CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1736 to 1740 of 1967. From the Judgment & Order dated the 9th October, 1969 of the Mysore High Court in W.P. Nos. 1249, 1260, 1432, 2206 and 2271 of 1963. B.R.L. Iyengar and M. Veerappa, for the appellants. H. B. Datar and R. B. Datar, for the respondents. (in C.A. Nos.,1736 & 1740/67). M. C. Bhandare and R. B. Datar, for respondent (in C. A. No. 1739/67). The Judgment of the Court was delivered by ALAGIRISWAMI, J.-These five appeals arise out of five writ petitions filed before the High Court of Mysore questioning three notifications issued under the Mysore Slum Areas (Improvement & Clearance) Act, 1958. The notifications were (1) a Declaration under section 3 of the Act, dated 17-111960, (2) a declaration under section 9 of the Act, dated 20-4-1961, and (3) a notification by the Government dated 20-12-1962 under section 12 by which certain lands were to be acquired under the Act. The provisions of section 3, 9, 12 and 15 were also impugned as unconstitutional. The High Court struck down sections 3 and 9 as violating Article 19(1)(f) of the Constitution and section 12(1) (b) as violating Article 14. It did not consider it necessary to consider the constitutional validity of section 15. It, however, held that the three notifications above referred to were not unconstitutional because in exercising their functions under sections 3, 9 and 12 the authorities concerned were not exercising a quasi judicial power. But the result of striking down the section of the Act above referred to was that the notifications also fell along with them. The State of Mysore has filed these appeals under certificate granted by the High Court. There are two possible approaches to this question. One is to hold that the provisions of the statute are themselves unconstitutional because they do not provide a reasonable opportunity for the affected parties to be heard; the other is to hold that as there is nothing in the statutory provisions which debar the application of the principles of natural justice while the authorities exercise the statutory powers under the Act, and as the principles of natural justice would apply unless the statutory provisions point to the contrary the statutory provisions themselves are not unconstitutional though the notifications issued under them may be struck down if the authorities concerned do not observe the principles of natural justice while exercising their statutory powers. As there is a presumption of constitutionality of statutes unless contrary is established it is the latter course that appears to us to, be the proper approach. This Court has made considerable advances in recent years in its attitude towards the question of the application of the principles of natural justice. The High Court referred to the decisions in Cooper v.The Board of Works for the Wandsworth District [14CB(NS)180] King v. The Electricity Commissioners [ 1924 (1) KB 171 ] as well as Nakkuda Ali v. M.F.De S. Jayaratne (1951 AC 66), as also to the decision of this Court in Province of Bombay v. Khushaldas S. Advani (AIR 1950 SC 222). It referred to the decision in Ridge v. Baldwin [1963 (2) All E.R. 66] and considered that it had considerably shaken the foundations of King v. The Electricity Commissioners (supra). It noticed the decision of this Court in Board of High School & Intermediate Education U.P. Allahabad v. Ghanshyam Das Gupta (AIR 1962 SC 11,10). It did not however refer to the decision of this Court in State of Orissa v. Dr. (Miss) Binapani Dei & Ors. [1967(2) SCR 625] nor the decision in A. K. Kraipak v. Union [1970](1) SCR 4571 as they were subsequent decisions of this Court.
In Binapani Dei’s case this Court held:
"The rule that a party to whose prejudice an
order is intended to be passed is entitled to
a hearing applies alike to judicial tribunals
and bodies of persons invested with authority
to adjudicate upon matters involving civil
consequences. It is one of the fundamental
rules of our constitutional set-up that every
citizen is protected against exercise of
arbitray authority by the State or its
officers. Duty to act judicially would
therefore arise from the very nature of the
function intended to be performed, it need not
be super. added. If there is power to decide
and determine to the prejudice of a person,
duty to act judicially is implicit in the
exercise of such power. If the essentials of
justice be ignored and an order to the
prejudice of a person is made, the order is a
nullity. That is a basic concept of the rule
of law and importance thereof transcends the
significance of a decision in any particular
case."
