Holding

Section 301(1) of the Bombay Municipal Corporation Act, 1888 limits compensation to the loss sustained and any expenses incurred, to be measured as the difference between the pre‑acquisition market value of the whole property and the market value of the remainder, and no interest is payable.

Summary

The Bombay Municipal Corporation (BMC) widened public streets and acquired portions of land under sections 298 and 299 of the Bombay Municipal Corporation Act, 1888. The Commissioner offered Rs 80 per square yard as compensation, which the owners rejected; the Court of Small Causes awarded market‑value compensation of Rs 450‑640 per square yard with 6% interest, a decision the BMC appealed. The Supreme Court examined whether section 301(1) of the Act prescribes a market‑value basis, what method should be used to calculate compensation, and whether interest is payable. It held that section 301(1) limits compensation to the loss sustained and any expenses incurred, not the market value of the acquired land, and that loss is measured as the difference between the market value of the whole property before acquisition and the market value of the remainder after acquisition, plus any proven expenses. The Court also ruled that no interest is payable because the Act contains no provision for it. Consequently, the appeals were allowed, the lower courts' judgments set aside, and the matters remitted to the Court of Small Causes for fresh determination using the prescribed method.

Issues considered

Does sub‑section (1) of section 301 of the Bombay Municipal Corporation Act, 1888 specify the principle for determining compensation for land or buildings acquired under sections 298 and 299?
Does that principle require compensation to be based on the market value of the acquired land or building?
What method should be adopted to calculate the amount of compensation payable under section 301(1)?
Is interest payable on the compensation awarded under section 301(1)?

Legislation cited

Bombay Act 1 of 1925 (amendment)
Bombay Municipal Corporation Act, 1888s. 298, s. 299, s. 301, s. 504
Land Acquisition Act, 1894

Subjects

compensationmunicipal corporation actland acquisitionmarket valueinterestpublic street wideningvaluation method

Judgment

) MUNICIPAL CORPORATION OF GREATER BOMBAY AND ORS. A
I ' v.
j THE CENTRAL BANK OF INDIA AND ANR. ETC. ETC.
l
MAY 2, 1994
B
[N. VENKATACHALA AND K. RAMASWAMY, JJ.]
)
, Bombay Municipal Co1poratio11 Act, 1888: Sections 2Y8, 299, 301(1)
) and 504.

Corporation-Land acquired j(Jr Public Street-Compensation for- c
Principle for detemiination of-Whether 'pecified by Section 301(1)-<:om-
pensation whether to be determined on market value of acquired lanli-
Method adopted for determination of compensation-What is-Interest on
payment of compensation-Whether payable.
D
The appellant-Corporation which resolved to improve some public
streets by widening them, acquired out of the lands of respondents certain
portions which fell within the regular line of the public streets and took
their possession as provided for in sub-section (2) of Section 298 and
sub-section (1) of Section 299 of the Bombay Municipal Corporation Act,
•
~ 1888. The Commissioner who was liable under sub-section (1) of S.ection E
301 of the Act, to pay compensation to the respondents for their acquired
portions or lands, offered to pay them compensation at an uniform rate of
Rs. 80 per square yard of land. But the respondents, who disputed the
adequacy of the said compensation offered to be paid to them, filed
applications before the Chief Judge of the Court of Small Causes, Bombay, F
praying for grant of higher compensation. The Chief Judge decided that
the compensation payable to the respondents was their market value
worked out at a rate ranging from Rs. 450 per sq. yard to Rs. 640 per sq.
yard. The appellant-Corporation assailed the judgment of Chief Judge, as
granting excessive compensation, by filing appeals in the High Court of
• Bombay. A Division Bench of the High Court allowed one of the appeals G
partly by reducing the compensation in some measure and dismissed the
~ rest. According to the Chief Judge of the Court of Small Causes, and the
Division Bench of the High Court, what was payable by way of compensa·
' lion under sub-section (1) of Section 301 of the Act to the owners for the
i portions of their lands acquired under either Sction 298 or Section 299 H
) 823

)
,
824 SUPREME COURT REP'JRTS [1994] 3 S.C.R.

A thereof was the market value of such portions and therefore, the market
value obtainable by the owuer for their respective entire lands had to be
appropriated between the unacquired portion of the land and the acquired
portion of the fand and it was that much of the market value apporticnable
to acquired land, which was liable to be paid to the owuer as compensation
for his acquired land. Consequently, both the Chief Judge of Court of
B Small Causes and the Division Bench of the High Court determined the
amount of market value, as such, of the acquired portions of the lands of
respondents and ordered payment of such amounts of market value as
compensation along with 6 per cent interest per annum from the date of
taking possession of the lands till the date of its payment.
c
In appeals to this Court on the questions :

(i) Does the provision in sub-section (1) of section 301 of the Bombay
Municipal Corporation Act, 1888 specify a principle of determination of
compensation payable to the owuers of the buildings or lands acquired for
D a public street under sections 298 and 299 thereof?

