Holding

The Town Development Scheme No. 78 approved by the Indore Development Authority was legal, valid and in accordance with the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973.

Summary

The Supreme Court examined whether the Indore Development Authority could lawfully approve Town Development Scheme No. 78 after the earlier Improvement Trust had invited objections under the Trust Act. The Court held that the Authority duly complied with the procedure prescribed by the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973, by issuing fresh notices, receiving objections, affording a hearing and approving the scheme, thereby satisfying the requirements of Section 50 and the principles of natural justice. It distinguished the earlier decision in Indore Development Authority v. Madan Lal, noting that in the present case the scheme was a completed scheme under the Adhiniyam, unlike the draft scheme in Madan Lal. Consequently, the scheme and the subsequent land‑acquisition notifications under the Land Acquisition Act were deemed legal and valid. The Court allowed the appeals, set aside the High Court's order, and upheld the scheme's legality.

Issues considered

Whether the Development Authority could approve Scheme No. 78 without a fresh procedure under the Adhiniyam after objections were already filed under the Trust Act.
Whether the scheme and the subsequent land acquisition notifications were illegal or unlawful.
Whether the precedent set in Indore Development Authority v. Madan Lal applies to the present facts.
Whether the High Court erred in quashing the scheme and directing revision.

Legislation cited

Land Acquisition Act, 1894s. 4, s. 6, s. 9
Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973s. 50, s. 51, s. 87
Madhya Pradesh Town Improvement Trust Act, 1960s. 46, s. 48, s. 51

Subjects

Town Development SchemeDevelopment AuthorityImprovement TrustProcedural complianceNatural justiceLand acquisitionSection 50Section 87Urban developmentMadan Lal distinction

Judgment

A
INDORE DEVELOPMENT AUTHORITY
v.
SHRIKRISHNA OIL MILLS AND ORS.

B APRIL 12, 2005

[RUMA PAL AND C.K. THAKKER, JJ.]

Urban Development :
c Madhya Pradesh Town Improvement Trust Act, 1960-Madhya Pradesh
Nagar Tatha Gram Nivesh Adhiniyam, 1973-Section 50-Development
Scheme-Proposal to frame-Under the Act-Objections against the Scheme
filed before Improvement Trust-Constitution of Development Authority and
dissolution ofthe Trust on coming into force ofthe Adhiniyam-Fresh objections
D invited by Authority-Objections submitted-After hearing the objectors Scheme
approved-Approval also by Revisional Authority-Scheme challenged by
objectors-Set aside by High Court-On appeal, held: Scheme not illegal or
unlawful as the same was approved by the Development Authority after
following the procedure as provided under the Adhiniyam and observing
E principles of natural justice.

A resolution was passed by Improvement Trust for framing Town
Development Scheme under Madhya Pradesh Town Improvement Trust
Act, 1960. Notification and individual notices were issued inviting
objections to the Scheme. Objections were filed by the respondents. In the
p meantime Madhya Pradesh Nagar Thatha Gram Nivesh Adhiniyam, 1973
came into force under which Development Authority was established and
Improvement Trust was dissolved. Tht: Development Authority issued
notice to the objector with regard to the objections against the Scheme.
Objectors filed objections afresh with the Authority. The Authority after
hearing the objectors and considering the objections, approved the Scheme
G in accordance with Section 50 of the Adhiniyam. Thereafter notifications
u/ss. 4 and 6 of Land Acquisition Act, 1894, were issued as also a notice
u/s. 9 to the respondents asking them to handpver possession of the
property. Respondents filed Writ Petitions challenging the notifications.
Single Judge of High Court disposed of the petitions by permitting the
H 4W
IN DORE DEVELOPMENT AUTHORITY v. SH RI KRISHNA OIL MILLS 481

respondent-objectors to approach revisional authority u/s.51 of the A
Adhiniyam. Appellant-Authority filed Writ appeal, which was di~missed
by Division Bench of High Court, upholding the order of Single Judge.
The Revisional Authority dismissed the revision filed by the respondents
observing that the Scheme had been notified by the Authority as per rules
and following the requisite procedure.
B
Challenging the order of Development Authority and the Revisional
Authority, respondents filed Writ Petition. High Court relying on Indore
Development Authority v. Madan Lal and Ors., [19901 2 SCC 334, allowed
the petition and also other petitions.

