Makhan Lal Malhotra And Ors. vs The Union Of India (Uoi)
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Not extracted
Decision Date: 27 October, 1960
Coram: B.P. Sinha, J.L. Kapur, K.N. Wanchoo, P.B. Gajendragadkar
In the matter titled Makhan Lal Malhotra and others versus the Union of India, the Supreme Court rendered its decision on the 27th of October, 1960. The judgment was delivered by a bench comprising Justices B P Sinha, J L Kapur, K N Wanchoo and P B Gajendragadkar.
Justice Kapur observed that the petitioners had invoked Article 32 of the Constitution to seek a writ of mandamus against the Union of India. Their request was that the respondent should verify the claims the petitioners had advanced and award compensation accordingly. The Court, however, found that the petition possessed little merit and therefore declined to endorse its acceptance.
The petitioners were identified as displaced persons who had originated from West Punjab, presently known as West Pakistan, and who had subsequently settled in various locations throughout India. They asserted claims relating to village houses that they had abandoned in West Pakistan and which were situated in different villages. Their petition enumerated each claim, all of which had been rejected by the Rehabilitation authorities. The Court deemed it unnecessary to detail the specific properties involved in each village. It was sufficient to note that the claims lodged by petitioners numbered one and two each exceeded the amount of twenty thousand rupees, while the claims presented by petitioners three through six each exceeded ten thousand rupees.
The petitioners challenged the constitutional validity of two regulatory provisions. The first was Rule 5 issued under the Displaced Persons (Claims) Supplementary Act, 1954 (Act 12 of 1954). The second was Rule 65 made under the Rules framed pursuant to the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (Act 44 of 1954). Their challenge was premised upon an alleged violation of Article 14 of the Constitution, which guarantees equality before the law. The Court noted that, at this juncture, it was unnecessary to recite the full series of Acts and regulations that had been enacted to address the verification of displaced persons’ claims and the granting of compensation.
The judgment then turned to a brief historical overview of legislation relevant to displaced persons. On 1 April 1948, Parliament enacted the East Punjab Refugees (Registration of Claims) Act, 1948 (East Punjab Act 8 of 1948). This was subsequently followed by the East Punjab Refugees (Registration of Land Claims) Act, 1948 (Act 12 of 1948). In the latter statute, “land” was defined in section 2(b) as land that is not occupied as the site of any building in a town or village, and which is occupied or let for agricultural purposes, for purposes subordinate to agriculture, or for pasture, and which includes the sites of buildings and other structures on such land. Section 2(a) defined “claim” as a statement of loss or damage suffered by a refugee since 1 March 1947 in respect of his land situated in the territory now comprising the provinces of Punjab (in Pakistan), North West Frontier Province, Sind, Baluchistan, or any State adjacent to those provinces that acceded to Pakistan.
Finally, the Court noted that Section 4(1) of the 1948 Act provided for the submission of applications for the registration of land claims by displaced persons.
In the case, the Court described the legislative developments that followed the passage of the East Punjab Displaced Persons (Land Settlement) Act of 1949 (East Punjab Act 36 of 1949). That Act, which had been enacted on 19 November 1949, defined the term “allottee” in section 2(b) and provided a definition of “land” in section 2(d). The definition of land under this statute differed slightly from the definition given in the earlier East Punjab Act (Act 12 of 1948). Specifically, section 2(d) stated that “land” meant land which was not urban land, which was not occupied as the site of any building in a town or village, and which was occupied or let for agricultural purposes, for purposes subservient to agriculture, or for pasture; the definition also expressly included the sites of buildings and other structures situated on such land. Subsequently, on 18 May 1950, the Central Legislature enacted the Displaced Persons (Claims) Act, 1950 (Act 44 of 1950). Under section 2(a) of that Act, the word “claim” was defined as the assertion of a right to ownership or any interest in the property described in paragraph (i) and, in paragraph (ii), in a class of property located in any part of West Pakistan, other than any urban area that might be notified by the Central Government in the Official Gazette. The Court noted that this Act remained in force for only two years before it lapsed. Pursuant to section 2(a)(ii), the Central Government issued a notification on 27 May 1950 specifying the categories of property for which claims could be lodged. The notification listed three classes: (1) any immovable property that