(ii) Does the principle specified in sub-section (1) of Section 301
warrant deter~ination of such compensation according to the market
value of such acquired buildings or lands?

E (iii) What method could be adopted for determining the amount of
compensation payable under sub-section (1) of Section 301 of the Act?

(iv) Does auy interest become payable on the amount of compensa-
tion payable under sub-section (1) of Section 301 to the owuer for his
acquired property?
F •
Allo"ing the appeals and setting aside the judgment of the Chief
Judge of the Small Causes Court and of the High Court, this Court

HELD : 1. When sub-section (1) of Section 301 of the Bombay
Municipal Corporation Act, 1888 requires the loss sustained by the owuer
G
as a consequence of acquisition and the expenses ·incurred by the o~er
as a consequence of acquisition, to be made good to such owner by way of
compensation, what is found in that sub~section cannot be anything other
than the principle of determination of compensation which is deliberately
or wantonly specified therein, having regard to the vulnerability of a
H portion of land or a portion of building being acquired for the public
MUNICIPALCORPN. OF BOMBAY v. C.B.I. 825
street. This situation makes one take the view that sub- section (1) of A
Section 301 of the Bombay Municipal Corporation Act specifies the
appropriate principle of determination of compensation for a building or
a land acquired either under section 298 or section 299 thereof. [832-F-G]

Municipal Corporation of the City of Ahmedabad & Ors. v. State of
Gujarat & Ors., [1973) 1 S.C.R. 1, relied on. B
2. The principle specified in sub-section(l) of Section 301 for deter-
mination of compensation payable to the owners for their lands or build-
ings acquired under either of the Sections 298 or 299 thereof, does not
warrant determination of compensation according to market value of such
building or land. [835-E) c
3. Principle of determination of compensation payable for owners
for the portions of their buildings or lands acquired either under Section
298 or Section 299 of the Act specified under sub-section(l) of Section 301 ·
requires that such compensation shall be confined only to the loss sus- D
tai.aed or the expenses incurred by the owner as a consequence of acquisi-
tion of his building or land lyillg >tithin the regular line of the public
street. If that be so, question of determining the compensation unde~
sub-section(l) of Section 301 for acquisition of lands lying within the
regular line of public street under either section 298 or section 299 thereof,
on the basis of their market value, cannot arise. In fact sub-section(l) of E
Section 301 before its amendment by Bombay Act 1 of 1925 also required
payment of compensation on the basis of market value. But the amended
sub-section makes it clear that the payment of value that is market value
as compensation for the acquired land is, in fact excluded thereunder. If
that be so, to hold that the market value of the acquired land is. payable
as compensation to the owner under sub-section(l) of Section 301 for the F
acquired lands envisaged thereunder is to order something to be which
the Legislature required, not to be done. [833-F-H, 834-A-B, F]

Municipal Council of Colombo v. Kunamana Navanna Suna· Pana
Latchiman Chettiar,, (1947) Appeal cases 188, relied on.
G
4. The method which is the most appropriate for adoption in deter-
mining the compensation payable under sub-section (1) of section 301 to
the owner for his acquired property having regard to the determinants or
indicia specified in that sub·section is that which should necessari1y
involve the following exercise : H
826 SUPREME COURT REPORTS [1994) 3 S.C:R.

A 1. or determining the market value of the whole property or land
of the owner before a portion of that property or land was
acquired under either Section 298 or Section 299.

2. Of determining the market value of the remainder property left
with the owner after a portion of it got acquired under either
B Section 298 or Section 299. That market value of the remainder
property must be that determined taking into consideration the
increased value accrued to it or decreased value suffered by it,
as a result of improved street formed by acquisition of its
r rtion and acquisition of similar portions of properties of
c ' 1ers. Whenever the remainder property gets the benefit of
h11yroved street formed with acquired portions of lands, it can
be presumed in the absence of contrary evidence that there is
increase in its value, although the quantum of increase ought
to depend on extents or strips of lands acquired for the improve-
ment of the street and importance gained by it.
D ;

3. If the amount of the market value of the property, as determined
under item(2) falls short of the amount of market value of the
property as determined in item (1), it is that amount of the
short-fall, which could be regarded as the loss to owner for his
E acquired portion of the property, the principal component of
compensation payable under sub-section(l) of Section 301 to the
owner for his acquired portion or property or land.

4. Expenses incurred by the owner, if any, on account of acquisition
of a portion of his property if not already taken into considera-
F lion in determining the market value of the remainder property
under item(2) then that amount of expenses incnrred by the
owner should be regarded as the other component of compen-
sation payable to him under sub-section(l) of Section 301.