--·
I
In appeal to this Court, appellant-Authority contended that since the
Authority had finalized the scheme after taking all the actions required
under the Adhiniyam, such Scheme could not be held illegal, unlawful or
C

against provisions of Adhiniyam; and that the case of Madan Lal was not
applicable to the present case.

Respondent-objectors contended that the Authority should have D
started the proceeding under the Adhiniyam afresh, since there was no
'draft Scheme' as envisaged by the Trust Act, the proceedings could not
have continued under the Adhiniyam by the Authority.

Allowing the appeals, the Court
E
HELD : 1. In the present case, procedure under Madhya Pradesh
Nagar Tatha Gram Nivesh Adhiniyam, 1973 was followed by the
Authorities. Notices were issued, objections were submitted and hearing
was afforded to the affected persons and thereafter the decision was taken.
Since in this case, the said procedure was followed, the provisions of the
Adhiniyam had been complied with; so also the principles of nature justice F
were observed. In these circumstances, it cannot be said that the action
taken by the appellants was illegal or unlawful. As the Revisional Authority
did not think it fit to interfere with the decision of the Development
Authority, it approved the action of the Authority and dismissed the
revision. Consequently, notifications under Sections 4 and 6 of the Land G
Acquisition Act were issued and published in accordance with law. Those
actions also cannot be termed illegal. The Scheme was not illegal or
unlawful. (494-H; 495-A-D)

Indore Development Authority v. Madan Lal and Ors., (1990} 2 SCC
334, distinguished. H
482 SUPREME COURT REPORTS [2005] 3 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2547 of2005.

From the Judgment and Order dated 15.2.2002 of the Madhya Pradesh
High Court in W.P. No. 1356 of 1998.

WITH I
B ll
C.A. Nos. 2548, 2549, 2550, 2551, 2552 and 2553 of 2005. ~->·

S.K. Gambhir, B.K. Sharma, Awanish Sinha and Sanjay Kapur with r
him for the Appellant.

C M.N. Krishnamani, Jaspal Singh, B.S. Banthia, R.N. Keshwani, Ram
Lal Roy, K.V. Vishwanathan, Anand, Abhisth Kumar, D. Bharat Kumar,
\ rr-
""'"""
Abhijit Sengupta, Satish K. Agnihotri, Rohit K. Singh and Amit Mishra with
~
them for the Respondents. -~

~
The Judgment of the Court was delivered by f'
/'--
D
C.K. THAKKER, J. Leave granted.

In all these appeals, common judgment and order passed by the High
J-
f·
,.....
Court of Madhya Pradesh in several writ petitions is questioned by the Indore }.---
Development Authority. By the impugned order, the High Court allowed the
)::"
E writ petitions filed by the petitioners - contesting respondents herein - and
quashed and set aside thenotification dated April 5, 1983 issued under Section
4 ofthe Land A~quisition· Act;. 1894; notification dated January 23, 1984
issued under Section 6 of the said Act as also an order dated August l 0, 1998
passed by the Director, Town and Country Planning, Bhopal.
'~
F To appreciate the controversy raised in the present batch of appeals, I

relevant facts may be stated.

The petitioners challenged before the High Court of Madhya Pradesh
Town Development Scheme No. 78 prepared in accordance with the provisions
G of the Madhya Pradesh Town Improvement Trust Act, 1960 (hereinafter
referred to as "the Trust Act") in accordance with the Master Plan of Indore.
The case of the petitioners, before the High Court was that a resolution was
passed on November 9, 1976 being ResolutionI
No. 196
.
for framing Scheme L
I
No. 78 by the Improvement Trust. A notification under Section 46 of the
Trust Act was issued on January 7, 1977 inviting objections against the
H scheme within sixty days of the publication of the notice. Individual notices
INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS [THAKKER, J.] 483

to the affected persons as required under sub-section (1) of Section 48 of the A
Trust Act were also issued. The petitioners and others filed objections on
July 1, 1977. It may, however, be stated here at this stage that on March 16,
1973, Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973
(hereinafter referred to as "the Adhiniyam") was brought into force, Under
the Trust Act, it was the Improvement Trust which was to consider such B
objections. Under.the Adhiniyam, however, the Development Authority was
to consider objections. Though the Adhiniyam came into force in 1973, the
Indore Development Authority was established under the Adhiniyam only on
July 13, 1977 and the Improvement Trust was dissolved. In view of the

