and ultra. vires' the proviSions of the Orissa MniCjpal

At, and (b) the levy of octroi duty at the rate of 1. per cent ad valorem was arbitrary, coercivend violative of Art. _301 of the Constitution ·:and, therefore, the appellant prayed for. quashin.g the nctification.s referredto above.

The writ petition was, however, dismissed by. a .Division Bench of the Orissa High Court hy it_s o.fder _dated 5th January, I 977. The appellant filed an application under Art: 133(1) of the Constitution for the grant of a certificate-for leave tc appeal to this Court, which was dimissed by the High Courr by its order <lated 19th January, 1977._ The appellant has_ now filed the-present appeal after obtaining special leave from this Court. • ·

.. The learned counselforthe appellant raised the following contentions : · ·

Inthe absence ofa notification canceiling the declaration constituting Ektali village. as part of Grama, it was not· legally permi.ssible for t.he. State Government acting Under theOnssa Municipal Act 1950 to include within the area of the municiphlity the area of the said Grama .

. 2. Themandator;' requ.irements of proviso to:sub-s.(J) of sA ·

of the Orissa Municipal Act, 1950 have pot been satisfied.

The objectio1; filed by the appellant uiider sub-'s.(2) of s.4 has not been considered by the State vernment.

•· 4.

(a) The libility to .ocfroi arises when any of the three alternatives mentioned in s.Bl(l)(kk) of the Municipal Act is satisfied viz., wlien, the, goods are brought

B •

406 SUPREME CClURT REPORTS [1984] 2 s.c.R.

within the mu\1icipal limits f9r (i) consumption,

(ii) use, or (iii) sale . .• (b). Th!!' tax alre.11dy imposed within the limits of the Municipality oj Jharsuguda could riot be automati- .. cally made applicable to the extended limits of the - municipaiity without obtaining the sanction of.the

State Governm'ent under s.131(1) (kh) of the Act.

(c) The rate leviediis per se unreasonable an'a arbitrary.

We take up th1ese grounds seriatim. . . . ·.

Admittedly village Eki:lli where. the factoy of \he appellant is located was a part of the d1:1ly constituted Ektali Orama Panchayat prior to 1973, within the meatffng of s.3 of the Orissa Orama Panchayat Act.· Sub-section (1) of. s'.3 authorises the State Government to constitute any village. or gro1'.1p of contiguous villages as a Orama by a. declaration notified in the C)iazette arid assign to such Grama a name which shall be of one of the villages. comprised w.ithin the Grama.

Sub-section (2) of s.3 provies that whenever the State Government deems it fit so to do, they rr:.ay cancel any notification in respect of a

Orama under sub-s.· (l)'or rnay alter the area co"mpriscd in a Orama . by. reducing. or adding to t'he number of villages comprised within s.tich Orama by a dec!aiation notified in the Gazette constituting such altered area or areas s a Orama or Gramas, as the case may be. ·

The. precise contentioi1 raised on behalf of the appellant is that there was a declaration b}· notification for the constitution of th_e Orama within the meaning!of sub-s.(I), but there has been.no notification as tequired by sub-s'.(2) of s.3 for taking village Ektali out of .Grama panchayat and, therefore, vi'llage Ektali continues to be a Orama and the inclusion o!' village. Ektali in Jharsuguda Municipality by notificati'ons dated 31st July, 1973 and 12th August; 197) will have no. effect. · ..

This contention has' considera bie force.

When a duly constituted Orama is;, o go out ofexistece an order pf the Magistrate cancelling the notification , i11 terms of ub-s.(2) of s.3 of the Grarria Panchayat Act is necessar:( But there are circumstances whkh take away the force of the argument. The Orama Panchayat never chaHenged .the notijication of mclusion of the village Ektali in Jhar-

. ,,; -

BHASKAR TEXTILE v. JHARSUGUDA MUNICIPALITY (Misra,!.) 407

' suguda Municipality.

From un-controverted averment made in para 6 of the counter-affidavit of the State filed before the High Court it appears that the Gra;,, a Panchayat was consulted befote the impugned not'fication. Therefore, we do not feel persuaded to accept the contention at the instance of the appelJant. This leads us to the second ground.

