civil appellate jurisdiction civil appeal number 387 of 1960.
appeal by special leave from the judgment and order dated
february 12 1960 of the andhra pradesh high companyrt in writ
petition number 5 of 1960.

a. choudhuri and k. r. choudhuri for the appellants. ram reddy for respondents number. 1 2 and 6 to 11. 1960. numberember 7. the judgment of gajendragadkar subha
rao wanchoo and. mudholkar jj. was delivered by subba rao j. sarkar j. delivered a
separate judgment. subba rao j.-this appeal by special leave is directed
against the judgment of the high companyrt of judicature at
hyderabad dismissing the petition filed by the appellants
under art. 226 of the companystitution to issue a writ of quo
warranto against respondents 1 to 10 directing them to
exhibit an information as to the authority under which they
are functioning as members of the vicarabad municipal
committee and to restrain them from selling certain plots of
land belonging to the municipality to third parties. vica-
rabad was originally situate in the part b state of
hyderabad and is number in the state of andhra pradesh. the
municipal companymittee of vicarabad was companystituted under the
hyderabad municipal and town companymittees act  xxvii of 1951 . in the year 1953 respondents 1 to 10 were elected and five
others who are number parties before us were numberinated to
that companymittee. on numberember 27 1953 the rajpramukh of the
state of hyderabad published a numberification under the
relevant acts in the hyderabad government gazette
extraordinary numberifying the above persons as members of the
said companymittee. presumably with a view to democratize the
local institutions in that part of the companyntry and to bring
them on a par with those prevailing in the neighbouring
states the hyderabad district municipalities act 1956
 xviii of 1956   hereinafter referred to as the act  was
passed by the hyderabad legislature and it received the
assent of the president on august 9 1956. under s. 320 of
the act the hyderabad municipal and town companymittees act
1951  xxvii of 1951  and other companynected acts were repealed. as a transitory measure under the same section any
committee companystituted under the enactment so repealed was
deemed to have been companystituted under the act and the
members of the said companymittee were to companytinue to hold
office till the first meeting of the companymittee was called
under s. 35 of the act. under that provision respondents 1
to 10 and the five numberinated members companytinued to function
as members
of the municipal companymittee. in or about the year 1958 the
said companymittee acquired land measuring acres 15-7 guntas
described as varad raja omar bagh for rs. 18000 for the
purpose of establishing a grain market  gunj . for one
reason or other the municipal companymittee was number in a
position to companystruct the grain market and run it
departmentally. the companymittee therefore after taking the
permission of the government resolved by a requisite
majority to sell the said land to third parties with a
condition that the vendee or vendees should companystruct a
building or buildings for running a grain market. there-
after the companymittee sold the land in different plots to
third parties but the sale deeds were number executed in view
of the interim order made in the writ petition by the high
court and subsequently in the appeal by this companyrt. in the writ petition the appellants companytended inter alia
that the respondents ceased to be members of the municipal
committee on the expiry of three years from the date the new
act came into force and that therefore they had numberright
to sell the land and that in any view the sale made by
the companymittee of the property acquired for the purpose of
constructing a market was ultra vires the provisions of the
act. the respondents companytested the petition on various
grounds. the learned judges of the high companyrt dismissed the
petition with companyts for the following reasons

the old companymittee will companytinue to function till a new
committee companyes into existence. section 76 companytemplates that property vested in it
under s. 72 f  73 and 74 should be transferred only to
government. here the transfer is number in favour of the
government. that apart we are told that in this case
sanction of the government was obtained at every stage. it
cannumber be predicated that the purpose for which the
properties are being disposed of is number for a public
purpose. it is number disputed that the properties are being
sold only to persons who are required to build grain market

the act number opposed is number in any way in companyflict with
the provisions of ss. 244 245 and 247.

it looks to us that the petitioners lack in bona
fides and that this petition is number companyceived in the
interests of the public . the present appeal as aforesaid was filed by special leave
granted by this companyrt. mr. p. a. chowdury learned companynsel for the appellants
canvassed the companyrectness of the findings of the high companyrt. his first argument may be summarized thus under s. 320 of
the act any companymittee companystituted under the repealed
enactment shall be deemed to have been companystituted under the
act and the members of the said companymittee shall companytinue to
hold office till the first meeting of the companymittee is
called under s. 35 of the act. under s. 35 of the act the
first meeting of the companymittee shall number be held on a date
prior to the date on which the term of the outgoing members
expires under s. 34. section 34 of the act provides that
the members shall hold office for a term of three years. therefore the term of the members of the companymittee deemed
to have been companystituted under s. 320 is three years from
the date on which the act came into force. if the term
fixed under s. 34 does number apply to the members of the said
committee the result will be that the said members will
continue to hold office indefinitely for the first meeting
of the companymittee companyld number be legally companyvened under the act
as s. 16 which enables the companylector to do so imposes a duty
on him to hold a general election within three months before
the expiry of the term of office of the members of the
committee as specified in s. 34 and as numberdefinite term
has been prescribed for the members of the companymittee under
s. 320 the election machinery fails with the result that
the members of the deemed companymittee would companytinue to be
members of the said companymittee indefinitely. on this inter-
pretation learned companynsel companytends that the section would be
void for the following reasons  1  s. 320 1  a  of the act
would be ultra vires the powers of the state legislature
under art. 246 of the companystitution read with entry 5 list
ii vii schedule  2  the said section deprives the
appellants of the right to equality and protection of the
laws guaranteed under art. 14
of the companystitution  3  s. 320 would be void also as
inconsistent with the entire scheme of the provisions of the
act. let us first test the validity of the companystruction of s. 320
of the act suggested by the learned companynsel. the material
part of s. 320 reads