formed part of the assets of an industrial undertaking and was situated in a non‑urban area of West Pakistan; (2) any other immovable property in West Pakistan consisting of a building located outside an urban area, provided that the estimated cost of construction of such building, at prevailing rates, was not less than Rs 20,000; and (3) any agricultural land in any part of West Punjab. The Court observed that, according to this notification, claims could be made only with respect to buildings in rural areas whose estimated construction cost met the Rs 20,000 threshold, while no comparable monetary restriction applied to urban areas. The Court then explained that the original notification was amended by a subsequent notification dated 13 September 1950. In that amendment, clause (2) of the earlier notice was replaced with a new provision stating that “any other immoveable property in West Pakistan comprising of a building situated in an area other than an urban area” could be claimed, provided that where the claimant had been allotted agricultural land in India, the value of the building claimed depended on the size of the allotted agricultural land. Specifically, if the allotted agricultural land exceeded four acres, the building’s estimated construction cost could not be less than Rs 20,000; if the allotted agricultural land was four acres or less, the building’s estimated construction cost could not be less than Rs 10,000. The amendment also contained two explanatory clauses, the first of which clarified the definition of “agricultural land allotted in India” for the purposes of the clause, stating that a person would be deemed to have been allotted such land regardless of whether the allotment was temporary or quasi‑permanent.
In this case, the Court observed that the clause in the earlier notification stated that a person would be regarded as having been allotted agricultural land in India if such land had been allotted to him in any manner, whether on a temporary or a quasi‑permanent basis. The Court then noted that on 23 March 1954 the Parliament enacted the Displaced Persons (Claims) Supplementary Act, 1954 (Act 12 of 1954). Section 12 of that Act authorised the Government to make rules for the administration of the Act. Consequently, Rule 5 was promulgated, containing the following provision: “The classes of property that may be verified under these rules shall be the same as under the principal Act and the rules made thereunder, namely – (1) any immoveable property situated within an urban area in West Pakistan; (2) any immoveable property in West Pakistan which forms part of the assets of an industrial undertaking and is situated in any area other than an urban area; (3) any other immoveable property in West Pakistan comprising a building situated in any area other than an urban area; provided that where a claimant has been allotted any agricultural land in India, (a) if the agricultural land so allotted exceeds four acres, the value of the building for which the claim is made shall not, according to the present estimated cost of construction, be less than Rs 20,000, and (b) if the agricultural land so allotted does not exceed four acres, the value of the building for which the claim is made shall not, according to the present estimated cost of construction, be less than Rs 10,000.” The Court pointed out that Explanation II to this rule was worded in the same terms as the notification dated 13 September 1950.
Further, the Court recorded that on 9 October 1954 the Displaced Persons (Compensation and Rehabilitation) Act, 44 of 1954 (hereinafter referred to as Act 44 of 1954) was enacted. Section 2(a) of that Act defined the “compensation pool,” which was to be constituted under section 14 of the same Act. Section 2(e) provided a definition of “verified claim,” stating that a verified claim meant any claim registered under the Displaced Persons (Claims) Act, 1950 (44 of 1950) for which a final order had been passed either under that Act or under the Displaced Persons (Claims) Supplementary Act, 1954, and expressly excluded certain other matters.
The Court then explained that section 4 of Act 44 of 1954 dealt with the application for payment of compensation, section 7 dealt with the determination of the amount of compensation, and section 40 empowered the Government to make rules under the Act. Accordingly, rules were issued by notification No. S. R. O. 1363 on 21 May 1955. Under these rules, rule 2(h) defined “urban area,” while rule 2(f) defined “rural area” as an area that is not an urban area. Rule 16 set out the scale of compensation, which was reproduced in Appendix 8 or Appendix 9. Under rule 18, compensation was to be calculated on the total value of all claims, encompassing all classes of property other than agricultural land that had been left by claimants in West Pakistan. Rule 44 addressed the allotment of acquired evacuee houses in rural areas as a substitute for monetary compensation. Specifically, sub‑rule (3) of rule 44 provided for the allocation of houses in those rural areas.