In order to appreciate the second ground it is appropriate at this stage to refer t<i the provisions of s.4 in so far as it is relevant for the purposes of the case :

"4.(1) The State Government may, by notification declare their intention-

(a) to constitute any town, together with, or exclusive of, any railway station, village, land or building in the vicinity of any such town, a municipality under this Act; or

(b) ................................................. .

(c) to include within a municipality any local area .contiguous to the same and defined in the notification ; or

(d) ............... .

(e) ............... .

(f) .............. .. •

(g) .............. ..

(h)

Provided that a declaration shall not be made under this sub-section unless the State Government are satisfied that two-thirds of the adult male population o( th_e town to which it refers, are chiefly employed in pursuits other than agricultural. and that such town contains nor less than ten thousand inhabitants and an average number of not less than one thousand inhabitants to the square mile of the area of such town.

408 SuPREME COURT REPORTS • , . [1984J2.s.c.R ..

(2) Any inhabitant of the town or local area, or any,, .· rate-payer of the rnimicipality, in respect of which an~,·:

' such notification has beenpublished urider sub-section (1) . ·

may, if he bjects to anything contained in the notificatfo~ •. submit his objection in writing to the State Government,,: through the Magistrate of the district within six weeks from, B: . the date of the publication of the notification and the State.

H ' '

Government shall take his objections into consideration . . '

(3) ........ "

 . The emphasis of the appellant is .that two-third of the aduh ,.--..'< male popu)ation 'or the Grama sho'uld be ch.iefly employed in pursuits j , other than agricultural. The appellant has referred to 1971 census · figures,.: On the basis or' these cerisus figures it is argued that out of . , the.total male population of 2640 of Grama Ektali only 1586 adults were.engaged in non-agricultural pursuits but the requirement of law was that two-third of the male population should have been employed 'P in the non-agricultural pursuits, which. comes to 1760.

 ·· The argument proceeds on the assption that the proviso to s.4(1) applies. 8ut a bare persual of the proviso clearly indicates. that the requirement is that two-thirds of the adult male population of the town to which it refers should be engaged in non-agrlculturar "" pursuits. The proviso, to our mind, applies not to all the clauses of > sub-s.(I) of s.4 but it applies only to cl.( a) of sub-~.(!) of s.4, because it is cl.(a) of s.4(1) which ta1ks of town. Therefore, the proviso, in ,.;_ our opinion, has no application to the present case and that eanot f"..) be taken to be a ground for challenging the notification for inclus10n of village' Ektali in the 1harsuguda Municipality. This takes us to the third ground.

'The appellant had filed an objection under sub-s'.(2) of s.4. The said objection was examined by the District Magistrate, Sambalpur and the Revenue Divisional Commissioner fNorthern Division), Sarnbalpur: They over-ruled the objection treating it to be of general nature. Thereafter, the Community Development and the Panchayati Raj (Grama Panchayat) Department were consulted to agree with this proposal, to which they agreed, and it was thereafter that the Urban Development Department issued a final notification dated 12th August, 1975 to include the above village into the municipal limits -0f 1harsuguda .Municipality. The contention of the appellant that the objection had not been considered by the State Government

• l

BHASKAR TEXTILE r. JHA.RSUGUDA MUNICPALITY (Mirsa, J.) 409 . cannot be accepted in as mnch as the objection is required to be made through the Magistrate of the district.

Naturally, the District M1gistrate while forwarding the objection to the State Government made his comment. The Revenue Divisional Commisioner intervenes in the channel of communication between the District Magistrate

and the State Government and he, therefore, had an occasion to process the matter. The State Government while dealing with the B • matter consulted the Panchayati Raj Department and ultimately .... . notified in terms of notification dated 12th August, 1975. In the

circumstances it cannot be acceptd that the objection filed by the . '(appellant had not been considered by the State Government.

It was next contended that the liability for qctroi arises when any of the three alternatives mentioned in s.13l(l)(kk) of the Municipal Act are satisfied, namely, when the goods are brought within the.municipal limits for (i) consumption, (ii) use, or (iii) sale. Section 131(1) of the Municipal Act empowers the Municipal Council to impose various kinds of taxes within the limits of the Municipality with the sanction of the State Government. One of the taxes contemplated by s.313 (!) is octroi, .as provided in cl. (kk).