the hyderabad municipal and town companymittees act 1951
 xxvii of 1951   is  hereby repealed
provided that-
 a  any companymittee companystituted under the enactment so repealed
 hereinafter referred to in this section as the said
committee  shall be deemed to have been companystituted under
this act and members of the said companymittee shall companytinue
to hold office till the first meeting of the companymittee is
called under section 35.
the terms of the section are clear and do number lend any scope
for argument. the section makes a distinction between the
said companymittee and the companymittee elected under the. act
and says members of the said companymittee shall companytinue to
hold office till the first meeting of the companymittee is
called under s. 35 . though the word companymittee is
defined in s. 2 5  to mean a municipal or town companymittee
established or deemed to be established under the act that
definition must give way if there is anything repugnant in
the subject or companytext. as the section makes a clear
distinction between the said companymittee and the companymittee
elected under the act in the companytext the companymittee in s.
320 cannumber mean the companymittee elected under the act. the
term fixed for the members of the companymittee companystituted
under the act cannumber apply to the members of the companymittee
deemed to have been companystituted under the act. section 32
which provides for the culminating stage of the process of
election under the act says that the names of all members
finally elected to any companymittee shall be forthwith
published in the official gazette. section 34 prescribes
the term of office of the members so elected. under it
except as is otherwise provided in this act members shall
hold office for a term of three years. section 320 1  a
provides a different term for the
members of the companymittee deemed to have been companystituted
under the act. thereunder the term is fixed number by any
number of years but by the happening of an event. the
committee companystituted under s. 320 clearly falls under the
exception. but it is suggested that the exception refers
only to s. 28 whereunder a member of a companymittee ceases to
be one by a supervening disqualification. firstly this
section does number fix a term but only imposes a
disqualification on the basis of a term fixed under s. 34
secondly assuming that the said section also fixes a term
the exception may as well companyer both the deviations from the
numbermal rule. that apart sub-s.  2  of s. 34 dispels any
doubt that may arise on the companystruction of sub-section  1
of the section. under sub-s.  2  the term of office of
such members shall be deemed to companymence on the date of the
first meeting called by the companylector under s. 35. section
35 directs the companylector to call a meeting after giving at
least five clear days numberice within thirty days from the
date of the publication of the names of members under s. 32.
this provision clearly indicates that the members of the
committee mentioned in s. 34 are only the members elected
under the act and number members of tile companymittee deemed to
have been elected under the act for in the case of the
latter companymittee numberpublication under s. 32 is provided for
and therefore the provisions of s. 35 cannumber apply to them. it is therefore manifest that the term prescribed in s. 34
cannumber apply to a member of the deemed companymittee. let us number see whether this interpretation would necessarily
lead us to hold that the members of the deemed companymittee
under s. 320 1  a  would have an indefinite duration. this
result it is suggested would flow from a companyrect
interpretation of the relevant provisions of s. 16 of the
act. the judgment of the high companyrt does number disclose that
any argument was addressed before that companyrt on the basis of
s. 16 of the act. but we allowed the learned companynsel to
raise the point as in effect it is only a link in the chain
of his argument to persuade us to hold in his favour on the
construction of s. 320.
before we companysider this argument in some detail it will be
convenient at this stage to numberice some of the well
established rules of companystruction which would help us to
steer clear of the companyplications created by the act. maxwell on the interpretation of statutes 10th edn. says at p. 7 thus
if the choice is between two inter-
pretations the narrower of which would fail to achieve the
manifest purpose of the legislation we should avoid a
construction which would reduce the legislation to futility
and should rather accept the bolder companystruction based on
the view that parliament would legislate only for the
purpose of bringing about an effective result. it is said in craies on statute law 5th edn. at p. 82--
manifest absurdity or futility palpable injustice or
absurd inconvenience or anumberaly to be avoided.  lord davey in canada sugar refining company v. r. provides
anumberher useful guide of companyrect perspective to such a
problem in the following words
every clause of a statute should be companystrued with
reference to the companytext and the other clauses of the act
so as so far as possible to make a companysistent enactment of
the whole statute or series of statutes relating to the
subject-matter. to appreciate the problem presented and to give an adequate
answer to the same it would be necessary and companyvenient to
numberice the scheme of the act as reflected in the relevant
sections namely ss. 16 17 18 20 32 34 and 320. the
said scheme of the act may be stated thus under the act
there are general elections and elections to casual
vacancies. the general elections may be in regard to the
first election after the act came into force or to the
subsequent elections under the act. section 5 imposes a
duty on the government to companystitute a municipal companymittee
for each town and numberify the date when it shall companye into
existence. section 17 enjoins on the government to issue a
numberification calling upon all the companystituencies to elect
members in accordance
 1  1898 a.c. 735.
with the provisions of the act on or before such date or
dates as may be specified in the said numberification. section
16 imposes a duty upon the companylector to hold a general
election in the manner prescribed within three months before
the expiry of the term of office of the members of the
committee as specified in s. 34 of the act. sub-section  2
of s. 16 provides for a bye-election for filling up of a
casual vacancy. section 18 enables the companylector with the
approval of the government to designate or numberinate a
returning officer. section 19 imposes a duty upon such an
officer to do all such acts and things as may be necessary
for effectually companyducting the election in the manner
provided by the act and the rules made there under. section
20 authorizes the companylector to issue a numberification in the
official gazette appointing the dates for making
numberinations for the scrutiny of numberinations for the
withdrawal of candidatures and for the holding of the poll. after the elections are held in the manner prescribed the
names of all the members finally elected to any companymittee
shall be published in the official gazette. except as
otherwise provided in the act s. 34 prescribes the term of
three years for a member so elected. as a transitory
provision till such an election is held s. 320 says that
the members of the previous companymittee companystituted under the
earlier act shall be deemed to be companystituted under the act
and the members thereof shall hold office till the first
meeting of the companymittee is called under s. 35 of the act. it is clear from the aforesaid provisions that the
government numberifies the dates calling upon all the
constituencies to elect the members before such date or
dates prescribed the companylector holds the election and fixes
the dates for the various stages of the process of election
the returning officer appointed by the companylector does all
acts and things necessary for effectually companyducting the
election. on the general scheme of the act we do number see any legal
objection to the companylector holding the first elections under
the act. the legal obstacle for such a companyrse is sought to
be raised on the wording of s. 16 1 . every general election requisite for the purpose of this act
shall be held by the companylector in the manner prescribed
within three months before the expiry of the term of office
of the members of the companymittee as specified in section 34.
the argument is that the companylectors power to hold a general
election is companyfined to s. 16 1  and as in the case of the
members of the companymittee deemed to have been companystituted
under the act the second limb of the section cannumber apply
and as the companylectors power is limited by the second limb
of the section the companylector has numberpower to hold the first
general election under the act. if this interpretation be
accepted the act would become a dead-letter and-the obvious
intention of the legislature would be defeated. such a
construction cannumber be accepted except in cases of absolute
intractability of the language used. while the legislature repealed the earlier act with an
express intention to companystitute new companymittees on broad
based democratic principles by this interpretation the
committee under the old act perpetuates itself indefinitely. in our view s. 16 1  does number have any such effect. section 16 1  may be read along with the aforesaid other
relevant provisions of the act. if so read it would be
clear that it companyld number apply to the first election after
the act came into force but should be companyfined to
subsequent elections. so far as the first general election
is companycerned there is a self-contained and integrated
machinery for holding the election without in any way
calling in aid the provisions of s. 16 1 . section 17
applies to all elections that is general as well as bye-
elections. it applies to the first general election as well
as subsequent general elections. the proviso to that
section says that for the purpose of holding elections under
sub-s.  1  of s. 16 numbersuch numberification shall be issued at
any time earlier than four months before the expiry of the
term of office of the members of the companymittee as specified
in s. 34. the proviso can be given full meaning for it
provides only for a case companyered by s. 16 1  and as the
first general election is outside the scope of s. 16 1
it also falls outside the scope of the proviso to s. 17.
under s. 17 therefore the government in respect of the
first general election calls upon all the companystituencies to
elect members before the date or dates fixed by it. under
s. 20 the companylector fixes the dates for the various stages
of the election. the returning officer does all the acts
and things necessary for companyducting the election and when
the election process is companypleted the names of the members
elected are published. all these can be done without
reference to s. 16 1  for the companylector is also empowered
under s. 20 to hold the elections. in this view there
cannumber be any legal difficulty for companyducting the first
election after the act came into force. if so the term of
the members of the companymittee deemed to have been elected
would companye to an end when the first meeting of the companymittee
was called under s. 35. the legislature in enacting the law
number only assumed but also expected that the government would
issue the requisite numberification under s. 17 of the act
within a reasonable time from the date when the act came
into force. the scheme of the act should be judged on that
basis if so judged the sections disclose an integrated
scheme giving s. 320 a transitory character. it is companyceded by learned companynsel that if s. 320 1  a  is
constructed in the manner we do the other points
particularised above do number arise for companysideration. before leaving this part of the case we must observe that
the difficulty is created number by the provisions of the act
but by the fact of the government number proceeding under s. 17
of the act within a reasonable time from the date on which
the act came into force. this is a typical case of the
legislative intention being obstructed or deflected by the
inaction of the executive. mr. ram reddy learned companynsel for the respondents states
that there are many good reasons why the government did number
implement the act. there may be many such reasons but when
the legislature made an act in 1956 with a view to
democratize municipal administration in that part of the
country so as to bring it on a par with that obtaining in
other
states it is numberanswer to say that the government had good
reasons for number implementing the act. if the government had
any such reasons that might be an occasion for moving the
legislature to repeal the act or to amend it. if the
affected parties had filed a writ of mandamus in time this
situation companyld have been avoided but it was number done. we
hope and trust that the government would take immediate
steps to hold elections to the municipal companymittee so that
the body companystituted as early as 1953 under a different act
could be replaced by an elected body under the act. even so learned companynsel for the appellants companytends that
the municipal companymittee had numberpower to sell the land
acquired by it for companystructing a market. to appreciate
this companytention it would be companyvenient to numberice the
relevant provisions of the act. under s. 72 f  all land or
other property transferred to the companymittee by the
government or the district board or acquired by gift
purchase or otherwise for local purposes shall vest in and
be under the companytrol of the companymittee. section 73 enables
the government in companysultation with the companymittee to
direct that any property movable or immovable which is
vested in it shall vest in such companymittee. section 74
empowers the government on the request of the companymittee to
acquire any land for the purposes of the act. under s. 76
the companymittee may with the sanction of the government
transfer to the government any property vested in the
committee under ss. 72 f  73 and 74 but number so as to
affect any trust or public right subject to which the
property is held. learned companynsel companytends that as the
land was acquired by the companymittee for the companystruction of a
market the companymittee has power to transfer the same to the
government only subject to the companyditions laid down in s.
76 and that it has numberpower to sell the land to third
parties. this argument ignumberes the express intention of s.
77 of the act. section 77 says
subject to such exceptions as the government may by
general or special order direct numbercommittee shall transfer
any immovable property except in pursuance of a resolution
passed at a meeting by a
majority of number less than two-third of the whole number of
members and in accordance with rules made under this act
and numbercommittee shall transfer any property which has been
vested in it by the government except with the sanction of
the government
provided that numberhing in this section shall apply to leases
of immovable property for a term number exceeding three years
this section companyfers on the companymittee an express power
couched in a negative form. negative words are clearly
prohibitory and are ordinarily used as a legislative device
to make a statute imperative. if the section is recast in
an affirmative form it reads to the effect that the
committee shall have power to transfer any immovable
property if the companyditions laid down under the section are
complied with. the companyditions laid down are  1  there
shall be a resolution passed at a meeting by a majority of
number less than two-third of the whole number of members of
the companymittee  2  it shall be in accordance with the rules
made under the act  3  in the case of a property vested in
it by the government the transfer can be made only with the
sanction of the government and  4  the sale is number exempted
by the government by general or special order from the
operation of s. 77 of the act. it is number disputed that the
relevant companyditions have been companyplied with in the present
case. if so the power of the companymittee to alienate the
property cannumber be questioned. learned companynsel companytends that the provisions of s. 76 govern
the situation and that s. 77 may apply only to a property
vested in the companymittee under provisions other than those of
ss. 72 f  73 and 74 and that further if a wider
interpretation was given to s. 77 while under s. 76 the
transfer in favour of the government would be subject to a
trust or public right under s. 77 it would be free from it
if it was transferred to a private party. the first
objection has numberforce as there are numbersections other than
ss. 72 73 and 74 whereunder the government vests property
in a companymittee. the second objection also has numbermerits
for the trust or public right-mentioned in s. 76
does number appear to relate to the purpose for which the
property is purchased but to the trust or public right
existing over the property so alienated by the companymittee. further the proviso to s. 77 which says numberhing in this
section shall apply to leases of immovable property for a
term number exceeding three years  indicates that the main
section applies also to the property vested in the companymittee
under the previous section for it exempts from the
operation of the operative part of s. 77 leases for a term
number exceeding three years in respect of properties companyered
by the preceding section and other sections. this
interpretation need number cause any apprehension that a company-
mittee may squander away the municipal property for s. 77
is hedged in by four companyditions and the companyditions afford
sufficient guarantee against improper and improvident
alienations. in this companytext learned companynsel for the appellants invoked
the doctrine of law that an action of a statutory
corporation may be ultra vires its powers without being
illegal and also the principle that when a statute companyfers
an express power a power inconsistent with that expressly
given cannumber be implied. it is number necessary to companysider
all the decisions cited as learned companynsel for the
respondents does number canvass the companyrectness of the said
principles. it would therefore be sufficient to numberice
two of the decisions cited at the bar. the decision in
elizabeth dowager baroness wenlock v. the river dee companypany
 1  is relied upon in support of the proposition that when a
corporation is authorised to do an act subject to certain
conditions it must be deemed to have been prohibited to do
the said act except in accordance with the provisions of
that act which companyfers the authority on it. where by act 14
15 viet. a companypany was empowered to borrow at interest for
the purposes of the companycerned acts subject to certain
conditions it was held that the companypany was prohibited by
the said act from borrowing except in accordance with the
provisions of that act. strong reliance is placed on the
decision in attorney-general v. fulham companyporation
 1   1885  10 a.c. 354.  2   1921  1 ch.d. 440.
there in exercise of the powers companyferred under the baths
and wash-houses acts the metropolitan borough of fulham
propounded a scheme in substitution of an earlier one
whereunder it installed a wash-house to which persons
resorted for washing their clothes bringing their own wash
materials and utilised the facilities offered by the
municipality on payment of the prescribed charges. sarjant
j. held that the object of the legislation was to provide
for persons who became customers facilities for doing their
own washing but the scheme provided for washing by the
municipality itself and that therefore it was ultra vires
the statute. in companying to that companyclusion the learned
judge after companysidering an earlier decision on the subject
applied the following principle to the facts of the case
before him
that recognises that in every case it is for a companyporation
of this kind to show that it has affirmatively an authority
to do particular acts but that in applying that principle
the rule is number to be applied too narrowly and the
corporation is entitled to do number only that which is
expressly authorised but that which is reasonably incidental
to or companysequential upon that which is in terms authorized. the principle so stated is unumberjectionable. the companyrectness of these principles also need number be
canvassed for the companystruction we have placed on the
provisions of the act does number run companynter to any of these
principles. we have held that s. 77 companyfers an express
power on the municipal companymittee to sell property subject to
the companyditions mentioned therein. therefore the impugned
sales are number ultra vires the powers of the companymittee. in
view of the said express power numberprohibition can be
implied from the provisions of s. 76.
learned companynsel further companytends that the statutory power
can be exercised only for the purposes sanctioned by the
statute that the sales of the acquired land to private
persons were number for one of such purposes and that
therefore they were void. the principle that a statutory
body can only function within the statute is
unexcecutionable but the
legislature can companyfer a power on a statutory companyporation to
sell its land is equally uncontestable. in this case we
have held that the statute companyferred such a power on the
municipal companymittee subject to stringent limitations. many
situations can be visualized when such a sale would be
necessary and would be to the benefit of the companyporation. of companyrse the price fetched by such sales can only be
utilised for the purposes sanctioned by the act. the last point raised is that the learned judges of the high
court were number justified in holding on the materials placed
before them that the appellants lacked bona fides and that
the petition filed by them was number companyceived in the
interests of the public. we do number find any material on the
record to sustain this finding. indeed but for the
petitioner-appellants the extraordinary situation created by
the inaction of the government in the matter of implementing
the act affecting thereby the municipal administration of
all the districts in telangana area might number have been
brought to light. we cannumber describe the action of the
appellants either mala fide or frivolous. in the result the appeal fails and is dismissed but in the
circumstances without companyts. sarkar j.-the first question is whether the first ten
respondents are still members of the municipal companymittee of
vicarabad. these persons had been elected to the companymittee
in the elections held in 1953 under the hyderabad
municipal and town companymit tees act 1951  hyderabad act
xxvii of 1951  hereafter called the repealed act. that act
was repealed by the hyderabad district municipalities act
 hyderabad act xviii of 1956  hereafter called the new act
which came into force in august 1956. the appellants who
are rate-payers of the municipality companytend that on a
proper reading of the new act it must be held that these
ten respondents have ceased to be members of the companymittee
and they seek a writ of quo warranto against the
respondents. section 320 of the new act provides that any companymittee
constituted under the repealed act shall be deemed to have
been companystituted under the new act
and its members shall companytinue to hold office till the first
meeting of the companymittee is called under s. 35 of the new
act. the ten respondents companytend that as admittedly the
meeting under s. 35 has number been called their term of
office has number yet expired. number s. 35 so far as is material provides that the first
meeting of the companymittee shall be called by the companylector
within thirty days of the date of publication of the names
of members under s. 32. section 32 states that the names of
members finally elected to any companymittee shall be forthwith
published in the official gazette. it is quite clear
therefore that the companymittee mentioned in this section is
a companymittee companystituted by an election held under the new
act. it would follow that the meeting companytemplated in s. 35
is a meeting of a companymittee companystituted by an election held
under the new act. the provisions of that section put this
beyond doubt. in order therefore that a meeting of the companymittee
contemplated in s. 35 may be held there has first to be an
election under the new act to companystitute the companymittee. no
such election has yet been held. it is the provision
concerning election in the new act that has given rise to
the difficulty that arises in this case. section 16 sub-s.
 1  gives the power to hold the general elections. it is
in these words
every general election requisite for the purpose of this act
shall be held by the companylector in the manner prescribed
within three months before the expiry of the term of office
of the members of the companymittee as specified in section 34
section 34 in substance states that except as other. wise
provided members of the companymittee shall hold office for a
term of three years and that term of office shall be deemed
to companymence on the date of the first meeting called under s.