5. The amount of loss in item(3) and the amount of expense in
G
item(4) together constitute the total compensation payable
under sub-section(l) of Section 301 to the owner for his acquired
jJroperty or land. [836-D-H, 837-A-D)
t
5. The 1nethod of determination of compensation payable under
H Section 301 (1) to the owner for his acquired property or land under either
MUNICIPALCORPN. OF BOMBAY v. CB.I. 827

Section 298 or Section 299 thereof requires the assessment of the loss A
sustained by the owner as a consequence of acquisition, such loss being
the amount of market value of the property or land as a whole, as stood
before its acquisition, minus the amount of market value of the remainder
property or land and assessment of the expenses incurred by the owner as
a consequence of acquisition. The said method has commended itself for
acceptance, since it accords with the principle specified in snb-section(l)
B
of section 301 for determination of compensation payable to the owner of
a property or land acquired ·under either Section 298 or Section 299
thereof. However, what method should be adopted for determining the
market value of the whole property of the owner or remainder property of
the o"ner, shall, as it ought to be, may depend on the nature of property c
concerned. (838-C-E]

6. Sub-section(l) of Section 301 as it stands does not provide for
payment of interest on the amount of compensation payable to the owner
for his properties acquired either under section 298 or section 299. There
is no other provision found in the Act providing for payment of interest D
on su~h ·amount of compensation. Therefore, no liability arises for pay-
ment of interest on such compensation. (838-G-H, 839-A-B]

Union of India v. Harikrishnan Khosla, (1993] Supp. 2 S.C.C. 149,
relied on. E
7. The market value of the remainder land (land left out after
acquisition) of respondents in each of the appeals, will have naturally
increased due to the advantage got by it on account of improved road made
by acquisition of their several parcels of lands. In the absence of evidence
of such increased value, the facts and circumstances of the present cases F
• warrant granting of an increase in the market value of the remainder land
of each of the respondents by ten per cent. (840-E]

8. The cases are remitted to the Court of the Chief Judge of Small
Causes Court at Bombay for deciding them according to the directions G
contained and indications given in this judgment after hearing parties or
their counsel. [841-C]

9. The Chief Judge, Court of Small Causes must firstly find out the
total market value of the remainder land of each of the respondents in the
appeals according to the rates per square yard already fixed for it by the H
828 SUPREME COURT REPORTS [1994] 3 S.C.R.

A High Court and secondly add to such market value ten per cent increase
adverted to. Then he must also find out separately the amount of market
value of the whole land of respective respondents in each of the appeals
against finding out such market value according to the rate per square
yard already fixed by the High Court. [840-F-G)

B 10. The amount of market value of the whole land of the respondents
in each of the appeals arrived at, as stated, minus the amount of market
value of the remainder land of respective respondents arrived at, as stated,
shall be treated as the loss sustained by each of them as a consequence of
acquisition of their respective portions of land. Such amount of loss, if
C any, shall alone be the amount to be ordered to be paid to the concerned
respondents as compensation payable to him/them, under· sub-section(l)
of Section 301 inasmuch as there is no claim .or evidence ill :the cases as
to the expenses incurred by himlf!iem as a consequence of acquisition
which would have otherwise become payable as a component of compensa-
tion under that such-section. (840-H, 841-A-B]
D
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1278-87
of 1977.

From the Judgment and order dated 5th, 6th/7th August 1974 of the
E High Court of Judicature at Bombay in First Appeal Nos. 386 to 395 of
1968.

VA Bobale & D.N. Mishra for JBD & Co. for the Appellants.

R.F. Nariman, R.B. Hathikhanawala & D.B. Moos for the Respon-
F dent in CA Nos. 1278-84/77.
"·
U.A. Rana, Anand Prasad for Gagrat & Co., for the Respondent in
CA No. 1285/77.

The Judgment of the Court was delivered by
G
VENKATACHALA, J. These appeals by special leave, directed
against the common judgment dated 5th, 6th and 7th August, 1974
rendered in First Appeals Nos. 386-395 of 1968 by the High Court of
Judicature at Bombay, are required to be decided by us by considering and
H answering three. important questions: .
J
MUNICIPALCORPN.OFBOMBAY v. C.B.I. [VENKATACHALA,J.] 829

(i) Does the provision in sub-section (1) of section 301 of the llombay A
• Municipal Corporation Act, 1888 - "the BMC Act" specify a principle of
determination of compensation payable to the owners of the buildings or
lands acquired for a public street under sections 298 and 299 ther.eof?

(ii) Does the principle specified in sub-section (1) of section 301 of B
the BMC Act, for determination of compensation payable to the owners
for their buildings or lands acquired under sections 298 and 299 thereof,
warrant determination of such compensation according to the market value
of such acquired buildings or lands ?

(iii) What method could be adopted for determining the amount of C
compensation payable under sub-section (1) of section 301 of the BMC
Act?

