Town planning reservations and land sale are valid, but lapsed development-plan reservations cannot be revived under the scheme.

Town planning legislation falls within the State's legislative competence and may validly provide for reservation, reconstitution, allocation of land and sale of a limited extent of land as part of an integrated planning scheme. A compensation mechanism different from the Land Acquisition Act does not, by itself, violate Article 14 or Article 300A, because Article 300A requires authority of law, not a particular compensation model. However, a town planning provision cannot be construed to revive land reservations that had already lapsed under the final development plan for non-acquisition under Section 20(2); such land remains outside the impugned clause and must be acquired, if at all, under the Land Acquisition Act.

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Issues: (i) Whether the impugned amendment to the town planning law was beyond the legislative competence of the State Legislature; (ii) Whether the impugned provision violated Article 14 and Article 300A by enabling reservation of land for town planning and sale without compensation under the Land Acquisition Act; (iii) Whether land already dereserved under the final development plan by reason of non-acquisition under Section 20(2) could again be reserved under Section 40(3)(jj)(a) in a town planning scheme; (iv) Whether Section 40(3)(jj)(a)(iv) was constitutionally valid.

Issue (i): Whether the impugned amendment to the town planning law was beyond the legislative competence of the State Legislature.

Analysis: The subject of town planning and urban development was held to fall within the width of Entry 18 of List II and Entry 20 of List III. The relevant entries were to receive a liberal construction, and a town planning statute could validly provide for acquisition, reservation, reconstitution and allocation of land as incidents of social and economic planning. The substituted provision merely prescribed outer limits for land allocation within town planning schemes and operated as an ancillary part of the planning legislation.

Conclusion: The amendment was within legislative competence and the challenge on that ground failed.

Issue (ii): Whether the impugned provision violated Article 14 and Article 300A by enabling reservation of land for town planning and sale without compensation under the Land Acquisition Act.

Analysis: The scheme under the Act contemplated a distinct method of planning, reconstitution and compensation, including valuation as on the date of declaration of intention to make the scheme. The fact that compensation under the town planning law differed from compensation under the Land Acquisition Act did not by itself make the law arbitrary or unreasonable. Article 300A required authority of law, not necessarily compensation on the Land Acquisition Act model, and the challenge based on alleged illusoriness of compensation was rejected.

Conclusion: The provision did not violate Article 14 or Article 300A and the challenge failed.

Issue (iii): Whether land already dereserved under the final development plan by reason of non-acquisition under Section 20(2) could again be reserved under Section 40(3)(jj)(a) in a town planning scheme.

Analysis: Section 40 had to operate subject to the final development plan and in harmony with Section 20. If land reserved or designated in the final development plan had lapsed by non-acquisition within the period contemplated by Section 20(2), the same land could not be indirectly re-reserved under a town planning scheme so as to defeat the lapse. Any land already dereserved would fall outside the sweep of the impugned clause and, if needed for acquisition, would have to be acquired under the Land Acquisition Act.

Conclusion: The impugned clause could not be applied to land covered by the lapse under Section 20(2), and it operated only for land not already dereserved.

Issue (iv): Whether Section 40(3)(jj)(a)(iv) was constitutionally valid.

Analysis: The provision allowing 15% land for sale by the Appropriate Authority was treated as part of the town planning mechanism and not as a mere revenue-raising device. The proceeds were statutorily directed to infrastructural facilities, making the provision ancillary to the planning scheme and consistent with the Act's object. It therefore did not suffer from constitutional infirmity.

Conclusion: Section 40(3)(jj)(a)(iv) was upheld as valid.

Final Conclusion: The amendment was sustained in principle, but its operation was confined by the requirement that it could not be used to revive reservations that had already lapsed under Section 20(2); on that interpretation, the petitions succeeded to that limited extent.

Ratio Decidendi: A town planning statute may validly reserve land for public purposes and for sale to fund infrastructure as an incident of economic and social planning, but it cannot be construed to nullify a statutory lapse of reservation already brought about by non-acquisition under the final development plan.

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