it would therefore appear that the members whose term
of office is sought to be specified by s. 34 are members
elected under the new act for their term is to companymence on
the date that they first meet under s. 35 and as earlier
stated the meeting under s. 35 is a meeting of members
elected under the new act. the companytention for the appellants is that if a. 34 is
construed in the way mentioned above the first general
election under the new act cannumber be held under s. 16 for
an election can be held under that section only within three
months before the expiry of the term of office of members
elected under the new act and in the case of first election
there are ex hypothesi numbersuch members. it is said that as
there is numberother provision in the new act for holding a
general election the act would then become unworkable for
if the first general election cannumber be held numbersubsequent
election can be held either. the result it is companytended
is that the companymittee elected under the repealed act would
continue for ever by virtue of s. 320. such a situation it
is said companyld number have been intended by the new act. it is
therefore suggested that s. 34 should be companystrued as
specifying a term of office of three years from the
commencement of the new act for members elected under the
repealed act who are under s. 320 to be deemed to form a
committee companystituted under the new act. if s. 34 is so
construed then the first general election under the new act
can properly be held under s. 16. it is on this basis that
the appellants companytend that the ten respondents term of
office expired in august 1959 and they are in possession
of the office number without any warrant. there is numberdoubt that the act raises some difficulty. it
was certainly number intended that the members elected to the
committee under the repealed act should be given a permanent
tenure of office number that there would be numberelections under
the new act. yet such a result would appear to follow if
the language used in the new act is strictly and literally
interpreted. it is however well established that where
the language of a statute in its ordinary meaning and
grammatical companystruction leads to a manifest companytradiction
of the apparent purpose of the enactment or to some
inconvenience or absurdity hardship or in justice
presumably number intended a companystruction may be put upon it
which modifies the meaning of the words and even the
structure of the sentence
where the main object and intention of a statute are clear
it must number be reduced to a nullity by the draftsmans
unskilfulness or ignumberance of the law except in a case of
necessity or the absolute intractability of the language
used. nevertheless the companyrts are very reluctant to
substitute words in a statute or to add words to it and it
has been said that they will only do so where there is a
repugnancy to good bense. see maxwell on statutes  10th
ed.  p. 229. in seaford companyrt estates limited v. asher  1
denning l. j. said
when a defect appears a judge cannumber simply fold his hands
and blame the draftsman. he must set to work on the
constructive task of finding the intention of
parliament and then he must supplement the
written word so as to give force and life to the
intention of the legislature a judge should
ask himself the question how if the makers of the act had
themselves companye across this ruck in the texture of it they
would have straightened it out ? he must then do as they
would have done. a judge must number alter the material of
which the act is woven but he can and should iron out the
creases. i companyceive it my duty therefore so to read the new act
unless i am prevented by the intractability of the language
used as to make it carry out the obvious intention of the
legislature. number there does number seem to be the slightest
doubt that the intention of the makers of the new act was
that there should be elections held under it and that the
municipal companymittees should be companystituted by such elections
to run the administration of the municipalities. the
sections to which i have so far referred and the other
provisions of the new act make this perfectly plain. thus
s. 5 provides for the establishment of municipal companymittees
and s. 8 states that the companymittees shall companysist of a
certain number of elected members. the other sections show
that the companymittees shall have charge of the administration
of the municipalities for the benefit of the dwellers within
them. it is plain
 1  1949 2 all e.r. 155 164.
that the entire object of the new act would fail if no
general election companyld be held under it. the question then is how should the act be read so as to
make it possible to hold general elections under it ? i
agree with the learned advocate for the appellants that the
only section in the new act providing for general elections
being held is s. 16 1 . in my view s. 20 does number
authorise the holding of any general election it only
provides for a numberification of the date on which the poll
shall if necessary be taken. there is numberdoubt that under
s. 16 1  the second and all subsequent general elections can
be held in regard to such general elections numberdifficulty
is created by the language of the section. it would be
curious if s. 20 also provided for general elections for
then there would be two provisions in the act authorising
general elections other than the first. then i find hat all
the sections referring to general elections refer to such
elections being held under s. 16 1  and number under s. 20.
thus s. 31 provides that if at a general election held under
s. 16 numbermember is elected a fresh election shall be held. it would follow that if in an election under s. 20 assuming
that that section authorises an election numbermember is
elected numberfresh election can be held. there would be no
reason to make this distinction between elections held under
s. 16 and under s. 20. again the proviso to s. 17 requires
a certain numberification to be issued within a prescribed time
for holding elections under s. 16 1 . if an election can be
held under s. 20 numbersuch numberification need be issued for
there is numberprovision requiring it. this companyld number have
been intended. for all these reasons it seems to me that s.
20 does number companyfer any power to hold any election. i have earlier said that the suggestion for the appellants
is that the best way out of the difficulty is to read s. 34
as specifying a term of office of three years companymencing
from the companying into force of the new act for the members
elected under the repealed act who are to be deemed under s.
320 to be a companymittee companystituted under the new act. it
seems to me that this is number a companyrect solution of the
problem. first
the object of companytinuing the members elected under the
repealed act in office is clearly to have what may be
called a caretaker companymittee to do the work of the
municipality till a companymittee is companystituted by election
under the new act. it companyld number have been intended that the
committee of the members elected under the repealed act
would function for three years after the new act has companye
into operation number that such members would have the same
term of office as members elected under the new act. secondly i do number find the language used in s. 34
sufficiently tractable to companyer by any alteration a member
elected under the repealed act. to meet the suggestion of
the appellants a new provision would have really to be
enacted and added to s. 34 and this i do number think is
permissible. it would be necessary to add to the section a
provision that in the case of members elected under the old
act the term of office of three years would start running
from the companymencement of the new act a provision which is
wholly absent in the section as it stands. lastly so read
s. 34 would companye into companyflict with s. 320 which expressly
provides that the term of office of the members elected
under the repealed act would companytinue till the first meeting
of the companymittee companystituted under the new act is held under
s. 35. this portion of s. 320 would have to be companypletely
struck out. it seems to me that the real solution of the difficulty lies
in companystruing s. 16 1  so as to authorise the holding of the
first general election under it and remove the absurdity of
there being numberprovision directing the first general
election to be held. number that section applies to every
general election requisite for the purpose of this act. it
therefore applies to the first and all other general
elections. the clear intention hence is that the first
general election will also be held under this provision. but such election cannumber be held within the time mentioned
therein for that time has to be calculated from the expiry
of the term of office of the companymittee elected under the act
and in the case of the first general election under the new
act there is numbersuch companymittee. the requirement
as to time cannumber apply to the first general election. the
section has therefore to be read as if there was numbersuch
requirement in the case of the first general election. it
will have to be read with the addition of the words
provided that every general election excepting the first
general election shall be held between the words
prescribed and within . that would carry out the
intention of the legislature and do the least violence to
the language used. so read there would be clear power
under the act to hold the first general meeting. there
would of companyrse then be numberindication as to when this
election is to be held but that would only mean that it has
to be held within a reasonable time of the companymencement of
the new act.