The Court observed that in rural areas the houses were assigned grades and that, pursuant to rule 47, the payment of compensation could be made only insofar as rule 65 permitted. Rule 57 dealt with the allotment of a house in addition to agricultural land for a displaced person who possessed a verified claim in respect of such land and who had settled in a rural area. The rule specified two grades of allotment: for claimants allotted land up to ten standard acres, a house of grade H was to be provided, and for claimants allotted land exceeding ten standard acres but not exceeding fifty standard acres, a house of grade G was to be provided. The rule further provided that if the person held a verified claim in respect of any rural building and that claim had been satisfied, either in whole or in part, before the allotment of the agricultural land, the provisions of rule 65 would not apply to him; however, he would not be entitled to the allotment of a house or a site and building grant in lieu of the building.
The Court then explained the two ancillary explanations to rule 57. Explanation I stated that where no house was available in the same village, an allottee could be granted a site and a building grant instead. Specifically, if the allottee had been allotted agricultural land not exceeding ten standard acres, he could receive a site measuring four hundred square yards together with a building grant of four hundred rupees. If the allottee had been allotted agricultural land exceeding ten standard acres but not exceeding fifty standard acres, he could receive a site measuring six hundred square yards together with a building grant of six hundred rupees. Explanation II clarified that the reference to grades in rule 57 corresponded to the grades of houses enumerated in rule 44.
The Court further recited rule 61, which dealt with a claimant’s refusal to accept an allotment of agricultural land. Rule 61 provided that when any person refused to accept the allotment of agricultural land offered to him, the claim for compensation of the allottee would be deemed satisfied to the extent of the value of the allotted land, and that land would become available for allotment to any other claimant.
Rule 65, which was the subject of the petition, was also reproduced. Sub‑paragraph (1) stipulated that any person to whom more than four acres of agricultural land had been allotted would not be entitled to receive separate compensation for any verified claim for a rural building whose assessed value was less than twenty thousand rupees. Sub‑paragraph (2) provided that any person to whom four acres or less of agricultural land had been allotted would not be entitled to receive separate compensation for any verified claim for a rural building whose assessed value was less than ten thousand rupees.
The petitioners argued that the purpose of the various Acts and the rules made thereunder was to rehabilitate displaced persons, but that the classification created by the rules was discriminatory. They contended that the classes were not based on any intelligible differentia and that there was no rational nexus between the differentia and the objective sought to be achieved. According to the petitioners, the classification consisted of (1) a distinction between urban and rural populations; (2) a distinction between refugees from rural areas who owned land and those who owned only rural houses; and (3) a distinction between persons who had quasi‑permanent and permanent allotments.
In this case, the Court observed that the classification created by the impugned rule comprised three separate distinctions: first, a division between the urban population and the rural population; second, a division between refugees from rural areas who possessed land and those who possessed only rural houses; and third, a division between individuals who held quasi‑permanent allotments and those who held permanent allotments. To resolve the issue raised, the Court found it necessary to trace, in chronological order, the various measures undertaken to rehabilitate the millions of persons who were compelled to migrate to India, leaving behind property of widely varying values. When displaced persons arrived from West Punjab and other provinces that became part of Pakistan, the authorities allotted to every agricultural family a specified area of agricultural land. The purpose of this allotment was twofold: to provide temporary shelter to the displaced persons and to preserve any crops that the original owners had left behind when they moved to Pakistan. At an Inter‑Dominion Conference between the Governments of India and Pakistan held at Karachi from 10 to 13 January 1949, a permanent Inter‑Dominion Commission was established to consider the administration, sale and transfer of evacuee property in both dominions. Pursuant to the decisions of that commission, the question of shops and houses in rural areas was examined by the Commission in New Delhi on 11 and 13 March 1949. The Commission recommended that rural buildings whose value was Rs 20,000 or more should be regarded as substantial buildings, while buildings valued at less than that amount should be treated as appendages of agricultural land and therefore classified as “agricultural properties”, as recorded in the minutes of the meeting on page 242 of the compilation entitled “Documents concerning Evacuee Property” covering the years 1947‑51. Chapter IX of the Land Resettlement Manual for Displaced Persons, authored by Mr. Tarlok Singh and recognised as an authentic source, sets out the procedure for allotting rural houses and sites. Rule 3 of that manual explains how an equitable distribution of houses was to be achieved. To ensure fairness, the size of the land allotted to a displaced person and the type of house abandoned by that person were treated as the principal factors. For each standard acre allotted, one mark was to be awarded; houses abandoned in West Punjab were valued at one mark for every thousand rupees of the house’s value, subject to a maximum of twenty marks, while houses valued above Rs 20,000 were excluded from allotment because they were to be dealt with under the terms of an earlier India‑Pakistan agreement. After the relative rights in each village had been valued, the allottee could select houses from the village list. Appendix 11 of the manual summarises the principles governing the allotment of rural evacuee houses, specifying that houses of kamins, artisans and similar categories were to be given to displaced artisans, and evacuee shops to evacuee shopkeepers. Rule 3 further provided that a temporary allotment did not create any quasi‑permanent right of ownership, but was subject to the conditions laid down in the manual.