The salient facts which have let to the filing of the present appeals
lie in a narrow compass : Gowalia Tank Road and Bhulabhai Desai Road D
lying within the area of the Bombay Muuicipal Corporation - "the BMC"
\l'e public streets envisaged under the BMC Act. In the year 1962, the
BMC which resolved to improve the said public streets by widening them,
acquired out of the lands of respondents in these appeals, certain portions
which fell within the regular line of the public streets and took their
possession, as provided for in sub-section(2) of Section 298 and sub-section E
(1) of section 299 of the BMC Act. The Commissioner who was liable
under sub-section(!) of Section 301 of the BMC Act, to pay compensation
to the respondents in these appeals for their acquired portions of lands,
offered to pay them compensation at an uniform rate of Rs. 80 per square
yard of land. But, the respondents, who disputed the adequacy of the said F
compensation offered to be paid to them, filed applications before the
Chief Judge of the Court of Small Causes, Bombay, praying for grant of
higher compensation for their acquired portions of ·lands, by taking
recourse to the provision in section 504 of the BMC Act. The Chief Judge,
who entertained those applications, with the consent of parties, clubbed all
the said applications, recorded common evidence thereon and decided G
them by his common judgment dated 14th March, 1968. Under that com-
mon judgment, the compensation made payable to the respondents in these
appeals - the owners, for their acquired portions of lands, was their market
value worked out at a rate ranging from Rs. 450 per sq. yard to Rs. 640
per sq. yard. The BMC assailed that common judgment of the learned H
I
I•

830 SUPREME COURT REPORTS [1994[ 3 S.C.R.

A Chief Judge, as granting excessive compensation, by filing appeals in the
High Court of Judicalu.re al Bllmhay. A Division Bench of the High Court, •
which heard those appeals, by its common judgment dated the 5th, the 6th
and the 7th August, 1974, while allowed one of them partly by reducing the
compensation in some n1easurc, dismissed the rest. According to the Chief
Judge of the Court of Small Causes, and the Division Bench of the High
B Court, what was payable by way of compensation unrler sub-section (1) of
section 301 of the BMC Act to the owners, for the portions of their lands
acquired under either section 298 or section 299 thereof, was the market
value of such portions and, therefore, the market value obtainable by the '
owners for their respective entire lands had to be apportioned between the
C unacquired portion of the land and the acquired portion of the land and
it was that much of the market value apportionable to acquired land, which
was liable to be paid to the owner as compensation for his acquired land.
Consequently, both the Chief Judge of Court of Small Causes and the
Division Bench of the High Court determined the market value of the
D entire land of respondent/s concerned in each appeal, of which his/their
acquired portion of land formed part and apportioned to such acquired
portion of land out of the market value of the entire land so determined,
according to the ratio of the area worked out on squared yard basis. The
market value of the acquired portion of land so determined was, in fact,
treated as the loss sustained by the respondent-owner concerned and the
E Commissioner was directed to pay the same to him/them as compensation
required to be paid under sub-section (1) of section 301 of the BMC Act
for his/their acquired land. For the unpaid amount of such compensation,
interest at 6% per annum was also ordered to be paid from the date of
taking possession of the land till its actual payment. The present appeals
by Special leave are filed on behalf of the BMC, against the said judgments
F
of both the Court of Small Causes and the High Court, assailing the
amounts of compensation determined for the acquired portions of lands of
the respondents, on the basis of the principle of their market value,
purporting to be under sub-section (1) of Section 301 of the BMC Act.

G The learned counsel appearing for the BMC, the common appellant
in all the present appeals, contended that the Court of Small Causes, as
well as, the High Court had gone wrong in determining the compensation
payable to the owner under sub-section (I) of Section 301 of the BMC Act
for his land acquired under sections 298 and 299 thereof, was its market
H value, when such compensation to be determined could not have been
MUNICIPALCORPN. OF BOMBAY v. CB.I. [VENKATACHALA,J.J 831

anything other than the loss which ihat owner had to sustain as a conse- A
• quence of such acquisition and the expense which that ovlner had to incur
as a consequence of such acquisition. He also contended that the method
of determining the amount of market value of the whole land of the
respondent in each appeal including that which was acquired and appor-
tioning that market value to the portion of the acquired land, was indeed,
not a method which the Court of Small Causes and the High Court, could
B
have adopted for determining the compensation payable under sub-section
(1) of Section 301 of the BMC Act. On the other hand, learned counsel
who appeared for contesting respondents in the present appeals, sought to
support the judgments of the Court of Small Causes and the High Court
by which it has been held that the compensation payable to the owners for c
their portions of lands acquired by the BMC under sections 298 and 299
thereof cannot be anything but their market value, and when such market
value was given as compensation to owners for their acquired lands, there
was no warrant for interfering with the same, by this Court. They also
sought to obtain support for their contention from the decision of Privy D
Council in Municipal Council of Colombo v. Kuna Mana Navanna Suna
I
Pana Latchiman Chettiar, (1947) Appeal Cases 188.

Th~ questions which we have formulated at the outset as those
requiring our consid~ration and answers, in deciding the present appeals,
since take within their fold the aforestated rival contentions of learned E
counsel for the contesting parties, they could now be considered and
answered, in there serial Order.

Re : Question (1) ·

Does the provision in sub-section (1) of section 301 of the BMC Act F
specify a principle of determination of compensation payable to the owners
of buildings or lands acquired for public streets under sections 298 and
299 thereof, is the question.