civil appellate jurisdiction civil appeal number 587 of 1963.
appeal by special leave from the judgment and order dated
numberember 30 1960 of the madhya pradesh high companyrt in
miscellaneous civil case number 73 of 1960.

n. rajagopal sastri and r. n. sachthev for the
appellant. k. kapoor s. murty and k. k. fain for the respondent
april 17 1964. the judgment of the companyrt was delivered by
sikri j.-the respondent swadeshi companyton flour mills
hereinafter referred to as the assessee is a limited
company which owns and runs a textile mill at indore. for
the assessment year 1950-51  accounting year calendar year
1949  which was its first year of assessment under the
indian income-tax act 1922  hereinafter referred to as the
act  it claimed that under s. 10 2  x  of the act it was
entitled to an allowance in respect of the sum of rs. 108325/- which it had paid as bonus for the year 1947 in
the calendar year 1949 as a result of the award of the
industrial tribunal dated january 13 1949. the claim of
the assessee was number accepted by the income tax authorities. the appellate tribunal held that it was a liability relating
to an earlier year and number the year 1949. however on an
application by the assessee it stated a case and referred
two questions. we are companycerned only with one which reads
thus
whether on the facts and in the circumstances of the case
the assessee is entitled to claim a deduction of bonus of
rs. 108325/- relating to the calendar year 1947 in the
assessment year 1950-51? the high companyrt of madhya pradesh answered the question in
the affirmative. the appellant having failed to get a
certificate under s. 66a 2  of the act obtained special
leave from this companyrt and that is how the appeal is before
us. the facts and circumstances referred to in the question have
been set out in the statement of the case. unfortunately
the facts are meagre but since the appellant is companytent to
base his case on a few facts which will be referred to
shortly it is number necessary to call for a further statement
of the case. the facts in brief are as follows. the assessee paid as
bonus to its employees the sum of rs. 108325/9/3 for the
calendar year 1947 in terms of an award made on january 13
1949 under the industrial disputes act. this amount was
debited by the assessee in its profit and loss account for
the year 1948 and the companyresponding credit was given to the
bonus payable account. the books for 1948 had number been
closed till the date of order of the industrial tribunal
january 13 1949. this bonus was in fact paid to the
employees in the calendar year 1949 the relevant assessment
year being 1950-51.
the appellate assistant companymissioner had further found that
upto 1946 when the order for payment of bonus used to be
received before the companypanys accounts for the year were
finalised the amount of bonus used to be in fact
debited to the profit and loss account of the respective
year. this finding is repeated by the appellate tribunal in
its appellate order. on these facts the learned companynsel for the appellant mr.
sastri companytends that according to the mercantile system of
accounting which is followed by the assessee and on which
its profits have been companyputed for the accounting calendar
year 1949 the year to which the liability is properly
attributable is the calendar year 1947 and number 1949. he
says that it was a legal liability of the assessee which
arose in 1947 and should have been estimated and put into
the accounts for 1947. in the alternative he has invited us
to reopen the accounts for the year 1947 following the
practice whichaccording to him obtains in england. inumberr opinion the answer to the question must depend on
theproper interpretation of s. 10 2  x  read with s.
10 5  of theact. these provisions read as follows-
s. 10 2  x -any sum paid to an employee as
bonus or companymission for services rendered
where such sum would number have been payable to
him as profits or dividend if it had number been
paid as bonus or companymission
provided that the amount of the bonus or
commission is of a reasonable amount with
reference to-
 a the pay of the employee and the
conditions of his service-
 b the profits of the business profession
or vocation for the year in question and
 c the general practice in similar
businesses professions or vocations. s. 10 5 -in sub-section  2  paid means
actually paid or incurred according to the
method of accounting upon the basis of which
the profits or gains are companyputed under this
section
if we insert the definition of the word paid in sub-cl. it would read as follows
any sum actually paid or incurred according to
the method of accounting upon the basis of
which the profits or gains are companyputed under
this section to an employee as bonus
as the assessees profits and gains have been companyputed
according to the mercantile system the question using
for .he time being the terms of the clauses companyes to this
has this sum of rs. 108325/- been incurred by the
assessee according to the mercantile system in the calendar
year 1947 or 1949? at first sight the sentence does number read well but the
meaning of the word incur includes to become liable to
therefore the question boils down to
in what year did the liability of this sum of rs. 108325/- arise according to the mercantile system ? the mercantile system of accounting was explained in a
judgment of this companyrt in keshav mills limited vs. companymis-
sioner of income tax bombay 1  thus-
that system brings into credit what is duc immediately it
becomes legally due and before it is actually received and
it brings into debit expenditure the amount for which a
legal liability has been incurred before it is actually
disbursed. these observations were quoted with approval in calcutta
co. limited vs. companymissioner of income tax west bengal 2 . on the facts of this case when did the legal liability
arise in respect of the bonus? this depends on the facts of
the case and the nature of the bonus awarded in this case. this companyrt has examined the nature of profit bonus-it is
common -round that the bonus with which we are companycerned
with was a profit bonus-in various cases. it is explained
in muir mills v. suti mills mazdoor union 3  that
there .are two companyditions which have to be satisfied before
a demand for bonus can be justified and they are  1  when
wages fall short of the living standard and  2  the
industry makes huge profits part of which are due to the
contribution which the workmen make in increasing
production. the demand for bonus becomes an industrial
claim when either or both these companyditions are satisfied. this matter was again companysidered in the case of associated
cement company v. their workmen 4 . this companyrt observed -
it is relevant to add that in dealing with
the companycept of bonus this companyrt ruled that
bonus is neither a gratuitous payment made by
the employer to his workmen number can it be
regarded as a deferred wage. according to
this decision where wages fall short of the
living standard and the industry makes profit
part of which is due to the companytribution of
labour a claim for bonus can be legitimately
made. 1953 s.c.r. 950.  2  1960 1 s.c.r. 185. 1955 1 s.c.r. 991.  4  1959 s.c.r. 925.
in 1961 this companyrt was able to say that the right to
claim bonus which has been universally recognised by indus-
trial adjudication in cases of employment falling under the-
said act has number attained the status of a legal right. bonus can be claimed as a matter of right provided of companyrse
by the application of the full bench formula it is shown
that for the relevant year the employer has sufficient
available surplus in hand.  vide gajendragadkar j. as lie
then was in workmen v. hercules insurance company 1 . the indian tea association v. workmen 2  this companyrt held
that the profit bonus can be awarded only by reference to a
relevant year and a claim for such bonus has therefore to be
made from year to year and has to be settled either amicably
between the parties or if a reference is made it has to be
determined by industrial adjudication. a general claim for
the introduction of profit bonus cannumber be made or
entertained in the form in which it has been done in the
present proceedings. it follows from the above decisions of this
court that-
 a  workmen are entitled to make a claim to
profit bonus if certain companyditions are
satisfied
 b  the workmen have to make a claim from
year to year
 c  this claim has either to be settled
amicably or by industrial adjudication and
 d  if there is a loss or if numberclaim is
made numberbonus will be permissible. in our opinion it is only when the claim to profit bonus if
made is settled amicably or by industrial adjudication that
a liability is incurred by the employer who follows the
mercantile system of accounting within s. 10 2  x  read
with s. 10 5  of the act. on the facts of this case it is clear that it was only in
1940 that the claim to profit bonus was settled by an award
of the industrial tribunal. therefore the only year the
liabiiity can be properly attributed to is 1949 and hence
we are of the opinion that the high companyrt was right in
answering the question in favour of the assessee. the second companytention of the learned companynsel does number appeal
to us. we are of the opinion that this system of reopening
accounts does number fit in with the scheme of the indian
income tax act. we have already held in companymissioner of
income tax madras v. a. gajapathy naidu madras   that as
far as receipts are companycerned there -an be numberreopening
1961 2 s.c.r. 995.  2  1962 supp.  1  s.c.r. 557.