-·
establishment of Indore Development Authority, a notice was issued on August
I
22, 1977 to the objectors with regard to the objections raised by them against C
Scheme No. 78. It was stated that hearing would be held on August 31,
1977. Pursuant to the said notice, objections were once again filed by the
petitioners and other objectors on September 3, 1977. All those objections
were then considered by the Development Authority on that day, i.e. September
3, 1977. On January 20, 1978, the Scheme was approved vide notification
No. 64 in accordance with the provisions of Section 50 of the Adhiniyam. D
The Scheme was published in two local newspapers, "Nai Duniya" on February
2, 1978 and in "Dainik Jagran" on February 3, 1978. It was also published
in the Official Gazette on February 10, 1978. A notification under Section
4 of the Land Acquisition Act was issued on April 5, 1983 and was published
in the Official Gazette on April 29, 1983. A notification under Section 6 of E
the Land Acquisition Act was issued on January 23, 1984 and was published
in the Official Gazette on March 9, 1984. A notice was issued under Section
9 of the Land Acquisition Act to the petitioners asking them to hand over
possession of property. A petition was, therefore, filed in the High Court of
Madhya Pradesh being W.P.No. 552 of 1986 challenging the notifications.
After hearing the parties, the learned Single Judge disposed of the petition by F
permitting the petitioners to approach revisional authority, viz. Director, Town
and Country Planning under Section 51 of the Adhiniyam. It appears that the
Indore Development Authority was of the view that there was gross delay
and !aches on the part of the petitioners in invoking writ jurisdiction of the
High Court under Section 226 of the Constitution inasmuch as though the G
scheme was approved in January 1978, the petition was filed in 1986. It,
therefore, filed an appeal against the order passed by the learned Single
Judge. The Division Bench of the High Court, however, upheld the order
of the learned Single Judge observing that the learned Single Judge had not
committed any error of Jaw or of jurisdiction in entertaining the petition and
in allowing the petitioners to invoke alternative remedy of revision. H
484 SUPREME COURT REPORTS [2005] 3 S.C.R.

A The petitioners thereafter approached the Director, Town and Country
Planning (Revisional Authority) who by his order dated August IO, 1998
dismissed the revision observing that the scheme had been notified by the
Indore Development Authority as per rules and the requisite procedure had
been followed. The action, therefore, could not be said to be illegal or
B contrary to law.

Before the High Court, it was contended on behalf of the petitioners
that the points raised by the petitioners were no longer res integra and were
finally concluded by a decision of this Court (Supreme Court) in Indore J
t
Development Authority v. Madan Lal and Ors., [1990] 2 SCC 334. It was
C urged that almost in similar circumstances, this Court ruled that the action
taken by the Indore Development Authority of approving the draft scheme
could not be held legal and valid and it was set aside. The Court also
observed that there was no draft scheme under the Trust Act which could
be saved by the Adhiniyam and no action could have been taken by the
Indore Development Authority. In the light of the said decision, the petition
D deserved to be allowed, submitted the petitioners.

The contention of the respondents-appellants herein. -, on the other
hand, was that Madan Lal was distinguishable and the ratio laid down therein
would not apply. It was submitted that in Madan Lal, no objections were
invited by the Indore Development Authority nor they were considered by
E that authority. The objections were invited by the Improvement Trust, but
before the draft scheme was framed and was approved by the State
'l.
Government, the Improvement Trust was abolished in view of .establishment
of Indore Development Authority under the Adhiniyam. Thereafter no action
could have been taken under the Trust Act. Actions which were required to
p be taken under the Adhiniyam were not taken. It was, therefore, submitted
that Madan Lal had no application to the facts of the case. It was stated that
in the instant case, objections were invited by the Improvement Trust under
the Trust Act in January, i 977 by issuing a notification under Section 46 of
the Trust Act. Notices to the affected persons were also issued under Section
48( 1) of the Trust Act by the Improvement Act on May 5, 1977 and objections
G were filed by the affected persons on July I, 1977. On July I3, 1977, the
Indore Development Authority was established under the Adhiniyam and the
Improvement trust was dissolved. But thereafter on August 22, I 977,
objections were invited by the Indore Development Authority and hearing
was fixed on August 3 I, I 977. In pursuance of the said notice, objections
H were filed on September 3, I 977 by the petitioners. Those objections were
INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS (THAKKER, J.] 485

considered and the Scheme was approved. It was, therefore, submitted that A
the action taken by the Indore Development Authority of approving the scheme
could not be said to be illegal.