In Krajak’s case it was held:
"The rules of natural justice operate in areas
not covered by any law validly made, that is,
they do not supplant the law of the lard but
supplement it. They are not embodied rules
and their aim is to secure justice or to
prevent miscarriage of justice. If that is
their purpose there is-no reason why they
should not be made applicable to
administrative proceedings also, especially
when it is not easy to draw the line that
demarcates administrative enquiries from
quasi-judicial ones, and an unjust decision in
an administrative enquiry may have are far
reaching effect than a decision in a quasi-
judicial enquiry.
It is further observed :
"The concept of natural justice has undergone
a great deal of change in recent years. What
particular rule of natural justice should
apply to a given case must depend to a great
extent on the facts and circumstances of that
case, the framework of the law under which the
enquiry is held and the constitution of the
Tribunal or the body of persons appointed for
that purpose. Whenever a complaint is made
before a court that some principle of natural
justice had been contravened, the court has to
decide whether the observance of that rule was
necessary for a just decision on the facts of
that case. The rule that enquiries must be
hold in good faith and without bias, and not
arbitrarily or unreasonably, is now included
among the principles of natural justice."
This Court also pointed out:
"The dividing line between an administrative
power and a quasijudicial power is quite thin
and is being gradually obliterated. For
determining whether a power is an
administrative power or a quasi-judicial power
one has to look to the nature of the power
conferred, the person or persons on whom it is
conferred, the framework of the law conferring
that power, the consequences ensuring from the
exercise of that power and the manner in which
that power is expected to be exercised......
in recent years the concept of quasi-judicial
power has been undergoing a radical change.
What was considered as an administrative power
some years back is now being considered as a
quasi-judicial power."
It also observed:
"With the increase of the power of the
administrative bodies it has become necessary
to provide guidelines for the just exercise of
their power. To prevent the abuse of that
power and to see that it does not become a
new despotism, Courts are gradually evolving
the principles to be observed while exercising
such powers. In matters like these, public
good is not advanced by a rigid adherence to
precedents. New problems call for now
solutions. It is neither possible nor
desirable to fix the limits of a quasijudicial
power." The audi alteram rule was held to be applicable by implication, to a case of deprivation of a right in property in Daud Ahmed v. District Magistrate Allahabad & Ors. (AIR 1972 SC 896 & 899) where this Court held:
"It is the nature of the power and the
circumstances and conditions under which it is
exercised that will occasion the invocation of
the principle of natural justice. Deprivation
of property affects rights of a person. If
under the Requisition Act the petitioner was
to be deprived of the occupation of the
premises the District Magistrate had to hold
an enquiry in order to arrive at an opinion
that there existed alternative accommodation
for the petitioner or the District Magistrate
was to provide alternative accommodation." The Mysore High Court, in the judgment under appeal, seems to have boon of opinion that the principle laid down in Cooper v. The Board of Works for the Wandsworth District (supra) was departed from in King v. The Electricity Commissioners (supra) and by the Privy Council in Nakkuda Ali v. M. F. De S. Jayaratne (supra). The Electricity Commissioners’ case was followed by this Court in Province of Bombay v. Khushadas .’V. Advani (supra). The High Court’s view seems to have been that this line of reasoning prevented the Court from inferring any procedure apart from that laid down in the statute. It seemed to have been of opinion that only what was laid down in the Constitution is the Constitutional law of the land. This is clear from the following passage in the judgment under appeal:
"The principles of natural justice recognised
in this country arc largely if not wholly’
moulded by the decisions of the English
Courts. In this country, as in England, though
the principles of natural justice are of
utmost importance in the administration of
justice they do not form part of the
Constitutional law of our country except
probably when we consider cases falling under
Article 311 of the Constitution. Some of our
statutes embody those principles but largely
they are the product of judicial decisions.