According to the appellant the .goods are brought into the municipal area not for the purpose of sale or for consumption but for the purpose of manufacture of yarn. The appellant took support from Burm2h Shell Oil Storage & Distribution Co. India Ltd. v. The Belgam Boro2f; h, Municipa/ity11 l in which this Court had an occasion to consider the word 'consumption'. This Court took the view that the word 'consumption' in its primary sense means the act of consuming and in ordinary pariance means the use of an article in a way which destroys, wastes or uses up that article, but in some legal contexts, the word 'consumption' has a. wider meaning, and that i.t is not necessary that by the act of consumption the commodity must be destroyed or used up. On the strength of this authority it is contended that the goods were brought into the municipal limits neither . for consumption, nor for sale. Assuming the contention to be correct1,

there is no escape from the conclusion that the goods are brought into the municipal iimits at least for the purpose of use. In this view of the legal position the imposition ·of octroi by' the Municipality cannot be challenged on this ground.

The next ground of attack is based on s,372 of the Orissa Municipal Act. Section 392 pertinently reads .: ..

{I) [1963] Supp. 2 S.C.R, 216 .

"392. The State Government before making any rules under sub-section (2) of section 81 and section 387, and a municipal council, before making any regulation or by-laws under section 388, shall publish, in such manner as the State Government deem sufficient for giving information to persons interested, the proposed rules or regulations or by-laws together with a notice specifying a date on or after which the same will be taken into consideration; and shall before making such rules or regulations or by-laws, receive and consider any objection or suggestion which may be made by any person with respect to the same before the date so specified.

• •

Every such rule or regulation or by-law shall be published in the. Gazette in English and in Oriya and such publication shall be evidence that the rule or regulation or by-law has been made as required by this section." ~

It is contended tliat the mandatory requirements having not been complied with the imposition of octroi is vitiated on this account.

The appellant in para 3 of the Writ petition had alleged that the bye-laws were not published in the State Gazette either in Oriya or in Englis]1. This allegation has, however, been controverted by the State Government in para 18 of the counter-affidavit. It was specifically averred that the bye-laws were approved and confirmed

by the Government in Urban Development Department vide order No. 1903/Legis-43-67/UD dated. nill published in. Orissa Gazette for information of the general public on 23rd May, 1969 at pages 691 to 697. There is a statutory presumption under s.372 of the Act that the publication of the rules or regulations or by-laws in the Gazette shall be evidence that the rule or regulation or bye-law has been made as required by this section.

Jn view of this statutory presumption the Court will assume that the bye-law has been made in accordance with law in the absence of anything more from the side of the appellant.

As a second limb to this argument it was contended by the appellant that even assuming that the bye-laws when initially enforced might be presumed to bein accordance with law, in the absence of similar steps being taken at the time of extension of bye-laws to the newly lidded area, the by~-laws are not enforceable in the new area.

J I

BHASKAR TEXTILE v. JHARSUGUDA MUNICPALITY (Mirsa, J.) 411

This argument has proceeded in utter oblivion of the .provisions of A ..., s.5 of the Municipal Act. It reads : -1 .

, •

"5. When any local area is jncluded in a municipality, by a notification under clause (b) or (c) of sub-section (3) of section 4, all the provisions of this. Act and of any rules, by-laws, notifications, or orders made thereunder, which immediately before such inclusion were in force tl1roughout such municipality, shall be deemed to appli to such area, unless the State Government, 111 and by the notification, otherwise direct." .c The learned counsel for the appellant, however, has placed

~ ...

strong reliance upon Visakhapatnam M¥nicipality v.

Kandrequla Nukaraju & Ors. 11 ' In that case the question that fell for considerac tion was whether the property tax which could lawfullv be levied under the Dis.trict Municipalities Act 1929 can be levied after the repeal of that Act, on property situated in the areas included within the municipal limits after the constitution of the municipality. Section 391(1) of the Andhra Pradesh Municipalities Act 1965 expressly repealed the District Municipalities Act, 1920 from which it must follow that ordinarily no action can be taken under the Act of 1920 after April I, 1966 when the repeal became effective on the coming into force of the Act. It was, however, contended in that case that

cl. 12 of Schedule 9 of the Act keeps the repealed enactment alive for tax purposes and, therefore, the municipality had the authority . to impose the property tax under the Act of J 920 notwithstanding . \il its repeal by the new Act. This Court, however, took the view that ·" the provisions contained in the Schedule re of a transitional nature.