As the answer to the said question, has to necessarily depend on the G
content of sub-section (1) of section 301 of the BMC Act, it could be
reproduced to understand its content, thus :

"301, (1) Compensation shall be paid by the Commissioner to the
owner of any building or land acquired for a public street under
section 298 or 299, for any loss which such owner may sustain in H
832 SUPREME COURT REPORTS (1994] 3 S.C.R.

A consequence of his building or land being so acquired and for any
expense incurred by such owner in consequence of the order made
•
by the Commissioner under either of the said sections; provided
that any increase or decrease in the valu~ of the remainder of the
property of which the building or land so acquired formed part
likely to accrue from the set-back to the regular line of the streei
B shall be taken into consideration and allowed for in determining
the amount of such comj:>ensation."
•
The said sub-section as could be seen from its content while provides
for payment of compensation to the owner for his building or land acquired
c under section 298 or section 299 of the BMC Act, requires that such
compensation (could comprise of, loss which such owner may sustain and
expense which such owner may incur, as a consequence of acquisition of
his building or land. In this context, if it is noted, that what is acquired
under section 298 of the BMC Act, is the portion of land within the regular
D line of public street, that is, the portion of land occupied by a building
· fallen down or burnt down or taken down, and that what is acquired under
section 299 of the BMC Act is the portion of land occupied by a building
external to the building abutting the public street or a verandah, a step, a
· platform or other structure within the regular line of public street, the same
furnishes the reason as to why the principle of compensation required to
E be adopted under sub-section (1) of section 301 of the BMC Act, for
payment of compensation for such acquisition is confined to merely the
loss sustained and the expense incurred, as a consequence of such acquisi-
tion. Thus, when sub-section (1) of section 301 of the BMC Act requires
the loss sustained by the owner as a Consequence of acquisition ·and the
F ~xpense incU.rr~ by the owner as _a consequence of acquisition, to be made
good to .such owner by way of compensation, what is found in that sub-
section cannot be anything other than the principle of determination of
compensation which is deliberately or wantonly specified therein, having
regard to the vulnerability of a portion .of land or a portion of building
being acquired for the public street. This situation, makes us take the view
G that sub·section (1) of section 301 of the BMC Act specifies the ap-
propriate principle of determination of compensation for a building or a
land acquired either under section 298 or section 299 thereof. Our view
that sub-section (1) of section 301 of the BMC Act specifies the principle
of determination of compensation for building or land acquired under ..
H sections 298 or section 299 thereof, gives no room for doubting, since it
-~

MUNICIPAL CORPN. OF BOMBAY v. C.B.I. [VENKATACHALA, J.] 833

receives, fortification from a Constitution Bench decision of this Court in A
' Municipal Corporation of the City of Ahmedabad & Ors. v. The State of
Gujarat & Ors., [1973] 1 S.C.R. 1, wherein dealing with the content of the
provision in sub-section (1) of section of the provision in sub-section (1)
of section 216 of the Bombay Municipal Corporation Act 1949 which is
exactly similar to the provision in sub-section (1) of section 301 of the BMC
Act, it has been held thus:
B

"...... ,........... Since full indemnification in accordance with judicial
norms is the goal set by the Act, it is implicit in such a provision
that the rules for .determination of compensation shall be ap-
propriate to the property acquired and such as will achieve the c
goal of full indemnity-against loss. In other words, the Act provides
for compensation to be determined in accordance with judicial
principles by the employment of appropriate methods of valuation
so that the person who is deprived of property is fully indemnified
against the loss. This, by itself, in our opinion, is a specification of
a principle for the determination of compensation." D

• (emphasis supplied)

Hence, we answer the question in the affirmative and to the effect
that sub-section (1) of section 301 of the BMC Act, itself, specifies the
E
principle of determination of compensation payable for land or building
acquired under either of the section 298 or 299 thereof.

Re : Question (ii)

Principle of determination of compensation payable for ·owners for F
the portions of their buildings or lands acquired either under section 298
or section 299 of the BMC Act, specified_ under sub-section (1) of section
301 of the BMC Act, as could be seen therefrom requires that such
compensation shall be Confined only to the loss sustained or. the expenses
inc~rred, by· the owner,, as a conseqllence of aCquisition of his building or
land lyi_ng within the regular line of the public street. If that be so, question G
of determining the compensation under sub:section· (1) of section 301 of
the BMC Act for acquisition of lands lying within the regular line of public
street under either section 298 or section 299 thereof, on the basis of their
.;
market value, cannot arise. Market value could undoubtedly, be a principle .
on the basis of which compensation may be required to be determined H
I
834 SUPREME COURT REPORTS [1994] 3 S.C.R.