The High Court, upholding the contention of the petitioners a.nd
observing that the facts in the present case and in the case of Madan Lal
"were identical in all respects" stated that it was unable to find "any B
distinguishing feature on facts" and held that the petition deserved to be
allowed and accordingly, it was allowed. Other petitions were also allowed.
The common order of the High Court is challenged by the Indore Development
Authority before us.

We have heard the learned counsel for the parties.
c
Th~ learned counsel for the appellant - Indore Development Authority
- contended that the High Court has committed gross error of law in allowing
the petitions filed by the petitioners holding that the case was covered by the
decision of this Court in Madan Lal. According to the learned counsel, Madan D
Lal was clearly distinguishable in view of the fact that whereas in that case
draft scheme was prepared by the Improvement Trust and was forwarded to
the State Government for approval but before approval was granted by the
State Government, the Indore Development Authority came to be established.
The Authority then proceeded with that scheme without issuing notices, without
inviting objections from the objectors and without taking a decision on those E
objections. In the case on hand, notices were issued by the Improvement
Trust under the Trust Act and objections were invited. Objections were filect
by the objectors but no draft scheme was prepared. It was not submitted to
the State Government for approval under the Trust Act. After establishment
of Indore Development Authority under the Adhiniyam on 13th July, 1977, F
notices were again issued by the Development Authority in August, 1977.
Those notices were received by the petitioners. They filed objections. Hearing
was fixed, objections were heard and decided. It was, therefore, submitted
that all actions required to be taken under the Adhiniyam had been taken by
the Development Authority and the scheme was prepared and finalized. Such
scheme cannot be held illegal, unlawful or against the provisions of Adhiniyam. G
Madan Lal, therefore, has no application. According to the learned counsel,
hence, the order passed by the High Court deserves to be set aside.

The learned counsel for the respondents - petitioners, on the other
hand, supported the order passed by the High Court. It was submitted that the
High Court considered the contentions raised on behalf of the Development H
486 SUPREME COURT REPORTS (2005] 3 S.C.R.

A Authority and negatived them. It was submitted that admittedly notices were
issued on 5th May, 1977 by the Improvement Trust under the Trust Act. It
is not in dispute that on that day Indore Development Authority had not been
established under the Adhiniyam. It came to be established on 13th July,
1977. If the Indore Development Authority wanted to take proceedings under
B the Adhiniyam, it ought to have started all proceedings afresh since there was
no 'draft scheme' as envisaged by the Trust Act and the proceedings could
not have been continued under the Adhiniyam by the Development Authority.
All the proceedings by the Development Authority, therefore, were contrary
to law and could not have culminated in a scheme under the Trust Act. It was
urged that in Madan Lal, this Court considered the relevant provisions of
C both the Acts and came to the conclusion that preparation and finalization of
scheme under the Adhiniyam was not legal and valid. It was, therefore,
submitted that the order passed by the High Court is in accordance with law
and no case has been made out to interfere with it.

To understand the contentions of the parties in their proper perspective,
D it would be appropriate to keep in mind the relevant provisions of both the
Acts i.e. the Trust Act and the Adhlniyam. The Trust Act i.e. Madhya Pradesh
Town Improvement Trust Act, .1960 was in operation upto March 15, 1973.
In that Act, "Scheme" was defined as inclusive of "town planning or town
improvement scheme". "Trust" · was defined as "the Improvement Trust"
E constituted under Section 4". Chapter 11 (Sections 4 to 15) provided for I
constitution of Trust and Officers of the Trust. Chapter IV (Sections 30 to 65)
dealt with Improvement Scheme which inter alia included contents of
Improvement Schemes, Classification of Schemes, Procedure to be followed
in framing Schemes, etc. Section 46 provided for preparation, publication
and transmission of notice as to improvement scheme and supply of documents
F to applicants. Section 48 required issuance of notice for proposed acquisition
of land. Sections 55 to 60 contained provisions relating to powers and duties
of the Improvement Trust in execution of Improvement Schemes. Chapter V
(Sections 66 to 83) contained provisions as to acquisition and disposal of
land.