They were intended to apply during the period of transition following upon the repeal of old municipal laws and the introduction of the

~ ..- new law. The object of clause 1~ of Schedule 9 was to authorise the levy of taxes which, on the commencement of .the Act, were levied ' • 'under the repealed laws. This Court further added that the muni.- cipality might have been levying property tax since long on properties situated within its limits, but until April I, 1966 the villages of Ramakrishnapuram and Sriharipuram were outside those limits. Qua the • areas newly included within the municipal limits, the tax was being imposed for the first time and therefore it was incumbent on the ""' municipality to follow the procedure presribed ]ly the first proviso to section 81(2). Residents and tax payers of those areas never had

(!) [1976] I S.C.R. 544.

ff,

an pportunity to object to the iposition of the tax and that valuable opportunity cannot be denied to them. It i's obligatry upon the municipality not only to invite objections to the proposed tax but also to consider the objec; tions 'received by it within the specified period.

For the State, however, reliance was placed in that case on s.3(4) of the Act to contend that the inclusion of the two villages within the municipal area attracts of its own force every provision of the Act with effect from the date on which the final notification is published by the Govero, ment under s.3(3). In support of this con: tention it cited the decision of this Court in Atlas Cycle Industries '

Ltd. v. State of Haryana & Anr. (ll This argument on behalf of thtf )' State was, however, repe!Jcd and the Court observed : ,

"Far from supporting the argument, we consider that the decision shows how a provision like the one contained in Section 3(4) cannot have the effect contended for by the appellant. In the Atlas Cycle case, section 5(4) of the Punjab Municipality Act, 1911 provided that when any local area was included in the municipality; "this Act and ... all rules, bye-laws, orders, directions and powers made, issued or conferred under this Act and i.n force throughout the whole municipality at.the time, shall apply to such areas."."

But this Court took the view that since section 5(4) of the Punjab Act did not, significantly, refer to notifications and since section 62(1) of the Punjab Act spoke of "notification" for the imposition of taxes, ..t., it was not competent to the municipality to levy a.nd collect octroi f from the company on the stre11gth '!lerely of. the provision contained in s. 5(4) of the Punjab Act. That case, however, is distinguishable and cannot be of much assistance for solving the problem before us.

Section 5 of the Orissa Municipal Act makes all the provisions of the Act and of any rules, by-laws, notifications, or orders made thereunder which immediately before such inclusion were in force

throuhout such municipality, applicble to such area, unless the

State Government, in and by the notification, otherwise direct. This section, therefore, includes not only the provisions of the Act, rules and bye-laws but also includes notifications. This distingnishes the present case from the Visakhapatnam Municipality's case (supra).

(I) [1972J I S.C.R. 127.

• -

.. -

I ;

.'I.

''.BHASKAR TEXTILE v. -JHARSUGUDA MUNICIPALITY (Mirsa. J.) . 41J .•

For the appellant, next reliance was pl.aced upon Bag~!kot City Municipality v. Bagalkot Cement.<" In that case also at the time o( the imposition of the octroi duty the respondent's factory was situat.ed . outside the municipal district and w:is not subject to the ectroi duty. Subsequently, the Government extended 'the municipal district so that. t\1.e _factory ca.me to be included within that district. The appellant ii1that case contended that upon such extension its octroi limits .. also stood extended to include the factory and the respondent became liable to pa.y octroi dnty in respect of goods brought into the factory.

The majority view was that the expression "municipal district" in _the bye-law referred to the municipal district as existing when the bye-law was framed.

The context preventea the definition. of ·"mnnicipal district" in. the Act, naniely, the municipal district as from time to time existing from being applied und0-r s.20 of the Bombay General Clanses Act to interpret the bye-law. The bye-law had been made without being published to the respondent, and if it was so read referring to the municipal district from time to time existing it would be invalid for non-compliance with the provisions of s.48 of the Act. this case again is distinguishable in view of the wording of s.5 of the Orissa Municipal Act.