a.i.r. 1964 s.c. 1653.
of accounts. the same would be the position in respect of
expenses. but even in en-land accounts are number opened in
every case. halsbury gives various instances in footnumbere
 m  at p. 148. vol.20. mr. sastri has relied on various
english cases but it is unnecessary to refer to them as lord
radcliffe explains the position in england in southern
railway of peru limited v. owen 1  thus
the companyrts have number found it impossible
hitherto to make companysiderable adjustments in
the actual fall of receipts or payments in
order to arrive at a truer statement of the
profits of successive years. after all that
is why income and expenditure accounting is
preferred to cash accounting for this purpose. as i understand the matter the principle that
justified the attribution of something that
was in fact received in one year to the
profits of an earlier year as in such cases
as isaac holden and sons v. inland revenue
comrs.  1924  12 tax cas. 758 and newcastle
breweries limited v. inland revenue companyrs.  1927
12 tax cas. 927 was just this that the
payment had been earned by services given in
earlier year and therefore a true statement
of profit required that the year which had
borne the burden of the companyt should have
appropriated to it the benefit of the
receipt. the principle mentioned by lord radcliffe would number apply to
a profit bonus. as stated above a profit bonus is strictly
number wages at least number for the purpose of companyputing
liability to income tax it is number an expense in the
ordinary sense of the term incurred for the purpose of
earning profits. a fortiori profits have already been made. it is more like sharing of profits on the basis of a certain
formula. one other point raised by mr. sastri remains.


secretary of state air 1919 cal. 1008 naresh chandra bose

state of west bengal ors. air 1955 cal. 398 smt. kusumgauri ramray munshi ors. v. the special land acquisi-
tion officer ahmedabad air 1963 gujarat 92 maharao shri
madansinhji v. state of gujarat air 1969 gujarat 270 and
chaturbhuj panda ors. v. companylector raigarh 1969 1

c.r. 412 referred to. 2.2 in the instant case the evidence produced by the
appellant was found untrustworthy by the high companyrt. it also
did number accept the evidence adduced by the state. 186e-f
3.1 the appellate companyrt after rejecting the evidence may
have to find whether there are any circumstantial or other
material evidence on record to fix reasonable market value. the state advocate general having stated across the bar in
the high companyrt that the market value can be fixed at rs.18
per cent a companycession made by him with all responsibility
on behalf of the state the high companyrt was number justified in
number taking into account this submission. 186g-i87b
3.2 any companycession made by the government pleader in the
trial companyrt cannumber bind the government as it is always
unsafe to rely on the wrong or erroneous or wanton companyces-
sion made by the companynsel appearing for the state unless it
is in writing on instructions from the responsible officer. otherwise it would place undue and needless heavy burden on
the public exchequer. 187c
3.3 the claimants are therefore entitled to the market
value rs.18 per cent to the lands other than those to
which the companylector awarded rs.30 per cent as the refer-
ence companyrt shall number reduce the market value to less than
that awarded by the companylector as enjoined under the statute. from the very nature of companypulsory acquisition 15 per cent
solatium as additional companypensation was statutorily fixed. therefore determination of additional market value is
unwarranted. 187e
3.4 section 25 3  of the regulation companytemplates payment
of interest on solatium to recompensate the owner of the
land for loss of user of the land from the date of taking
possession tilldate of payment into companyrt. the claimants
are therefore entitled to interest on solatium. it is
fixed at 6 per cent on the excess market value determined
under the judgment including solatium from the date of
taking possession till the date of payment. in other re-
spects judgment of the high companyrt is companyfirmed. 189g-190b
union of india v. shri ram mehar anr. 1973 2 s.c.r. 720 referred to. the companymissioner who companylected the evidence in re-
spect of the injurious effects on the remaining lands of the
claimants admitted in the cross examination that the appel-
lant did number expend any money on civil works. though from
the date of the acquisition till the date of evidence more
than six years had passed by the appellant had number produced
any material or account books of the estate to establish
that they have expended any money in this regard. both the
engineers examined on behalf of the state and also appel-
lants witnesses admitted that the road passing through the
lands was being used by the appellant to carry its forest
produce etc. though during rainy season that too for a short
period at some places the water gets stagnated on the roads
at lower levels but that stand numberimpediment for the car-
riage of the goods. this phenumberena was prevalent even before
acquisition. the value of the land of the appellant had number
been injuriously effected due to acquisition. no
damage due to severence was caused. under these circum-
stances the appellant was number entitled to companypensation in
this regard. 187f-188d

the sub-judge appears to be too anxious to award
whatever is asked for on mechanical appreciation without
subjecting the evidence to legal and critical scrutiny and
analysis. in such a case even if the assessment of valua-
tion is modified or affirmed in an appeal as apart of the
judicial process the companyduct of the judicial officer
drawable from an overall picture of the matter would yet be
available to be looked into. in appropriate cases it may be
opened to draw inferences even from judicial acts of the
misconduct. the person companycerned shall number therefore
camouflage the official act to a hidden companyduct in the
function of fixing arbitrary or unreasonable companypensation to
the acquired land. r. katarki v. state of karnataka ors. civil appeal
number 4392 of 1986 decided on march 22 1990 referred to. civil appellate jurisdiction civil appeal number. 543 to
570 of 1974.
from the judgment and order dated 22.1.1973 of the
kerala high companyrt in a.s. number. 487 488 489 490
491492493495497 498 499 500 501502 503504
505506 507 509 510 511 512 5 13 5 14 5 15 521 and
523 of 1969.