G The Adhniyam i.e. Madhya Pradesh Nagar Tatha Gram Nivesh
Adhniyam, 1973 came into force on March 16, 1973 which was amended
from time to time. "Local authority" is defined as Municipal Corporation
constituted by or under the Madhya Pradesh Municipal Corporation Act,
1956; a Municipal Council or Nagar Panchayat constituted by or under the
H Madhya Pradesh Municiplaities Act, 1961 or a Gram Panchayat constituted
- INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS [THAKKER, J.]

under the Madhya Pradesh Panchayat Raj Adhiniyam, 1993. "Town
487

A
Development Scheme" is defined as "a scheme prepared for the
implementation of provisions of a development plan by the Town and Country
Development Authority and includes scheme". "Town and Country
Development Authority" means an authority established under Section 38 of
the Act. Chapter III deals with Regional Planning and Chapters IV and V
relate to Planning Areas, Development Plans and Zoning Plan. Chapter VII B
provides for establishment of Town and Country Development Authority and
preparation of Town Development Schemes. Indore Development Authority
was established under Section 38 of the Adhiniyam.

Section 50 empowers the Town Country Development Authority to C
prepare a scheme and reads thus :

"50. Preparation of town development schemes. - (1) The Town and
Country Development Authority may, at any time, declare its intention
to prepare a town development scheme.

(2) Not later than thirty days from the date of such declaration of D
intention to make scheme, the Town and Country Development
Authority shall publish the declaration in the Gazette and in such
other manner as may be prescribed.

(3) Not later than two years from the date of publication of the E
declaration under sub-section (2) the Town and Country Development
Authority shall prepared a town development scheme in draft form
and publish it in such form and manner as may be prescribed together
with a notice inviting objections and suggestions from any person
with respect to the said draft development scheme before such date
as may be specified therein, such date being not earlier than thirty F
days from the date of publication of such notice.

- (4) The Town and Country Development Authority shall consider all
the objections and suggestions as may be received within the period
specified in the notice under sub-section (3) and shall, after giving a
reasonable opportunity to such person affected thereby as are desirous G
of being heard or after considering the report of the committee
constituted under sub-section (5) approve the draft scheme as published
or make such modifications therein as it may deem fit.

(5) Where the town development scheme relates to reconstitution of
plots, the Town and Country Development Authority shall H
488 SUPREME COURT REPORTS (2005] 3 S.C.R.

A notwithstanding, anything contained in sub-section (4) constitute a
. committee consisting of the Chief Executive Officer of the said
Authority and two other members of whom one shall be representative
of the Madhya Pradesh Housing Board and the other shall be an
officer of the Public Works Department not below the rank of an
Executive Engineer nominated by the Chief Engineer, Public Works
B Department for the purpose of hearing objections and suggestions
received under sub-section (3).

(6) The Committee constituted under sub-section (5) shall consider
the objections and suggestions and give hearing to such persons as
are desirous of being heard and shall submit its report the Town and
c Country Development Authority within such time as it may fix along
with proposals to -

(i) define and demarcate the areas allotted to or reserved for
public purpose;

D (ii) demarcate the reconstituted plots;

(iii) evaluate the value of the original and the reconstituted plots;

(iv) detennine whether the areas reserved for public purpose are
wholly or partially beneficial to the residents within the area
E of the scheme;

(v) estimate and apportion the compensation to or contribution
from beneficiaries ·of the scheme on account of the
reconstitution of the plot and reservation of portions for public
purpose;
F
(vi) evaluate the increment in value of each reconstituted plot
and assess the development contribution leviable on the plot
holder;
...
Provided that the contribution shall not exceed half the
accrued increment in value;
G
(vii)ev~luate the reduction in value of any reconstituted plot and ·>--
assess the compensation payable ther~for.

(7) Immediately after the town d~velopment scheme is approved under
sub-section (4) with or without modifications the Town and Country
H Development Authority shall publish in the Gazette and in such other
INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS [THAKKER, J.] 489

manner as may be prescribed a final town development scheme and A
specify the date on which it shall come into operation."

Section 51 confers revisional power on the Director of Town and Country
Planning. Section 52 authorisei: the State Government to give directions in
public interest to the Town and Country Development Authority to frame, to
modify or to revoke town development scheme. Section 54 deals with lapse B
of scheme in certain eventualities.