Lastly it is urged that the octroi duty levied in this case by the Municipality is unreasonable and excessive.· The Municipality is required to provide certain amenities not only for the permanent residents within the municipality, but also even for .casual visitors who may on occasions enter the limits of the . municipality. The entry of large quantities of goods within the municipality almost daily from outside necessarily creates innnmerable problems such as provisions .of water supply, lighting facilities, facilities for conservancy, sanitation, maintenance of good roads and markets etc. which the .

Jharsuguda Municipality has done and theie is no allegation to the contrary by . tlie appellant. From the material placed before us we are of the view that the levy is not an nnreasonable one. It is not also excessive. The imposition qf .octroi cannot, therefore, be challenged on the ground that there is violation of Art. 19(1)(g) of .. the Constitution.

Considering tlie case from any aspect the imposition of octroi duty, in our opinion, does not suffer from any infirmity.

(!) (1963] Supp. I S.C.R. 710.

.:E

A For the foregoing discussion the appeal cannot succeed. It is accorrungly dismissed. In the circumstances of the case, h. owever, ] we allow the parties to bear their own costs. ,

S.R.

Appeal dismissed.

,..

. •

BHASKAR -TEXTILE MILLS LTD

JHARSUGUDA MUNICIPALITY & OTHER

R. B. MISRA

Section 3

Section 4

Article 19(1)

Companies Act 1956

Section 3

Jharsuguda MnicipalitY.

Article 133(1)

Orissa Municipal Act

Article 19(1)(g)

S.UPRBME COURT.REEPORTS [1984] 2 s.c.

Section 3

Ektali

section 1

Orissa Municipal Act, 1950

Ektau

Section 4

section 392

Jn S of th Municipal Act

Misra

V.S. Desai

Parveen Kumar

A.shok Mathur

C. V. Murty

Y. Prabhakar Rao

C.'¥. Murty

R.K. Mehta

B.D. Sharma

Arts. 226 and 227

s. 131(1)(kk)

Orissa Municipal Act, 1950

Jharsuguda MuniCipality

31st March 1962

Municipal Act, 1950

Mirsa

Arts. 226 and 227

Jharsuguda Municipality

Orissa High Court

a .Division Bench of the Orissa High Court hy its o.fder dated 5th January, I 977.

Themandator

Orissa Municipal Act, 1950

Eki

31st July, 1973

12th August; 197)

1harsuguda Municipality

Sambalpur

Sarnbalpur

12th August, 1975

Section 131(1)

Section 392

section 81

section 387

section 388

23rd May, 1969

section 4

Municipalities Act 1929

Section 391(1)

Andhra Pradesh Municipalities Act 1965

District Municipalities Act, 1920

cl. 12

Schedule 9

clause 1

Schedule 9

Ramakrishnapuram

Sriharipuram

section 81(2)

Atlas Cycle Industries

Section 3(4)

section 5(4)

Punjab Municipality Act, 1911

section 5(4)

section 62(1)

s. 5(4)

Section 5

Visakhapatnam Municipality

Jharsuguda Municipality

Art. 19(1)(g)


~··

\ii. '<"\ .

415 A

AVTAR SINGH BRAR

TAJ SINGH & OTHERS

January I 6, I 984

[S. MuRTAZA FAZAL Au, A. VARADARAJAN AND RANGANATH MISRA, JJ.J

Representation of the People Act, 1951-S.123(2)-Corrupt practice-Scope of

The first respondent, Tej Singh; won in legislative assembly election defeating the appellant by 123 votes and also 3 other candidates including Ruplal.

The appeIIant challenged the election of Tej Singh on the ground that he was guilty of committing corrupt practices. The 1nain corrupt practice said to have been indJ; lged in by Tej Singh was that he had got circulated pan1phlets and posters arµong the voters of the constituency Wherein he had mentioned that Ruplal had withdrawn his candidature and any vote given to him (Tej Singh) would be deemed to be a vote for Ruplal, and the said posters were Printed not by Ruplal but at the instance of Tej Singh.

Allowing the appeal,

I-lELD ; The effect of the posters was to mislead the voters so as to make them beliC've that one of the candidates, Viz., Ruplal, had withdrawn and any vote given to Tej Singh would be considered as a vote given to Ruplal.

Tn other w0rds, the effect of the posters .was that v.11 the voters who would have voted for Ruplal would now cast their votes in favour ofTej Singh.