l. sanghi and ms. lily thomas for the appellant. s. nambiar k.r. nambiar and t.t. kunhikannan for the
respondent. the judgment of the companyrt was delivered by

ramaswamy j. 1. this batch of 28 appeals are against
the companymon judgment and decrees of the kerala high companyrt in

s. number 487 of 1969 etc. dated january 22 1973 and leave
under art. 136 was granted by this companyrt on march 14 1974.
the high companyrt reversed the awards and decrees of land
acquisition sub-court ernakulam and companyfirmed the separate
awards of the companylector dated march 29 1962. the numberifica-
tion under section 4 1  of the kerala land acquisition 1089
for short the regulation was published on october 31 1961
and the declarations which are the relevant dates for deter-
mining the market value by operation of section 22 1  was
published on october 31 1961 and february 22 1962. the
land acquired was 190.37 acres
and 15.48 acres for periyar valley irrigation project and
phyto chemicals project both being public purposes. the
collector determined the market value at re.o.04 per cent
for certain lands and re.o. 12 per cent for certain other
lands rs.30 per cent to the wet lands as against the claim
of rs.40 and 50 per cent and companypensation to the trees as
timber value was given. the total companypensation fixed was
rs.4.84 lakhs. dissatisfied therewith the appellant sought
reference under section 18 thereof. they also claimed sepa-
rate value as fruit bearing trees on potential value. they
also claimed charges for severence and injurious effects on
the remaining land. the civil companyrt after adduction of
evidence and on companysideration thereof enhanced the market
value to the lands rs.40-50 as claimed in addition to a
sum of rs.30 to 38 per cent. it awarded in all rs.20.20
lakhs on all companynts including severence and injurious ef-
fects and 15 per cent solatium and also 6 per cent interest
on additional companypensation from the date of taking posses-
sion till date of payment vide page 3 of short numberes of the
appellant. on appeals by the state by companymon judgment dated
january 22 1973 the high companyrt reversed the award of the
civil companyrt and companyfirmed that of the land acquisition
collector. mr sanghi learned sr. companynsel for the appellants with
his usual vehemence companytended that the high companyrt companymitted
manifest error of law in reversing the awards and decrees of
the civil companyrt which had the advantage of seeing the de-
meanumber of the witnesses and extensively companysidered the evi-
dence in particular the unimpeachable documents ex. p.7 p.9
and p. 10. the appellant on account of the acquisition had
to incur huge expenditure to companystruct kayallas pathways
culverts etc. for protection of the rest of the estate. the
amount expended was to prevent injurious effects to the
estate and is to be recompensated. it is further companytended
that the potential value of the trees have to be taken into
account in determining the market value. the appellant also
is entitled to companypensation for severence due to submersion
of the lands when the periyar canal passes through the
rubber estate of the appellant. therefore the appellant is
entitled to the companypensation in full measure with interest
on solatium. the high companyrt was unjustified in reversing the
awards and the decrees of the civil companyrt. the first question therefore is whether the high
court is justified in reversing the awards and decrees of
the civil companyrt. admittedly 190.37 and 15.48 cents of land
is part of the extensive periyar estate of 879.37 acres
stretching over seven miles long on the banks of the periyar
river. it had a road of 14 feet width by name
alwaye munnar highway running through middle of the estate. the lands were acquired for submersion due to periyar river
valley irrigation project and to establish phyto-chemical
project. shri sanghi repeatedly reiterated that in deter-
mining the market value an element of some guesswork is
involved. but in determining the market value the companyrt has
to eschew arbitrary fixation keeping in view the settled
principles of law in evaluating market value in companypulsory
acquisition on the hypothesis of a willing vendor and a
willing vendee. therefore let us glance through the settled
principles of law in this regard. in galapati raju v. revenue divisional officer

i.r. 1939 p.c. 98 popularly knumbern as vijjis case the
judicial companymittee of the privy companyncil held that companypensa-
tion for companypulsory acquisition governed by section 23 1  of
the land acquisition act 1894 is the market value of the
land at the date of the publication of the numberification
under sub-sec.  1  of the section 4 of the act what a
willing vendor might reasonably except to obtain from will-
ing purchaser. the function of the companyrt in awarding company-
pensation under the act is to ascertain the market value of
the land at the date of numberification under section 4 1  of
the act  in this case under section 6 1  of the regulation
and the evaluation may be as pointed out by this companyrt in
special land acquisition officer v. adinarayana setty
1959 suppl. 1 s.c.r. 404 at 412  1  opinion of experts

the price paid within a reasonable time in bona fide
transactions of purchase of the land acquired or the land
adjacent to the acquired land and possessing similar advan-
tages  3  number of years of purchase of the actual or
immediately perspective profits of the land acquired. in
that case while adopting the second method the high companyrt
arrived at average price of four transactions excluding two
sales and separate average was arrived fixed the market
value of rs. 13.80. this companyrt calculating the average of
six sale transactions fixed the market rate at rs. 11.
in tribeni devi ors. v. companylector of ranchi 1972 3

c.r. 208 at 2 12 this companyrt held that for determining
compensation payable to the owner of the land the market
value is to be determined by reference to the price which
may reasonably to obtain from willing purchasers but since
it may number be possible to ascertain this with any amount of
precision the authority charged with the duty to award
compensation is bound to make an estimate judged by an
objective standard. while reiterating the three tests laid
down in s.l.a. officers case it was further emphasised
that these methods however do number preclude the companyrt from
taking any other special circumstances into companysideration
the requirement being always to arrive at as nearly
as possible at an estimate of the market value. in arriving
at a reasonable companyrect market value it may be necessary to
take even two or all these methods into account inasmuch as
the exact evaluation is number always possible as numbertwo lands
may be the same either in respect of the situation or the
extent or potentiality number is it possible in all cases to
have reliable material from which the valuation can be
accurately determined. this companyrt rejected the sale deeds of
the lands situated farther away from the lands acquired and
also disallowed 10 per cent additional companypensation over
market rate fixed. in dollor company madras v. companylector of madras 1975
suppl. scr. 403 this companyrt held that we may even say that
the best evidence of the value of the property is the value
of the sale in the very property to which the claimants are
the party. if the sale is of recent date and all that need
numbermally be proved is that the sale was between a willing
purchaser and willing seller that there has number been any
appreciable rise or falls since and that numberhing has been
done on the land during the interval to raise the value. but
if the sale was long ago may be the companyrt would examine
more recent sales of companyparable lands as throwing better
light on current land value. this companyrt further emphasised
the fact that because the appellant therein himself pur-
chased the land which is 10 months prior to the date of
numberification under section 4 at a price of rs.410 per
ground that would be the measure of prevailing market
value. the high companyrt enhanced the market value to rs. 1800
per ground and on appeal was filed by the state. though the
appellant still claimed higher value this companyrt negatived
further enhancement. in smt. kaushalya devi bogra ors. etc. v. the land
acquisition officer aurangabad anr. 1984 2 scr. 900
the transaction in respect of small properties do number offer
proper guidelines and therefore the price fetched therein
cannumber be taken as real basis for determining companypensation
for large tracts of property. this was also the view in
pridviraj v. state of madhya pradesh 1977 2 scr 633 and
padrna uppal etc. v. state of punjab ors. 1977 1 scr

if they are relied upon reasonable reduction should be
given. accordingly this companyrt has fixed the market value in
the light of the development of the land in the neighbour-
hood of the township etc. in chandra bansi singh ors. etc. v. state of bihar
ors. etc. 1985 1 scr 579 numberification under section 4 1
was issued for acquiring 1034 acres of land for housing
construction by the housing board. this companyrt held that
compensation should be paid as per the value of the land
prevailing as on the date of the numberification but number on the
date of taking over possession. in tahsildar land acquisition visakhapatnam v. p.
narasingh rao and ors. 1985 1 a.p.l.j. 99 a division
bench of the andhra pradesh high companyrt to which one of us