In the scheme, the authorities were required not to disturb any allottee who was otherwise eligible for comparable accommodation in the village. The chapter contains detailed provisions governing how the allotments were to be carried out, including procedures for partitioning a house when it could accommodate two or more families. Rule 20 was highlighted as a particularly important provision and was quoted in full: “Where necessary, evacuee abadi sites should be extended to suit the layouts of model villages. The Additional Deputy Commissioner should endeavour to persuade the allottees to surrender a part of their holdings in exchange for land out of the common pool or out of areas excluded from allotment.” Rule 21 gave effect to another Inter‑Dominion agreement and therefore excluded from allotment any house whose value was Rs 20,000 or more and that was liable to be exchanged or sold. Accordingly, the instructions contained in the manual made every effort to allocate houses to persons who had also been allotted land, so that displaced persons could receive compensation in the form of a house together with their land grant.
Rule 97, made under Central Act 44 of 1954, set out the conditions for granting rehabilitation assistance to allottees of agricultural land of four acres or less. It provided that any person who had been allotted such land and whose claim for rural buildings left in West Pakistan had been wholly rejected could receive a rehabilitation grant, provided that (a) the person had not accepted the agricultural land allotment or the allotment had been cancelled, and (b) the person did not hold a verified claim for any other substantial rural building; furthermore, a person who received a grant under Rule 97‑A could not also receive a grant under Rule 97. Rule 97‑A permitted a rehabilitation grant of Rs 450 per standard acre to any person who had been allotted two standard acres or less of agricultural land in Punjab or Patiala and East Punjab States Union under a notification specified in Section 10 of the Act, on the condition that (a) the person had not accepted the land allotment or the allotment had been cancelled, and (b) the person did not hold a verified claim for any urban property or any substantial rural building. By the already‑cited Rule 57, houses of all grades were allotted to persons who received certain parcels of land, and the scheme provided building sites and building‑grant payments where no houses existed in the villages. These rules, made under Act 44 of 1954 and elaborated in the Land Resettlement Manual prepared by Mr Tarlok Singh, demonstrate that every displaced person was assigned either a house, a building site, or appropriate monetary assistance.
In this case, the Court observed that the authorities had provided building sites and monetary assistance for the construction of houses in rural areas. The rule that required claimants to file for houses whose value was at least rupees 10,000 when the allotted land did not exceed four acres, and at least rupees 20,000 when the allotted land exceeded four acres, was made pursuant to an Inter‑Dominion Agreement between the two Governments. That Agreement had been recognised under Article 31(5)(b)(iii) of the Constitution. Consequently, the Court held that the rules fixing the house‑value thresholds of rupees 10,000 in one situation and rupees 20,000 in the other were policy decisions that emerged from a meeting of the Inter‑Dominion Commission concerned with the evaluation of evacuee property. The Court further noted that these rules merely restated the content of the notifications dated 27 May 1950 and 13 September 1950, both of which had themselves been the product of decisions taken at Inter‑Dominion Commission meetings.