As the margin of votes between the defeated and the returned CalldidateS was very small, viz., 12·3 votes, if such a misrepresentation was not made, in .all probability the votes \vould have gone to the appellant (Avtar Singh) and, therefore, the result of the election would have been materia11y altered. On a perusal Of the evidence-both oral and documentaryadduced by the parties and in the circumstances of the case, the irresistible inference and inescapable conclusion that can be arrived at is that Tej Singh had actually paid for the posters which were printed at his instance and Ruplal was not connected with the printing of the posters. In these circumstances the appellant has proved beyond reasonable doubt that Tej Singh. had indulged in corrupt practices particualrly when the printing of the posters by Tej Singh has been clearly admitted by him. [417 D-E; G; 418 BJ • .

Cl.VIL APPELLATE JURISDICTION : Civil Appeal (NCE) No. 735of1982.

From the Judgment and Order dated the 22nd April, 1981 of the Punjab & Haryana High Court in Election Petition No, 6 of 1980.

K.L. Sharma, A..S, Sohal and MC Dhingra for the Appellant.

M. Veerappa and A.shok Kumar Sharma for Respondent No. I.

416 . ,-

SUPREME COURT RJ!PORTS [1984] 2 s.c.R.

A A..S. Pundz'r for Respondent No. 2.

The Judgment of the Court was delivered by

FAZAL Au, J. This election appeal arises out of an election to the Baghapurana Constituency {District Faridkot) to the Punjab Legislative Assembly. The polling took place on May 31, 1980 and the counting was done on June 1, 1980. Tej Singh, respondent, secured 25694 votes whereas Avtar Singh (appellant) secured 25571 votes. There were three other candidates also in the field, viz., (l).Sathi Ruplal, (2) Bhogat Puran Singh, and (3) Jagdish Chander. 4

RChupladl securedd

1 1 4 3 0 47 vdot 2 e 8 s 56 while Bhagat 1 . Pu 1 ran

1 Singh and Jhagdihsh .. - .. an er secure an votes respec 1ve y. t appears t at t e margin between the votes secured by Tej Singh (respondent) and Avtar Singh (appellant) was only 123.

Avtar Singh filed an elecfon petition in the Punjab & Haryana High Court against Tej Singh alleging that he was guilty of committing D corrupt practices, detaile~. in the petition and in the Statement of facts: Ruplal supported the appellant but Bhagat Puran Singh and Jagdish did not put in any appearance despite service and, therefore, the proceedings were taken ex parte against them. Tej Singh denied having indulged in any corrupt practice as alleged by Avtar Singh.

E It is not necessary for us to go into further details because, in our opinion, the appeal must succeed on a short point. The main corrupt practice said to have been indulged in Tej Singh was that he had got circulated paophlets and posters among the voters of the J constituency wherein he had mentioned that Ruplal had withdrawn ;'r" his candidature and any vote given to him (Tej Singh) would be deemed F to be a vote for Ruplal, and the said posters were printed not by Ruplal but at the .instance of Te~ Singh. ·

On a perusal of the evidence-both oral and documentaryadduced by the parties, we are clearly of the opinion that the allega-· tions of corrupt practices indulged in by Tej Singh have been clearly G proved. The posters said to have been printed and circulated are Annexures P-1 and P-2 which appear at page 42 of the second paper book and it may be necessary to extract certainportions thereof-

"Keeping in view the present conditions in the country H it is imperative to defeat the dictatorial Congre;'!; in these electiens.

~ y

> \ -

AVTAR SINGH v. TAJ SINGH (Fazal Ali, J.) 417

Therefore, I fervently appeal to all the voters ofBagha- purana Constituency to vote and elect Shri Tej Singh, the joint front candidate of the Akali Dal, because Shri Tej Singh is the only candidate who can defeat the Congress ...... In . the end I submit that every vote cast in favour of S. Tej Singh

will be deemed to have been cast in my favour."

According to PW 4 (Roshanlal) in whose press the posters were printed, the order for the printing was placed by Darshan Singh and Mukhtiar Singh. The witness goes on to state that a few days before Tej Singh had come to his printing press and informed him that he (Tej. Singh) would be sending some work for printing. Soon thereafter the witness was approached by Darshan Singh and Mukhtiar Singh. Roshan Lal also. admitted that Tej s; ngh was known to him.