A under certain Statutes, for lands acquired thereunder. For instance, the
Land Acquisition Act, 1894 provides for payment of compensation for the
land acquired thereunder on the basis of market value, that is, the price
which a willing vendor might reasonably obtain from a willing purchaser
for such land. It may be recalled in this context that in fact sub-section (1)
of section 301 of the BMC Act, before its amendment by Bombay Act 1 of
B 1925, also required payment of compensation for lands acquired under
sections 298 and 299 of the BMC Act, on the basis of market value, in that,
it read :

"301. (1) Compensation shall be paid by the Commissioner to the
c owner of any building or land acquired for a public street under
section 298 or 299, for the value of the said land and for any loss,
damage or expense sustained by such owner in consequence of the
order made by the Commissioner under either of the said sections."

As seen from the said unamended sub-section, compensation was
D
payable to the owner for his land or building acquired for a public street
under either of the sections 298 or 299 of the BMC Act, included the value
of the land. But, section (1) of section 301 of the BMC Act as it stands •
amended, even though specifies the principle of compensation payable for
land acquired under either of the sections 298 or 299 of the. BMC Act,
E does not require the payment of compensation to be paid thereunder, to
include the value of land. The amended sub-section, therefore, makes it
clear that the payment of value, that is, market value, as compensation for
the acquired land is, in fact, excluded thereunder. If that be so, to hold
that the market value of the acquired land is payable as compensation to
F the owner under sub-section (1) of section 301 of the BMC Act for the
acquired lands envisaged thereunder, is to order something to be done
which the Legislature required, not to be done.

Indeed the decision of the Privy Council in Municipal Council of
Colombo v. Kunamana Navanna Suna Pana Latchiman Chettiar, 1947
G Appeal Cases 188, relied upon by counsel for respondents to support the
view of Court of Small Causes and the Division Bench of the High Court
that, that compensation payable under sub-section (1) of section 301 of the
BMC Act, is the market value of the land acquired under either of the
sections 298 or 299, goes against such view. The Privy Council in that case
H was concerned with a provision which provided for payment of compensa-
MUNICIPALCORPN. OF BOMBAY v. C.B.L[VENKATACHALA,J.) 835

• tion for a land acquired for a public street according to the value of the A
land as required by the Statute - the Land Acquisition Ordinance. When
' the judgment of Supreme Court of Colombo appealed against, indicated
that the compensation was ordered to be paid according to the loss
sustained by the owner of the land acquired for the public street, instead
of ordering compensation, according to the market value of the acquired
land, the Privy Council observed thus : ·
B

"............. The Supreme Court in valuing the acquired strip as part
of the rest of the land of the respondent which is not. either actually
or nationally in the market, have not ascertained the market value
of the acquired strips; they have attempted to ascertain the loss C
which the respondent had sustained by reason of acquisitioning of
the acquired strip. That method finds no warrant in the Or-
dinance.11

Thus, the above decision of the Privy Council, if anything, makes it
clear that what is to be paid by way of compensation for a land acquired D
under a Statute is what is required to be paid thereunder, by way of
compensation for the acquired land and not payment of something by way
of compensation which is not envisaged under the Statute.

Hence, our answer to the question is that the principle specified in E
sub-section (1) of section 301 of the BMC Act for determination of
compensation payable to the owners for their lands or buildings acquired
under either of the section 298 or 299 thereof, does not warrant determina-
tion of compensation according to market value of such building or land.

Re : Question (iii)

Method adoptable for determining the amount of compensation
payable to the owners under sub-section (1) of section 301 of the BMC Act
for land or building acquired under either section 298 or section 299
thereof, arises for consideration here. The compensation payable under (j
sub-section (1) of section 301 of the BMC Act to the owner of the acquired
land or building can only be the loss sustained and the expense incurred
by the owner because of such acquisition and not the market value of the
acquired building or land, as pointed out by us herein-before while con-
sidering Question (ii). Therefore, compensation payable under the said
sub-section should be the amount which is required to be made good to H
836 SUPREME COURT REPORTS [1994] 3 S.C.R.

A the owner towards reimbursement of his loss sustained, if any, on account
of acquisition and his expense incurred, if any, on account of acquisition.
Sometimes there may not be any loss sustained and sometimes there may
not be any expense incurred. At other times, there may be both loss
sustained and expense incurred by the owner. Therefore, depending upon
a given situation, what should be the compensation payable under that
B sub-section, has to be determined. Moreover, as is required by the proviso
to the. said sub-section "any increase or decrease in the value of the
remainder of the property of which the building or land so acquired formed
part, likely to accrue from the set-back to the regular line of the street shall
be taken into consideration and allowed for", in determining the amount
c of such compensation.

If such amount, is the compensation payable to the owner under the
said sub-section, what method should be adopted for determining such
amount of compensation is the real question, which needs our answer.