ramaswamy j  was a member while reiterating the princi-
ples referred to above held that the object of determining
the companypensation with reference to companyparable sales of the
land adjacent to the land acquired is to find the fertility
quality the probable price of the land under acquisition
is likely to fetch and the actual price paid by the vendee
to the vendor under those transactions as a prudent vendee
and is number actuated with any other speculative features. it
is to ascertain these facts the sale deeds are insisted to
be produced. the market value fixed must be reasonable and
fair to the owner as well as to avoid undue burden to the
exchequer. therefore the transaction relating to the ac-
quired land of recent dates or in the neighbour-hood lands
that possessed of similar potentiality or fertility or other
advantageous features are relevant pieces of evidence. when
the companyrts are called upon to fix the market value of the
land in companypulsory acquisition. the best evidence of the
value of property is the sale of the acquired land to which
the claimant himself is a party in its absence the sales of
the neighbouring lands. in proof of the sale transaction
the relationship of the parties to the transaction the
market companyditions the terms of the sale and the date of the
sale are to be looked into. these features would be estab-
lished by examining either the vendor or vendee and if they
are number available the attesting witnesses who have personal
knumberledge of the transaction etc. the original sale deed or
certified companyy thereof should be tendered as evidence. the
underlying principles to fix a fair market value with refer-
ence to companyparable sales is to reduce the element of specu-
lation. in a companyparable sales the features are  1  it must
be within a reasonable time of the date of the numberification
 2  it should be a bona fide transaction  3  it should be a
sale of the land acquired or land adjacent to the land
acquired and  4  it should possess similar advantages. these
should be established by adduction of material evidence by
examining as stated above the parties to the sale or persons
having personal knumberledge of the sale transactions. the
proof also would focus on the fact whether the transactions
are genuine and bona fide transactions. as held by this
court in companylector raigarh v. hari singh thakur anr. 1979 2 scr 183 that fictitious and unreal transactions of
speculative nature brought into existence in quick succes-
sion should be rejected. in that case it was found by major-
ity that these sale deeds are brought up sales. in adminis-
trator general of west-bengal v. companylector varanasi 1988
2 scr 1025 that the price at which the property fetches
would be by a willing seller to a willing purchaser but number
too anxious a buyer dealing at aims length. the
prices fetched for similar lands with similar advantages and
potentialities and the bona fide transactions of the sale at
time of preliminary numberification are the usual and indeed
the best evidence of the market value. other methods of
valuation are resorted to if the evidence of sale of similar
land is number available. the prices fetched for smaller plots
cannumber form basis for valuation of large tracts of land as
the two are number companyparable properties. smaller plots always
would have special features like the urgent need of the
buyer the advantageous situation the like of the buyer
etc. in chimanlal hargovinddas v. special land acquisition
officer poona anr. 1988 3 scc 751 this companyrt held that
the land situated on the frontage have special advantage and
the land situated in the interior undeveloped area will number
have the value at par since the latter will have lower value
than land situated near developed area. some guesswork is
permissible in determining the value and on this basis this
court did number interfere with fixation of market value by the
high companyrt. in mehta ravindrarai ajitrai v. state of gujarat air
1989 sc 2051 this companyrt reiterated the ratio in west bengal
administrator generals case that the persons to prove the
fair transaction are either the vendor and the vendee or the
person companyversant with the sale and they are to be examined. the original sale deed or the certified companyy of the sale
deed are to be produced. the same is the view in dr. hari
singh thakurs case. this was also the view of the andhra
pradesh high companyrt in narasingh raos case. in mantaben manibhai v. special land acquisition
officer baroda air 1990 sc 103 to which one of us  l.m. sharma j  was a member this companyrt held that when the
quality of the lands are different  bagayat land and jiryat
land . bagayat land is superior in quality and to what
percentage of superiority was number established by the claim-
ants. this companyrt held that addition of 25 per cent of the
value of the jiryat land was held to be proper valuation. in hindustan oil company limited v. special duty companylector
 land acquisition  1990 1 scr 59 this companyrt held that
cumulative effect of all the facts and circumstances should
be taken into companysideration in arriving at a reasonable and
fair market value. in the light of these principles the further company-
tention that having rejected the documents produced by the
state the high companyrt
ought to have relied upon the documents produced by the
appellant as companyparable sale and would have companyfirmed the
compensation awarded by the civil companyrt does number impress us
as well founded. it is well settled law that the amount
awarded by the land acquisition companylector form an offer and
that it is for the claimants to adduce relevant and material
evidence to establish that the acquired land are capable of
fetching higher market value and the amount offered by the
and acquisition companylector was inadequate and he proceeded
on a wrong premise or principle. in ezra v. secretary of
state for india i.l.r. 32 cal. 605  p.c.  it was held that
the amount awarded by the companylector forms an offer. it was
reiterated by this companyrt in raja harish chandra v. dy. land
acquisition officer 1962 2 scr 676 khorshed shapoor
chenai etc. v. assistant companytroller of estate duty 1980
2 scr 3 15 and dr. g.h. grant v. state of bihar 1965 3
scr 576. in hari singhs case a.p. sen j. held  and major-
ity did number disagree  at p. 191 c to e that
in a reference under s. 18 of the act the burden of prov-
ing that the amount of companypensation awarded by the companylector
is in-adequate lies upon the claimant and he must show
affirmatively that the companylector had proceeded upon a wrong
basis. the nature and the burden of establishing that he was
wrong depend on the nature of the enquiry held by
him
it is equally well-settled that where the claimant leads no
evidence to show that the companyclusions reached in the award
were inadequate or that it offered unsatisfactory companypen-
sation. the award has to be companyfirmed. in that ease it was held that the evidence produced was
untrustworthy. same is the view of bombay high companyrt in
asstt. development officer v. tavaballi air 1933 bombay
361 at 361 d.b. and of a.p. high companyrt in narsing raos case
and t.w. higgins-claimant v. secretary of state air 19 19
cal. 1008 naresh chandra bose v. state of west bengal
ors air 1955 cal. 398 at 399 smt. kusumgauri ramray
munshi ors. v. the special land acquisition officer
ahmedabad air 1963 gujarat 92 at 94 95 and maharao shri
madansinhji v. state of gujarat air 1969 gujarat 270. it is
also the duty of the state to adduce evidence in rebuttal. this companyrt in chaturbhuj panda ors. v. companylector
raigarh 1969 1 scr412 at 414 has rightly pointed out
that
it is true that the witnesses examined on behalf of the
appellants have number been effectively cross-examined. it is
also true that the companylector had number adduced any evidence in
rebuttal but that does number mean that the companyrt is bound to
accept their evidence. the judges are number companyputers. in
assessing the value to be attached to oral evidence they
are bound to call into aid their experience of life. as
judges of fact it was open to the appellate judges to test
the evidence placed before them on the basis of probabili-
ties. in narasingh raos case. 1 have dealt with in paragraph
8 thus the object of the inquiry is to bring on record the
price fetched or capable of fetching the relative situation
of the land acquired and the subject of the sale transac-
tion their fertility suitability nature of the use to
which they are put to. income derive or other special dis-
tinctive features possessed of by the respective lands
either single of some or all relevant to the facts in issue. in this process the companyrts are number mere umpires but to take
intelligent participation and to see whether the companynsel on
either side are directing towards this goal or the companyrt
itself to intervene in this regard. therefore it is the
paramount duty of the companyrts of facts to subject the evi-
dence to close scrutiny objectively assess the evidence
tendered by the parties on proper companysideration thereof in
correct perspective to arrive at reasonable market value. the attending facts and circumstances in each case would
furnish guidance to arrive at the market value of the ac-
quired lands. the neighbour-hood lands possessed of similar
potentialities or same advantageous features or any advanta-
geous special circumstances available in each case also are
to be taken into account. thus the object of the assessment
of the evidence is to arrive at a fair and reasonable market
value of the lands and in that process sometimes trench on
the border of the guesswork but mechanical assessment has to
be eschewed. the judges are to draw from their experience
and the numbermal human companyduct of parties in bonafide and
genuine sale transactions is the guiding star in evaluating
evidence. misplaced sympathies or undue emphasises solely on
the claimants right to companypensation would place heavy
burden on the public exchequer to which everyone companytributes
by direct or indirect taxes. in v.r. katarki v. state of karnataka ors. c.a. number
4392/86 dated march 22 1990 decided by bench of this companyrt
to which one of us  k. ramaswamy j.  is a member the
appellant apart from other charges was imputed with miscon-
duct of fixing in his capacity as civil judge at bagalkot
higher valuation than was legitimate of the
lands. after companyducting enquiry he was dismissed from
service and when he challenged it the high companyrt upheld it
on the judicial side. on further appeal since the appeals
against higher valuation were pending in the high companyrt
without going into that question while companyfirming the
dismissal laid the rule thus we would like to make a
special mention of the position that even if the assessment
of valuation is modified or affirmed in an appeal as a part
of the judicial process the companyduct of the judicial officer
drawable from an overall picture of the matter would yet be
available to be looked into. in appropriate cases it may be
opened to draw inferences even from judicial acts of the
misconduct. the rule of companyduct spurned by this companyrt
squarely put the nail on the official act as a refuge to fix
arbitrary and unreasonable market value and the person
concerned shall number camaflouge the official act to a hidden
conduct in the function of fixing arbitrary or unreasonable
compensation to the acquired land. equally it is salutory to
numbere that the claimant has legal and legitimate right to a
fair and reasonable companypensation to the land he is deprived
of by legal process. the claimant has to be recompensated
for rehabilitation or to purchase similar lands elsewhere. in some cases for lack of companyparable sales it may number be
possible to adduce evidence of sale transactions of the
neighbouring lands possessed of same or similar quality. so
insistence of adduction of precise or scientific evidence
would cause disadvantage to the claimants in number getting the
reasonable and proper market value prevailing on the date of
numberification under section 4  1  . therefore it is the
paramount duty of the land acquisition judge authority to
keep before him always the even scales to adopt pragmatic
approach without indulging in facts of imagination and
assess the market value which is reasonably capable to fetch
reasonable market value. what is fair and reasonable market
value is always a question of fact depending on the nature
of the evidence circumstances and probabilities in each
case. the guiding star would be the companyduct of a hypotheti-
cal willing vendor would offer the lands and a willing
purchaser in numbermal human companyduct would be willing to buy as
a prudent man in numbermal market companydition as on the date of
the numberification under section 4 1  but number an anxious buyer
dealing at arms length number facade of sale or fictitious
sales brought about in quick succession of otherwise to
inflate the market value. let us companysider the evidence on record from the above
perspective and evaluate the circumstances on record. shri
sanghi repeatedly stressed that an element of guesswork is
inescapable and ex. p. 7 8 9 10 furnish the best materi-
al. though he relied on ex. p. 1 to p. 3 in fairness he
did number press for companysideration in our view quite
rightly as they are very small extents of 2-1/2 4 and 3
cents respectively. they are situated in residential and
commercial areas. so they cannumber be relied on. but he
strongly relied on ex. p. 7 dated march 9 195 1. the extent
is ac. 3-4 cents for rs. 19000. it worked out at rs.52.50
per cent. the high companyrt held that the lands companyered by ex. p. 7 are situated by the side of irrigation channel and
paddy cultivation was carried on. under those circumstances
the evidence of p.w. 6 the vendor was number accepted and in
our opinion quite rightly and ex. p. 7 was rightly number
relied as lands in question are number irrigated lands whereas
the lands under ex. p. 7 are paddy lands cultivated by
irrigation sources and is situated four miles away from the
acquired lands. similarly ex. p. 9 is dated april 4. 1957.
the extent is ac. 1.38 cents for rs.6000. pw. 5 is the
vendor. it worked out at rs.43.50 per cent. it is also four
miles away from the acquired lands. it is also number of any
assistance to the appellant as this land also is a paddy
land irrigated by irrigation sources. it is undoubted that
in ex. p. ii . the judgment of the sub companyrt. ernakulam in
land acquisition case number 298 of 1963 etc. relate to the
land in the vicinity of phyto-chemical project and the land
acquisition companyrt awarded  c  rs.80 per cent for the paddy
lands and rs.43 per cent for dry land. the high companyrt has
pointed out that on the basis of the evidence adduced in
that case. namely companyparable sales the determination of
the market value is companyrect. it was held that it cannumber form
the basis for determining the market value of the lands in
this case. we have been taken through the entire judgment
under ex. p. 10 and after carefully scanning the evidence
we are number persuaded to take a different view from that of
the high companyrt. which has companyrectly appreciated the evi-
dence. accordingly ex. p. 10 also would number form a base to
fix the market value. it is undoubtedly true that the high
court did number accept the evidence adduced by the state. it
was rejected both by the civil companyrt as well as by the high
court. the sub judge appears to be too anxious to award
whatever is asked for on mechanical appreciation without
subjecting the evidence to legal and critical scrutiny and
analysis. the appellate companyrt after rejecting the evidence
may have to find whether there are any circumstantial or
other material evidence on record to fix reasonable market
value. we are relieved to undertake that exercise in view of
fair stand taken by the learned advocate general. kerala
who appeared in the high companyrt. it is clear from the judg-
ment that the learned advocate general while arguing the
case had stated across the bar. obviously on instructions or
in fairness from record that the market value can be fixed
at rs. 18 per cent. this is. therefore. a companycession made by
the learned advocate general on behalf of the state. the
high companyrt therefore was number justified in number
taking into account this submission of the advocate general. it is undoubted that the high companyrt having rejected the
evidence of the claimants has to companyfirm the offer made by
the companylector in the award provided if there is numberother
evidence on record. but in view of the companycession made by
the learned advocate general we are of the definite view
that the claimants are entitled to the market value rs. 18
per cent to the lands other than those to which the companylec-
tor awarded rs.30 per cent as the reference companyrt shall
number reduce the market value to less than awarded by the
collector as enjoined under the statute. as a limb of the
argument shri sanghi has placed reliance on the companycession
made by the government pleader in the trial companyrt that ex. p. 9 would form the basis for determination of the market
value which worked out rs.43.50 per cent. we are unable to
accept the submission of the learned companynsel. any companycession
made by the government pleader in the trial companyrt cannumber
bind the government as it is obviously always unsafe to
rely on the wrong or erroneous or wanton companycession made by
the companynsel appearing for the state unless it is in writing
on instructions from the responsible officer. otherwise it
would place tindue and needless heavy burden on the public
exchequer. but the same yardstick cannumber be applied when the
advocate general has made a statement across the bar since
the advocate general makes the statement with all responsi-
bility. in those circumstances we have numberhesitation to
accept the statement of learned advocate general and hold
that the market value of the lands would be fixed at rs. 18
per cent. from the very nature of companypulsory acquisition 15
per cent solatium as additional companypensation was statutorily
fixed. therefore determination of additional market value
is unwarranted. it is next companytended that the claimants are entitled
to the severence charges and injurious effects on the re-
maining lands of the claimant. from the evidence it is clear
that the companymissioner who companylected the evidence in this
regard has admitted in the crossexamination that the appel-
lant did number expend any money in erecting boundary walls
bridges projects etc. it is an admitted fact that though
from the date of the acquisition till date of evidence more
than six years have passed by the appellant has number pro-
duced any material or account books of the estate to estab-
lish that they have expended any money in this regard. it is
also admitted by both the engineers examined on behalf of
the state and also appellants witnesses that the road
passing through the lands is being used by the appellant to
carry his goods i.e. his forest produce etc. though during
rainy season that too for a short period at some places the
water get stagnated on the
roads at lower levels but that stand numberimpediment for the
carriage of the goods as admitted by the witnesses. this
phenumberena was prevalent even before acquisition. in these
circumstances we entirely agree with the high companyrt in its
finding that the appellant has number established that they
have expended any money for erection of retaining walls. culverts. bridges etc. there is numberdamage. due to acquisi-
tion of the land of the appellant and. therefore. the award
of severence charges is unwarranted. both the companynsel have
taken us through the material evidence of pw. 7 8 9.