Those principles do not over-ride specific
provisions contained in any. statute unless
the same comes into conflict with any of the
provisions in the Constitution." We may point out that, in holding the impugned provision void for contravention of Art. 19(1)(f) of the Constitution, the High Court itself relied on a principle of natural justice inasmuch as it held that a procedure providing ,or due hearing to the party affected before a building was condemned to be demolished was not provided in the impugned Act. In other words, the High Court itself was treating rules of natural justice as part of requirements of our Constitutional law although they are not specifically conferred upon citizens under a separate heading. We think that the Electricity Commissioners’ case (supra) which was followed by this Court in Khushaldas S. Advani’s case (supra), was not really a departure from the general principle laid down in Cooper v. The Board of Works for the Wandsworth District (supra), but, it was an attempt to formulate the conditions under which the general principle laid down thereby Erle, C.J., who quoted the Biblical story of how even God Himself had given Adam an opportunity of answering why he had eaten the forbidden fruit before, expelling him from Paradises was applicable in the circumstances of an increasingly complex economic and social order whose problems compelled the emergence of the welfare socialistic State with its many organs armed with extensive powers. Courts attempted, in the interests of justice, where its imperative demands were not met, to control administrative action by assimilating it to judicial action over which Courts could exercise supervision. In later cases, emphasis was more on the needs of justice and fairness rather than upon the distinction between the judicial and administrative action. Administrative action had, however, to be given free scope within its legitimate sphere without jeopardizing rights of individuals affected. Policies and schemes framed under statutory provisions, which affected rights of individuals could impose the obligations upon the authorities taking what were essentially administrative decisions at points at which they begin to impinge on specific individual rights. It is only where there is nothing in the statute to actually prohibit the giving of an opportunity to be heard, but, on the other hand, the nature of the statutory duty imposed itself necessarily implied an obligation to hear before deciding that the "audi alteram partem" rule could be imported. The nature of the hearing would, of course, vary according to the nature of the function and what its just and fair exercise required in the context of rights affected. We must, therefore, examine the nature of functions imposed by statute and the requirements they are designed to meet in applying the tests stated above. We think that, the duty to hear those whose dwellings are to be condemned becomes imperative before deciding to demolish their particular buildings although we do not think that any quasi-judicial trial was called for. All that was necessary was to I hear objections, checked by spot inspections, where needed, before taking a decision. This would have met with the requirements of natural justice in such cases where emergent action may sometimes be very necessary. We may point out that, in cases of demolition orders, pursuant to schemes framed under the Housing Act in England, the duty to hear before making them was held by the Court to be implied. The earliest of these cases was Cooper v.The Board of Works for Wandsworth District.These duties are now imposed by statute (see Sections 16 and 20 of Housing Act, 1967). Before proceeding to deal with the questions that arise it is necessary to set out the relevant statutory provisions. Section 3 provides for declaration of slum areas. It reads "(1) Where the competent authority upon report from any of its officers or other information in its possession is satisfied that(a) any area is or may become a source of danger to the public health, safety or convenience of residents in that area or in its neighbourhood. by reason of the area being lowlying, insanitary squalid or otherwise, or (b) the buildings in any area, used or intended to be used for human habitation(i) are in any respect unfit for human habitation; or (ii) are, by reason of dilapidation, over crowding, faulty arrangement or design, narrowness or faulty arrangement of streets, lack of ventilation, light, or sanitation facilities, or any combination of these factors, detrimental to safety,. health or morals; it may, by notification in the official Gazette, declare such area to tea slum area(2) In determining whether a building is unfit for human habitation for the purposes of this Act, regard hall be had to its condition in respect of the following matters, that is to any(a) repair; (b) stability; (c) freedom from damp; (d) natural light and air; (e) water supply; (f) drainage and sanitary conveniences; (g) facilities for storage, preparation and cooking of food and for the disposal of waste water; and the building shall be deemed to be unfit as aforesaid if and only if it is so far defective in one or more of the said matters that it is not reasonably suitable for occupation in that conditions."’ Once an area is declared as a slum area, the owner of every building in that area has to apply to the competent authority as required by section 3-A(1) of the Act for the registration of the building owned by him in that area and also furnished to the said authority such particulars as may be required by it. Section 3-B lays down: "Notwithstanding anything contained in any other law for the time being in force; no person shall(ii)in respect of any area declared as a slum area under section 3 after the commencement of the said Act, subsequent to the date of declaration of such area as a slum area, erect any new building in such slum area, or make any addition to or any alteration in any building already existing on the said date in such slum area, except with the previous permission in writing of the competent authority and subject to such restrictions or conditions as may be imposed by the said authority." Section 9 gives power to declare any slum area to be a clearance ;area. It leads : .lm15 "(1) Where the competent authority upon a report from any of its Officers or other information in its possession is satisfied .as respects any slum area that the most satisfactory method of dealing with the conditions in the area is the demolition of all the buildings in the area, the authority shall by an order notified ,in the official Gazette, declare the area to be a clearance area, that is to say, an area to be cleared of all buildings in accordance with the provisions of this Act : Provided that any building in the area which is not unfit for human habitation or dangerous or injurious to health may be excluded from the declaration if the authority considers it necessary. (2)The competent authority shall forthwith transmit to the State Government a copy of the declaration under this section together with a statement of the number of persons who .on a date specified in the statement were occupying buildings comprised in the clearance area." Section 12 gives power to the State Government to acquire land. It reads : " (1) Where on any representation from the competent authority it appears to the State Government that, in order to enable the authority to execute any work of improvement in relation to any building in a slum area or to form or widen lanes .and roads the-rein or to re-develop any clearance area, or to rehabilitate slum dwellers it is necessary to acquire(a) any land within, adjoining or surrounded by any such slum area or clearance area; or (b) any other land in any locality; the State Government may acquire the land by publishing in the official Gazette a notice to the effect that the State Government has decided to acquire the land in pursuance of this section : Provided that before publishing such notice the State Government may call upon the owner, or any other person who, in the opinion of the State Government may be interested in, such land to show cause why it should not be acquired, and after considering the cause, if any, shown by the owner or any other person interested in the land, the State Government may pass such order as it may deem fit. (2)When a notice as aforesaid is published in the official ,Gazette, the land shall on and from the date on which the notice is so published, vest absolutely in the State Government free from all encumbrances." Section 16 prescribes the basis for determination of compensation for the land acquired under section 12. It reads :
"(1) The amount payable as compensation in
respect of any land acquired under this Act,
shall be determined in the manner specified in
sub-section (2).
(2)(a) In respect of any land within adjoining
or surrounded by any slum area or clearance
area-
(i) the amount payable as compensation shall
be the amount equal to sixty times the net
average monthly income actually derived from,
such land during the period of five consecu-
tive years immediately preceding the date of’
publication of the notice referred to in
section12; and
(ii) the net average monthly income referred
to, above shall be calculated in accordance
with the principles and in the manner set out
in the Second Schedule.
(b) In respect of any other land, the amount
payable: as compensation shall be,an amount
equal to the market value of such land on the
date of publication of the notice under
section 12 : Provided that the amount payable under clause (a) or clause (b) shall not be in excess of the market value of the: land or similar land on the first day of July 1959. (3)The prescribed authority shall, after holding an inquiry, in the prescribed manner, determine in accordance with the provisions of subsection (2) the amount payable as compensation and publish a notice in the official Gazette specifying the amount so determined and calling upon the owner of the land’ and every person interested therein to intimate to it before a. date specified in the notice whether such owner or person agrees, to the amount so determined and if he does not so agree, what. amount he claims to be the amount payable as compensation(4)Any person who does not agree to the amount of compensation determined by the prescribed authority under subsection (3) and claims a sum in excess of that amount may prefer an appeal to the Court of the District Judge having jurisdiction within thirty days from the date specified in the notice referred to in that sub-section. (5)On. appeal, the Court of the District Judge shall determine the amount of compensation and its determination shall be final. (6)Where there is any building on the arid in respect of which the amount of compensation has been determined under clause (a) of sub-section (2) no separate compensation shall be paid in respect of such building. Provided that where the owner of the land and the owner of the building on such land are different, the prescribed authority shall apportion the amount