Section 87 provides for Repeal and savings. The rele..,ant part of the
said section reads thus :

"87. Repeal, savings, and construction of references.- c
(I) As from the date of -

(a) .............. .
(b)
(c) the establishment of the Town and Country Development D
Authority for any area, the following consequences shall ensue
in relation to that area, namely -

(i) the Madhya Pradesh Town Improvement Trust Act, 1960
(No. 14 of 1961), shall stand repealed in its application to
the said area ; E
(ii) the Improvement Trust functioning within the jurisdiction of
the Town and Country Development Authority so established
shall stand dissolved and any Town Improvement Scheme
prepared under the said Act shall in so far as it is not
inconsistent with the provisions of this Act be deemed to F
have been prepared under this Act;

(iii) all assets and liabilities of the Town Improvement Trust
shall belong to and be deemed to be the assets and liabilities
of the Town and Country Development Authority established
in place of such Town Improvement Trust under Section 38; G
(iiia) ................ .

(iv) ................ .

(v) all records and paper belonging to the Town Improvement H
490 SUPREME COURT REPORTS [2005) 3 S.C.R.

A Trust referred to in sub-clause (ii) shall vest in and be
transferred to the Town and Country Development Authority
established in its place under Section 38.

(2) Notwithstanding the repeal of the Madhya Pradesh Town
Improvement Trust Act, 1960 (No.14 of 1961) (hereinafter referred
B to as the repealed Act) under sub-clause (i) of clause (c) of sub-
section (l) -

(a) all cases relating to compensation in respect of acquisition
and vesting of land in Town Improvement Trust under Section 71 of
the repealed Act and pending before the Town Improvement Trust or
C the Court of the District Judge or the High Court immediately before
the date of such repeal shall be dealt with and disposed of by -

(i) the Town and Country Development Authority ~stablished in the
place of such Town Improvement Trust under Section 38;
(ii) the Tribunal constituted under Section 73 of the repealed Act
D
after the commencement of the Madhya Pradesh Nagar Tatha
Gram Nivesh (Sanshodhan) Adhiniyam, 1979;
(iii) the Court of the District Judge;
(iv) the High Court;
E as the case may be, in accordance with the provisions of the
repealed Act, as if this Act had not been passed;
(b) the Town and Country Development Authority, the Tribunal,
the Court of the District Judge or the High Court, as the case
may be, may proceed to deal with or dispose of the same from
F the stage at which such cases were left over at time of repeal."

In Madan Lal, this Court had an occasion to consider the provisions of
the Trust Act as also of the Adhiniyam. In that case, the Indore Improvement
Trust was constituted under the Trust Act. The Trust framed Scheme No. 72
by inviting objections from the persons whose land was· proposed to be
G acquired for executing the scheme. Certain persons filed objections which
were considered by the Trust. Under the Trust Act, the Improvement Trust
had no authority to approve the scheme and it was required to obtain sanction
of the State Government. Accordingly, the Government was approached for
grant of sanction to Scheme No. 72. Section 51 of the Trust Act empowered
H the State Government either to sanction the scheme with or without
INDORE DEVELOPMENT AUTHORITYv. SHRIKRISHNA OIL MILLS [THAKKER, J.] 491

modification or to refuse the sanction or to return the scheme for re- A
consideration by the Improvement Trust. The Government, however, could
not take any action in view of subsequent development. On January 17,
1977, the Improvement Trust forwarded it to the Government with objections
received by it. But during the pendency of the consideration of objections,
the Development Authority under the Adhiniyam was established on July 13, B

-· 1977 and the Improvement Trust was replaced by Developmert Authority.
The Government was deprived of power to sanction Scheme No. 72. The
Development Authority notified the said scheme under sub-section (4) of
Section 50 of the Adhiniyam and it was published in Government Gazette on
September 30, 1977. On May 04, 1978, another notification was issued
under sub-section (7) of Section 50 of the Adhiniyam informing general C
public that certain lands were to be acquired for implementation of the scheme.
Notification under Sections 4 and 6 of the Land Acquisition Act were issued.
The land owners challenged the scheme and acquisition of land by filing a
petition in the High Court of Madhya Pradesh inter alia contending that since
the scheme was not sanctioned by the State Government under the Trust Act,
the Development Authority could not have adopted the scheme. The High D
Court allowed the petition upholding the objection and observing that. there
was no valid scheme in existence and all actions taken by the Development
Authority were illegal and unlawful. The Development Authority approached
this Court.
E
Holding that the High Court had not committed any error, this Court
stated :-