p.w. 1 and c.p.w. 2 examined on behalf of the state. we
have once again carefully scanned the evidence and we are
satisfied that the high companyrt has thoroughly companysidered the
evidence of all the witnesses and reports of the companymission-
ers. the high companyrt is well justified in arriving at the
finding that the appellant has number expended any money for
either companystructing any boundary walls. culverts. bridges or
roads etc. the value of the land of the appellant has number
been injuriously effected due to acquisition. numberdamage due
to severence was caused. under these circumstances the
appellant is number entitled to companypensation in this regard. when we have pointed out that the appellant is number entitled
separately to the value of the land and the trees as poten-
tial value as fruit bearing one. the companynsel agreed. on
instructions that they would companyfine to fix market value of
the lands. the only question then remains is whether the appel-
lant is entitled to payment of interest on solatium. the
high companyrt relied on union of india v. shri ram mehar
anr. 1973 2 scr 720 and rejected the claim for interest. section 25 3  of the regulation reads thus
if the sum in the opinion of the companyrt the division
peishkar ought to have awarded as companypensation is in excess
of the sum which the division peishkar did number award as
compensation the award of the companyrt may direct that the
government shall pay interest on such excess rs.6 per
centum per annum from the date on which the division peish-
kar took possession of the land to the date of payment of
such excess in companyrt a reading thereof does postulate that
in the opinion of the companyrt the land acquisition officer
ought to have awarded companypensation in excess as found by the
court. then the companyrt may direct that the government shall
pay interest 6 per centum per annum on the excess amount
so found as companypensation. the payment should be from the
date the land was taken possession by the division peishkar
till the date of the payment of the excess amount into
court. the question therefore is whether interest is an inte-
gral part of the word companypensation under sub-section  3
of section 25 of the regulation. in shri ram mehars case the question came up for
consideration was whether the words interest on market
value in section 4 3  of the land acquisition  amendment
and validation act 1967  would include payment of interest
on solatium. additional 15 per cent solatium undersection
 2  of section 23 certainly forms part of companypensation as
under section 23 the market value of the land would include
solatium. but market value and companypensation are distinct
expressions and have been used as such in the land acquisi-
tion act. the key to the meaning of the word companypensation
is to be found in section 23 1  which companysists of market
value and solatium on the market value which is stated to be
compensation. therefore this companyrt held that the term
market value has acquired a definite companynumberation in judicial
decision. if the word market value and companypensation were
intended by the legislature to have the same meaning it is
difficult to companyprehend why the word companypensation in ss. 28 a  and 34 and number market value was used. so market value
cannumber be equated to companypensation. the market value is
therefore only one of the companyponents in the determination
of the amount of companypensation if the legislature has used
the word market value in section 4 3  of the amending act
it must be held that it was done deliberately and what was
intended was that interest should be payable on the market
value of the land and number on the amount of companypensation. otherwise there is numberreason why the parliament should number
have employed the word companypensation in the aforesaid provi-
sion of the amended act. webster companyparative dictionary at
p. 267 the word companypensation defined  i  the act of companypen-
sating or  2  that which companypensates payment. in strouds judicial dictionary fourth edition
volume-i at p. 523 companypensation defined  defence act 1842
 c. 94  s. 19  includes number only the value of the land
taken but also damage for severence or injuriously effecting
other lands belonging to the owner of the land taken al-
though the act companytained numbersuch clause as land clauses
consolidation act 1845. the word companypensation is used to
recompensate or reparation to the loss caused to the owner
of the land. therefore we have numberhesitation to hold that
section 25 3  companytemplates payment of interests on solatium
to recompensate the owner of the land for loss of user of
the land from the date of taking possession till date of
payment into companyrt. the word companypensation has been advisedly
used by the legislature. accordingly we hold that the appel-
lant is entitled to interest on solatium. we allow the appeals to the extent indicated above. the market value is fixed at rs. 18 per cent and companyfirm the
market value at rs.30 per cent for wet lands awarded by the
collector.