The Court then turned to the constitutional requirement under Article 14, which mandates that the State must not deny any person equality before the law or equal protection of the laws within India. Judicial precedent, the Court explained, has incorporated the doctrine of classification into the equality clause, but such classification must not be arbitrary. It must be grounded in differences that are relevant to the purpose for which the classification is made, and there must be a reasonable connection between the classification and the objective sought. The purpose of the impugned provisions, read together with the relevant Acts, was to rehabilitate evacuees on an equitable basis. To achieve this aim, the evacuee law divided evacuees into distinct categories. Primarily, the division distinguished between persons who had been residing in rural Pakistan, where agriculture was their occupation, and persons who had been residing in urban Pakistan. Within the rural group, the law further separated those who owned agricultural land that included a building as part of the holding from those who owned agricultural land with an independent building that could not be described as part of the holding. The scheme therefore gave separate treatment to rural and urban areas. In rural areas, land together with a building was treated as a single unit, but when the building possessed substantial value, it was placed in a different category and compensated separately. The Court concluded that this classification bore a reasonable relation to the rehabilitation objective, because the three categories—urban dwellers, rural dwellers with integrated buildings, and rural dwellers with independent substantial buildings—required distinct treatment for the purpose of resettlement on new lands and for the payment of compensation.
Finally, the Court stated that it could not be seriously contested that a house situated in a rural area and a house situated in an urban area should not be treated identically. The petitioners’ real grievance, however, concerned the distinction made between houses in rural areas. The Court emphasized that it was necessary to determine what constituted a “substantial” building and that a clear line must be drawn to differentiate substantial from unsubstantial structures.
The Court considered whether the classification of rural houses had been made arbitrarily and without any sound basis. It observed that it might seem odd to treat a property valued at Rs 9,999 in one instance or Rs 19,999 in another as a building of unsubstantial character, and it might also appear unreasonable to allow the size of the land – for example four acres in one case and a larger acreage in another – to influence the determination of whether the building is substantial. While such observations could be used to support a claim of discrimination, the Court noted that the situation was unprecedented because a very large number of persons had been uprooted from their homes and required rehabilitation. This circumstance required that all displaced persons receive equitable treatment and that the available evacuee properties remaining in India be distributed fairly. To reduce the heavy burden of rehabilitation, an Inter‑Dominion adjustment was undertaken, and the two Dominions entered into an agreement that was presumably based on the relevant circumstances concerning the treatment of rural house property. The Court held that the reasonableness of the classification could be judged only after taking into account these surrounding circumstances and the conditions that prevailed at the time. It further stated that the existence of compensation in every case formed part of the basis for the classification, and that Rules 57 and 97‑A framed under Act 44 of 1954 provided a reasonable justification for the method of classification.
Under those Rules, every displaced person who settled in a rural area was allotted a house together with land; where a house could not be provided in the same village, the allottee received a site and a building grant. If a claimant’s request for a house was rejected, a rehabilitation grant was provided instead. The impugned provisions, however, allowed separate compensation for a rural house whose value exceeded a prescribed limit. The Court therefore concluded that the classification was not arbitrary, but was founded on sound principles and equitable considerations. A clear distinction was drawn between a rural house that formed part of the land holding and a rural house that was an independent unit, and different rehabilitation principles were applied to address the differing situations. The potential hardship caused by dividing houses into two categories was mitigated by offering the claimant who fell on the unfavorable side of the line either a rural house or a rehabilitation grant. The Court rejected the attack on the classification on the ground of a lack of intelligible differentia. It referred to Appendix XI of the Land Resettlement Manual prepared by Mr Tarlok Singh, which illustrated the principles for allotting rural evacuee houses and described the elaborate marking system used to allocate either houses to land allottees or building sites with subsidies. The Court also noted that Rules 97 and 97‑A, made under Act 44 of 1954, contained detailed provisions for rehabilitation grants, including grants to agricultural land allottees whose claim for rural property had been rejected or who had refused to take the land allotted to them.
The Court observed that rule 57, which had been cited earlier, expressly provides for the allocation of building sites together with a monetary subsidy for the construction of houses. By noting this dual provision, the Court explained that the rule therefore addresses the needs of allottees who might otherwise have to take the land that had been allotted to them without further assistance. The Court further held that because the rule offers both land and financial support for house building, it cannot be said that the regulation suffers from any infirmity on the ground of discrimination. Consequently, the Court concluded that the challenged provision was not arbitrary or unjustified, and that the grievance raised by the petitioners regarding unequal treatment had no legal foundation.
In the result, the Court held that the petition failed in law and therefore dismissed it. The dismissal was ordered to be accompanied by costs, which were to be borne by the petitioners. The final order of the Court expressly stated that the petition was dismissed, thereby bringing the proceedings to an end.