D
The method which in our considered opinion is the most appropriate
for adoption in determining the compensation payable under sub-section
{1) of section 301 of the BMC Act to the owner for his acquired property,
having regard to the determinants or indicia specified in that sub-section,
· is that which should necessarily involve the following exercise :
E
{1) Of determining the market value of the whole property or land
of the owner before a portion of that property or land was acquired under
either section 298 '" section 299 or the BMC Act.

p· {2) Of determining the market value of the remainder property left
· with the owner after a portion of it got acquired under either section 298
or section 299 of the BMC Act. That market value of the remainder
property must be that determined taking into consideration the increased
value accrued to it or decreased value suffered by .it, as a result of improved
street formed by acquisition of its portion and acquisition of similar por-
G tions of properties of others. Whenever the remainder property gets the
benefit of improved street formed with acquired portions of lands, it can
be presumed in the absence of contrary evidence that there is increase in
its value, although the quantum of increase ought to depend on extents or
strips of lands acquired for the improvement of the street and importance
H gained by it
MUNICIPALCORPN.OFBOMBAY v. C.B.I.(VENKATACHALA,J.) 837

(3) If the amount of the market value of the property, as determined A
uncJ.er item (2) falls short of the amount of market value of the property as
determined it) item (1), it is that amount of the short-fall, which could be
regarded as the loss to the owner for his acquired portion of lhe property,
the principal component of compensation payable under sub-section (1) of
section 301 of the BMC Act to the owner for his acquired portion of
property or land.
B

(4} Expenses incurred by the owner, if any, on account of acquisition
" of a portion Of his property if not already taken into consideration in
determining the market value of the remainder property under item (2),
then that amount of expenses incurred by the owner should be regarded c
as the other component of compensation payable to him under sub-section
(l) of section 301 of the BMC Act

(5) The amount of loss in item (3) and the amount of expense in item
(4) together constitute the total compensation payable under sub-section
(1) of section 301 of the BMC Act to the owner for his acquired property D
or land.

How, by adoption of the said method the amount of compensation
payable under sub-section (1) of section 301 of the BMC Act is deter-
minable could be illustrated with reference to a hypothetical case of
• acquisition of 20 sq. mts. of land out of 100 sq. mts. of land whereby the E
owner is allowed to retain the remainder land of 80 sq. mts. of land.

Amount of market value to be fetched for 100 sq. mts. of land before
acquisition of its portion, is found to be, say Rs. 180 per sq. mt. Such
market value would be 100 times of Rs. 180, that is, Rs. 18,000.00.
F
Amount of market value to be fetched for 80 sq. mts. of remainder
land, is found to be, say of Rs. 200 per sq. mt., such market value would
be 80 times of Rs. 200, that is, Rs. 16,000.00.

The amount of market value of the entire 100 sq. mis. of land before
G
a portion of it was acquired, minus the amount of market value of the
remainder land would furnish the amount of loss sustained by the owner,
that is, Rs. 18,000.00 minus Rs. 16,000.00 = Rs. 2,000.00.

i The loss so sustained by the owner as a consequence of acquisition
of a portion of his land and the amount of expenses, say Rs. l,000.00 H
838 SUPREME COURT REP OR TS [1994) 3 S.C.R.

A incurred by him because of the acquisition, (such expenses if not already •
included in determining the market value. of the reminder land of 80 sq.
mts), together, would be the compensation. That is Rs. 2,000.00 + Rs.
1,000.00 = Rs. 3,000.00.

Therefore, compensation payable under sub-section (1) of section
B 301 of the BMC Act to the owner for his acquired land, would be Rs.
3,000.00.

. Hence, our answer to the question is that the method of determina-
tion of compensation payable under section 301 (1) of the BMC Act to the
C owner for his acquired property or land under either section 298 or section
299 thereof, requires the assessment of the loss sustained by the owner as
a consequence of acquisition, such loss being the amount of market value
of the property or land as a whole, as stood before its acquisition, minus
the amount of market value of the remainder property or land and assess-
ment of the expenses incurred by the owner as a coru;equence of acquisi-
D tion. The said method has commended itself for our acceptance, since it
accords with the principle specified in sub-section (1) of section 301 of the
BMC Act for determination of compensation payable to the owner of a
property or land acquired under either section 298 or section 299 thereof.
However, what method should be adopted for determining the market
E value of the whole property of the owner or remainder property of the ·•
owner, shall, as it ought to be, depend on the nature of property concerned.

There is, however, another question which requires our consideration
and answer. That question concerned the payment of interest on the
amount of comperu;ation payable under sub-section (1) of section 301 of
F the BMC Act to the owner for his acquired property referred to therein.

Sub-section (1) of section 301 of the BMC Act as it stands does not
provide for payment of interest on the amount of compensation payable to
the owner for his properties acquired either under section 298 or section
G 299 of the BMC Act. There is no other provision also found in the BMC
Act providing for payment of interest on such amount of compensation.
The question is, if the statute which provides for acquisition of property
and payment of compensation therefor, does not provide for payment of
interest on such compensation, does any interest become payable.