The witness further proved Ex, P-5 and P-6 (vouchers) which were issued by his press and signed by him; and he stated that the payment was made to him by Darshan Singh and Mukhtiar Singh.

The effect of the posters>was to mislead the vo.ters so as to mlke them believe that one of the candidates, viz., Ruplal, had withdrawn and any vote given to Tej Singh would be considered as a vote given to Ruplal. In other words, the effect of the posters was that all the voters who would have voted for Rnplal would now cast their votes' in favour of Tej Singh. As the margin of votes between the deteated and the returned candidates was very small, viz. 123 votes, if such a misrepresentation was not made, in all probability the votes would have gone to the appellant (Avtar Singh) and, therefore, the J:esult . , of the election would have been materially altered. We find a good deal of substance in the argument of the appellant. Tej Singh (R.W.

28) has not disputed that the payment of the vouchers (Ex. P-5 and

P-6) was made by him and the vouchers were appended by him along with the return of expenses incurred during his election campaign, which was verified by him to be a true and correct statement.•

In these circumstances, therefore, the irresistible inference and inescapable concll.'sion that can be arrived at is that Tej Singh had actually paid for the posters which were printed at his instance and Rup Lal was not connected with the printing of the posters. Tej

Singh further admitted that Bhum Raj was incharge of his eleciion office at Moga and that Exs, P-5 and P-6 were taken by him from Bhum Raj. He further admits that whatever expenses were incurred by

i.lhum Raj were incurred on his be)lalf. In other words, Tj Singh

f~Jsely tepresented to the. voters that the posters were circulated by

• 418

SUPREME COURT REPORTS [1984] 2 s.c.R.

Ruplal whereas the same was done by or with the consent of Tej Singh.

Therefore, it is clear that Ex-P-1 and P-2 which contained the appeal purporting to be of Ruplal were in fact printed at the instance of Tej Singh and Ruplal had no connction with the same.

In these circumstances, we are satisfied that the appellant has proved beyond reasonable doubt that Tej Singh had indulged in corrupt practices particularly when the printing of the posters by Tcj

Singh has been clearly admitted by him, as indicated above. It is also clear to us that in view of the very narrow margin of votes (123) between Tej Singh and Avtar Singh, a strong presumption and possibility that the votes polled in favour of Rup Lal would have gone to Avtar Singh cannot be ruled out and that would have doubtless male- . rially altered the result of the election. Leaving aside other grounds taken by the appetlant which were in fact not pressed before us, the appellant is entitled to succeed on the ground of corrupt practices (referred to above) as contemplated by S. 123(2) of the Act having been adopted by the first respondent JTej Singh) which have been fully proved.

The result is that the appeal is allowed, the judgment of the High Court is quashed and the election of the first respondent (Tej Singh) is set aside. In the circumstances, we make no order as to costs. •

H.S.K .

Appea! allowed. •

A

AVTAR SINGH BRAR

TAJ SINGH & OTHERS

A. VARADARAJAN

RANGANATH MISRA, JJ

Representation of the People Act, 1951

Ruplal

Tej Singh

ofTej Singh

VIL APPELLATE JURISDICTION

Punjab & Haryana High Court

K.L. Sharma

Sohal

MC Dhingra

M. Veerappa

A.shok Kumar Sharma

A A..S. Pundz'r

FAZAL Au

l).Sathi Ruplal

Bhogat Puran Singh

Jagdish Chander

s 56

Bhagat

Singh

Jhagdihsh

Bhagat Puran Singh

Jagdish

Avtar Singh

Te~ Singh

Fazal Ali

~ y
\ -

AVTAR SINGH v. TAJ SINGH (Fazal Ali, J.) 417

Therefore, I fervently appeal to all the voters ofBagha- purana Constituency to vote and elect Shri Tej Singh, the joint front candidate of the Akali Dal, because Shri Tej Singh is the only candidate who can defeat the Congress ...... In .

S. Tej Singh

Roshanlal

Darshan Singh

Mukhtiar Singh

Tej. Singh

Roshan Lal

Tej

Rnplal

Tej Singh

Rup Lal

Tej

Singh

Bhum Raj

Moga

Tj Singh

Tcj

Singh

S. 123(2)

JTej Singh