"9. It is not in dispute that the Development Authority did not follow
the procedure prescribed under Section 50 of the Adhiniyam for
preparation of Scheme No. 72. A note dated August 24, 1977 prepared p
by the Officers of the Development Authority indicates that the scheme
No. 72 was approved under Section 50(4) of the Adhiniyam without
inviting objections and without considering the same. It was, however,
argued for the appellant that the Development Authority need not
have invited fresh objections and suggestions for consideration since
that procedure has already been followed by the Improvement Trust G
under the Trust Act. The provisions of Section 87 (l) (c) (ii) of the
Adhiniyam were also relied upon to salvage the scheme.

l 0. We do not think that the Development Authority was justified in
following a short cut in this case. The procedure followed under the
Trust Act <.:ould not be sufficient to dispense with all the requirements H
492 SUPREME COURT REPORTS [2005] 3 S.C.R.

·· A of Section 50 of the Adhiniyam. As earlier noticed that Section 50
of the Adhiniyam provides procedure for preparation and approval of
scheme for development. After preparing a draft scheme, the
Development Authority must invite objections and suggestions from
the public. There must be due consideration of the objections and
suggestions received in the light of the Master Plan of Indore. Indeed,
the public must also have an opportunity to examine the scheme and
file objections in the• light of the Master Plan if the Development
Authority wants to adopt the scheme. Since the scheme in question
was not an approved scheme under the Trust Act, the Development
Authority could not have dispensed with the procedure prescribed
c under Section 50 of the Adhiniyam."

The Court said;

"12. Two separate consequences follow upon the constitution of the
Development Authority; firstly, the Improvement Trust functioning
in that area shall stand dissolved; secondly, the Improvement Schem~
D
prepared under the Trust Act shall be deemed to have been prepared
under the Adhiniyam insofar as it is not inconsistent with the provisions
of the Adhiniyam. The High Court has held that the term 'scheme
prepared' in the context must mean a completed scheme in respect of
which all the procedures under the Trust Act have been followed.
E We agree with this conclusion as in our opinion, it is a correct view
to be taken. But the Scheme No. 72 was not a completed scheme
under the Trust Act. That scheme was considered only by the
Improvement Trust but not approved by the government. Under the
Trust Act the scheme has no validity unless it was approved by the
government. Since that scheme was just a draft scheme under the
F Trust Act, it could not get the benefit of legal fiction provided under
· Section 87 (I)(c )(ii). Besides even if the scheme was prepared with
the approval of the government under the Trust Act it could not be
deemed to be a scheme under the Adhiniyam unless it is in conformity
with the Master Plan of Indore and it cannot also be said to be a
G scheme saved under Section 87 (I) (c) (ii) of the Adhiniyam."

Taking into account the fact that fresh process may result in undue
delay, this Court proceeded to state :

"13. However, in the circumstances of the case and to avoid delay in
H the preparation of a fresh draft scheme, we reserve liberty to the
INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS [THAKKER, J.] 493
Development Authority to invite objections and suggestions with A
regard to scheme No. 72 under Section 50(3) and consider the same
under Section 50(4) of Adhiniyam and take further steps according to
law, if so advised."

One more aspect was also considered by this Court and it was stated;
B
"14. There is yet another aspect. The High Court has quashed the
acquisition of lands belonging to the respondents, but not on the
ground of any illegality in the procedure followed. Mr. Parasaran
learned counsel for the appellant therefore, submitted that the
notifications issued under Sections 4 and 6 of the Land Acquisition
Act may not be disturbed and the claimants will be given compensation · C
at the current rate if the scheme is adopted and implemented. The
submission appears to be reasonable and it would avoid repetition of
the procedure for acquisition. We record the submission of learned
counsel. We also direct that the claimants shall be paid compensation
for the lands acquired at the market value as on the date of publication D
of the scheme under Section 50(7) of the Adhiniyam if the scheme
is ultimately approved as indicated above."

It is thus clear that in Madan Lal, Scheme No. 72 was framed by the
Improvement Trust under the Trust Act. Objections were invited by the
Trust from the persons whose land was proposed to be acquired for execution E
of the scheme. Objections were filed by interested persons to the Trust.
They were considered by the Trust. Since the Trust had no authority to
approve the scheme under the Trust Act, it approached the Government for
grant of sanction to the scheme. On the scheme being sanctioned by the
Government and publication of a notification to that effect under sub-section
(I) of Section 52 of the Trust Act, it was to become "conclusive evidence" F
that the scheme had been duly framed and sanctioned as laid down in sub-
section (2) of Section 52 of the Trust Act. But, as observed by this Court;
the Government could not exercise the power and sanction the scheme under
the Trust Act in view of the fact that the Development Authority came to be
constituted under the Adhiniyam. The Development Authority then proceeded G
with the scheme prepared by the Improvement Trust. The scheme was notified
under Section 50(4) of the Adhiniyam on September 30, 1977. It was stated
that the scheme was "duly approved for Indore Planned Area and it would
come into operation from the date of publication of the notification". This
Court, in the circumstances, proceeded to examine whether Scheme No. 72
prepared by the Improvement Trust but was not approved by the State H
494 SUPREME COURT REPORTS [2005] 3 S.C.R.