H It is now settled by three-Judge Bench decision of this Court in Union
MUNICIPALCORPN.OFBOMBAY v. C.B.I. [VENKATACHALA,J.] 839

of India v. Hariklishnan Khos/a, {1993] Supp. 2 S.C.C. 149 that no interest A
is payable on the compensation payable under the Requisitioning and
Acquisitioning of Immovable Property Act, since there is no provision
made in that regard in that Act. The ratio of the said decision since forbids
payment of interest on the amount of compensation payable under sub-sec-
tion (1) of section 301 of the BMC Act, we are constrained to hold that
no liability arises for payment of interest on such compensation.
B

Now coming to facts of the cases which have led to the filing of the
present appeals by the BMC, what has been done in the judgments of the
Chief Judge of the Court of Small Causes and the High Court appealed
against, is to determine the amount of market value, as such, of the C
acquired portions of the lands of respondents in the appeals and order
payment of such amounts of market value as compensation along with 6
per cent interest per annum from the date of taking possession of the land
till the date of its payment.

D
In answering the various questions considered by us herein·bcfore,
we have held that the compensation payo.ble under sub-section (1) of
secti•)Il 301 of the BMC Act fot the properties acquired under either
section 298 or section 299 thereof cannot be determined on the basis of
their market value, as it would go against the principle of determination of
compensation specified in that sub-section and that no interest shall be E
payable on such amount of compensation for delayed payment, as the same
is not made payable by any provision in the BMC Act. Hence, the judgment
1 of the Chief Judge of Small Causes Court, as well as, the judgment of the
High Court; appealed against in these appeals, directing payment of com-
pensation for the acquired portions of lands, according to their actual
F
market value along with interest thereon @ 6 per cent per annum, become
unsustainable and are liable to be set aside by allowing the rresent appeals.
Then, do the cases under present appeals, require to be remanded to the
Chief Judge of the Court of Small Causes, Bombay for their disposal in the
light of this judgment, is the question, which calls for our consideration.
G
It was submitted by learned counsel for the respondents that we
should instead of remanding the cases under appeals to the Chief Judge
of the Court of Small Causes at Bombay for fresh disposal in accmdance
with this judgment, as was suggested by us, the amounts of compensation
awarded to the respondents in the appeals having regard to the fact that a H
f
'

840 SUPREME COURT REPORTS [1994] 3 S.C.R:

A period of 20 years has elapsed from the year in which the acquisitions
concerned were made, and the total amounts awarded, that is, about eleven
lakhs, not being a very big amount from the point of the BMC, should be
allowed to stand undisturbed. We have given our anxious consideration to
the submission. What has been now done by the Court of Small Causes, as
well as, the High Court is, to determine the market value of the whole of
B
the land of each of the respondent/s in the appeals, as stood before its
portion was acquired, on square yard basis and award out of that amount
of compensation, the amount of market value apportionable to the ac-
quired portion of the land, according to its area on square yard basis. If
the material, as to what was the total extent of land of the respondent/s in
c each of the appeals, before a portion of it was acquired, was made available
to us, we would have ourselves determined the compensation, according to
the method which is already suggested by us for adoption. When such
material, is unavailable, we have no option but to remand the cases for
disposal by the Chief Judge of the Court of Small Causes at Bombay in the
manner which we shall presently indicate.
D
The market value of the remainder land (land left out after acquisi-
tion) of respondent/s in each of the appeals, will have naturally increased,
due to the advantage got by it on account of improved road made by
acquisition of their several parcels of lands. In the absence of evidence of
E such increased value, in our view, the facts and circumstances of the
present cases warrant granting of an increase in the market. value of the
remainder land of each of the respondent/s by ten per cent.

Therefore, the Chief Judge, Court of Small Causes must firstly, find
F out the total market value of the remainder land of each of the respon-
dent/s in the appeals, according to the rate per square yard already fixed
for it by the High Court and secondly add to such market value ten per
cent increase adverted to. Then, the Chief Judge must also find out,
separately, the amount of market value of the whole land of respective
respondent/s in each of the appeals again finding out such market value
G according to the rate per square yard already fixed by the High Court.

The amount of market value of the whole land of the respondent/s
in each of the appeals arrived at, as stated, minus the amount of market
value of the remainder land of respective respondent/s arrived at, as stated,
H shall be treated as the loss sustained by each of them, as a consequence of
MUNICIPAL CORPN. OF BOMBAY v. C.B.I. [VENKATACHALA .I.[ 841

I acquisition of their respective portions of land. Such amount of loss, if any) A
shall alone be the amount, to be ordered to be paid to the concerned
respondenl/s, as compensation payable to him/them, under sub-section (l)
. of section 301 of the BMC Act, inasmuch as there is no claim or evidence
in the cases as to the expenses incurred, by him/them, as a consequence of
acquisition, which would have otherwise become payab1e as a component
of compensation under that suh-section. That no interest is payable on the B
amount of compensation to be ordered to be paid, shall, however, be noted.

In the result, we allow these appeals set aside the judgments of the
Chief Judge of Small Causes Court at Bombay and of the High Court of
Bombay appealed against, and remit the cases to the Court of the Chief C
Judge of Small Causes Court at Bombay for deciding them according to
the directions contained and indications given in this judgment, after
hearing parties or their counsel. However, in the circumstances of these
appeals, we make no order as to costs.

T.N.A. Appeals allowed.

:,1