of compensation between the owner of the land and the owner of the building in such proportion as it considers reasonable: Provided further that the compensation in respect of the building shall not in any case exceed fifty per cent of the total amount of compensation which has been determined in accordance with the provisions of this section." As pointed out by the High Court, no appeal is provided against the declaration made under sections 3 and 9. Those declarations have far-reaching consequences. While acting under section 3 and 9 the possibility of arbitrary decisions cannot be ruled out. ’ It must also be borne in mind that most of the owners of properties in the slum area-, are likely to be poor persons with slender means. On the other hand it may also be necessary to bear in mind that quite often the persons who live in the slums may not be owners of the property but all the slum area might be owned by a rich person. In such cases .the residents of slums themselves might be interested in the slums being declared as slums. Once an area is declared as a slum area the owners of every building therein have to apply for registration of their buildings. No owner of a property in the area can erect any now building or make any addition to, or alteration in any existing building without previous permission which may be subject to such restrictions or conditions as may be imposed by the competent authority. The authority concerned may also call upon the owners to carry out works of improvement and if such a direction is not complied with the authority may itself execute the works of improvement and recover the’ cost from him. Under section 10 the owners of the buildings may be asked to vacate and demolish them and on failure to do so the buildings may be demolished and the cost of demolition recovered from the owners. A notification under section 9 enables an area to be declared a ,clearance area on the ground that the most satisfactory method of dealing with the conditions in the area is the demolition of all the buildings in the area. But even in a slum area there may be buildings which may not have to be pulled down and they may be in quite good condition. The proviso to sub-section (1) provides for such a contingency but if there is no provision for hearing the affected person he cannot bring to the notice of the concerned authority that his building is not unfit for human habitation or dangerous or injurious to health and such person would go unheard. There can be no two opinions about the need to hear the affected persons before declaring an area to be a slum area under section 3 or an area as a clearance area under section 9 or before taking action under section 10. All these difficulties will be removed if the affected persons are given an opportunity to be heard in respect of the action proposed. With regard to section 12(1)(b), however, we do not consider that that is a section which suffers from the same vice as the other sections. The validity of section 12(1)(a) has been upheld by the High Court and as we agree with the High Court we do not think it is necessary to say anything more. As regards section 12(1)(b), however, we do not agree with the High Court that the power to acquire any other land in any locality suffers from any constitutional objection. The power under section 12(1) is exercisable to execute any work of improvement in relation to any building in a slum area or to form or widen lanes and roads therein or to re-develop any clearance area. The power under section 12(1) (a) would be relatable to this purpose. But that section also enables acquisition of lands to rehabilitate slum dwellers. Such rehabilitation may not be in the original slum area itself. By its very nature a slum area is likely to be over-crowded and in redeveloping it not enough land may be available to house all persons formerly living in the cleared area. It may be necessary to acquire other lands for the purpose of rehabilitating them., Therefore the power under section 12(1)(b) is relatable to the purpose of slum clearance itself. Furthermore, that power is nothing more than the power available to a State Government under the Land Acquisition Act. As the section itself provides for calling upon the owner or any other person interested in the land to show cause why it should not be acquired, which provision corresponds to section 5A of the Land Acquisition Act, we do not consider that this section suffers from any defect. As regards section 15 though the High Court considered that it was not necessary to go into its validity in view of its finding regarding the other sections, it may be necessary to consider the validity of this section in the view that we have taken holding that the sections themselves are not bad but only the notifications issued thereunder. But we were informed at the bar by the learned Advocate appearing on behalf of the State of Mysore that a subsequent amendment of the Act has made provision regarding compensation applicable to acquisitions under section 12 of the Act on the same terms as under the Land Acquisition Act. We do not, therefore, consider it necessary to express any opinion on the validity of section 15. In the result the appeals are allowed in part. We hold that sections 3, 9 and 12(1)(a) and (b) are valid but the three notifications, already referred to, are bad as the affected persons were not given an opportunity of making representations against them. In the circumstances of this case there will be no order as to costs. P.H.P. Appeals allowed in part.