A Government could have been adopted by the Development Authority?
Considering the ambit and scope of Section 50 of the Adhiniyam and the
procedure laid down therein, this Court held that the Development Authority
was required to call for objections and suggestions under the Adhiniyam and
after giving a reasonable opportunity to the objectors who were desirous of
B being heard could approve the draft scheme. Since the Development Authority
did not follow the said procedure in preparation of Scheme No. 72, the Court
held that the action was not in consonance with law and Section 87(1)<c)(ii)
of the Adhiniyam did not salvage the scheme.

At the same time, "to avoid delay in preparation of a fair draft scheme'',
C the Court granted liberty to the Development Authority to invite objections
and suggestions with regard to Scheme No. 72 under Section 50(3) and
consider them under Section 50(4) of the Adhiniyam and take further steps
in accordance with law.

In the instant case, it is no doubt true, as contended by the learned
D counsel for the contesting respondents that Scheme No. 78 was prepared by
the Improvement Trust under the Trust Act. It is also true that objections
were invited by the Trust by issuing notices to the persons who were·sought
to be affected by the scheme on May 5, 1977. It is also correct that objections
were filed on July l, 1977. All those actions were taken prior to July 13,
1977, i.e. before the Development Authority was established. An important
E fact, however, cannot be overlooked and it is that on August 22, 1977, once
again a notice was issued by the Development Authority to the objectors. It
has come on record that though objections were filed by the objectors earlier,
fresh objections were filed again on September 3, 1977. It was stated in
those objections that applicants had received notices earlier and had filed
F their objections against Scheme No. 78. But as once again they had received
such notice on August 23, 1977, they were submitting objections. It is also
on record that those objections were heard at the office of the Development
Authority, Indore, and "Note sheet" was prepared and signed by the Chairman
of the Indore Development Authority. The scheme was then approved,
finalized and .published in local newspapers as well as in the Government
G Gazette. Notifications under Sections 4 and 6 of the Land Acquisition Act ...
were also issued.

From the above facts, it is clear that in the present case, procedure
-
under the Adhiniyam was also followed· by the authorities. Notices were
H issued, objections were submitted and hearing was afforded to the affected
INDORE DEVELOPMENT AUTHORITY v. SHRIKRISHNA OIL MILLS [THAKKER, J.] 495

persons and thereafter the decision was taken. As already noted in Madan A
Lal, this Court reserved liberty to the Development Authority to invite
objections and suggestions against Scheme No. 72 and allowed the authority
to take appropriate decision according to law after affording hearing to the
objectors. Since in this case, the said procedure was followed, objections
were submitted by the affected parties to the Development Authority, they B
were considered and the scheme was approved after extending opportunity of
hearing to them, the provisions of the Adhiniyam had been complied with so
also the principles of nature justice were observed. In these circumstances,
it cannot be -said that the action taken by the appellant was illegal or unlawful.
As the revisional authority did not think it fit to interfere with the decision
of the Development Authority, it approved the action of the Authority and C
dismissed the revision. Consequently, notifications under Sections 4 and 6
of the Land Acquisition Act were issued and published in accordance with
Jaw. Those actions also cannot be termed illegal. We, therefore, see no
substance in the contentions of the respondents that Scheme No. 78 was
illegal or unlawful.
D
For the foregoing reasons, in our opinion, all the appeals deserve to be
allowed and are hereby allowed. The order passed by the High Court is
quashed and set aside and scheme No. 78 prepared and approved by the
Indore Development Authority is held legal, valid and in accordance with
Jaw. All consequential actions taken in pursuance of the scheme are also E
held legal and lawful.

The civil appeals are disposed of accordingly. In the facts and
circumstances of the case, however, there shall be no order as to costs.

K.K.T. Appeals allowed.