State of Andhra Pradesh Vs. Kannapalli
Chinna Venkatachalamayya Sastri [1962] INSC 117 (30 March 1962)
30/03/1962 WANCHOO, K.N.
WANCHOO, K.N.
AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR
P.(CJ) GAJENDRAGADKAR, P.B.
AYYANGAR, N. RAJAGOPALA
CITATION: 1962 AIR 1687 1963 SCR (1) 155
CITATOR INFO :
R 1978 SC 771 (61)
ACT:
Land-lord and a Tenant-Estate-Reduction of
rent of ryoti land--Whether unreasonable restriction-Madras Estates Land
(Reduction of Rent) Act, 1947 (Mad. XXX of 1947), s. 3(4)-Constitution of India
Art 19(1) (f).
HEADNOTE:
The Respondent, the sole inamdar of village
Chinnavenkatapuram in the Parlakimidi Zamindari in the District of srikakulam
filed a Writ Petition before the High Court challenging lnter-alia the
notification issued under s. 3 (4) of the Madras Estates Land (Reduction of
Rent) Act by which the rents in respect of ryoti lands included in his Estate
were reduced. He also challenged the provisions of the Act. The High Court
accepted the challenge to the notification on the ground that the net income
from rents was reduced to less than 25% of the original income and that the
reduction was so substantial as to amount to an unreasonable restriction on the
respondent's right to hold property under Art. 19 (1) (f ) of the Constitution.
On appeal by a certificate.
Held, that the provisions of the Act were
valid as they laid down reasonable restrictions in the interest of ameliorating
the conditions of tenants of ryoti land in 'Estates' who were at a disadvantage
compared to tenants of ryotwari lands.
Held, further, that it is only in a
theoretical case where a land-holder would be virtually' deprived of his income
by the reduction of rents that it can be said that the reduction was
unreasonable. By the reduction the income of the Respondent was brought on a
par with that of the highest prevailing rents in ryotwari lands and so it
cannot be said that the reduction of rents made by the notification was
violative of the land holders' rights under Art. 19 (f ).
The method of comparing the rents prior to
reduction with the rents after reduction for the purpose of deciding the
unreasonableness of the restriction was not sound as not humane landholders but
those who were charging unconscionable rents would benefit thereby.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 242 of 1960.
Appeal from the judgment and order dated
September 11, 1957, of the Andhra Pradesh High Court in Writ Petition No. 201
of 1952.
R. Can-apathy Iyer, T. V. R. Tatachari, D.
Venkatappaya Sastri and P. D. Menon, for the appellants.
K. Bhimasankaram and T. Satyanarana, for the
respondent.
1962., March 30. The Judgment of the Court
was delivered by WANCHOO, J.-This appeal on a certificate granted by the Andhra
Pradesh High Court raises a question of the constitutionality of the Madras
Estates Land (Reduction of Rent) Act, No. XXX of 1947, as amended, (hereinafter
referred to as the Act) and a notification issued there under. The brief facts
necessary for present purposes are these. The respondent was the sole in amdar
of village Chinnavenkatapuram in the Parlakimidi zamindari in the district of
Srikakulam. The legislature the composite State of Madras passed the Act, which
came into force from January 7, 1948, to provide for the reduction of rents
payable by ryots in estates governed by the Madras Estates Land Act, No. 1 of
1908, approximately to the level of the assessments levied on lands in ryotwari
areas in the neighborhood and for the collection of such rents exclusively by
the State Government. The Act applied to all estates as defined in s. 3 (2) of
the Madras Estates Land Act. Section 2 provided for the appointment of a
special officer for any estate or estates for the purpose of recommending fair
and equitable rates of rent for the ryoti lands in such estate or estates and
laid down the procedure to be followed by the Special officer for 157 such
purpose, and gave power to the special officer to determine after necessary
enquiries the extent if any to which the rates of rent payable for each class
of ryoti lands should in his opinion be reduced and to fix the rates of rent
payable for each class of ryots after such reductions. Under a. 3, the special
officer had to submit a report after completion of his inquiry to the State
Government on the two points mentioned above and after considering the
recommendations of the special officer and the remarks of the Board of Revenue
thereon, the State government was empowered by order published in the gazette
to fix the rates of rent in respect of each class of ryoti land in each village
in the estate, and the order so passed by the State Government was to take
effect from the commencement of the Fasli year 1357. Section 3 (4) then
provided for the recovery of rents so fixed by the State Government and the
amount so recovered in respect of each year, after deducting therefrom the cost
of such recovery as may be determined according to the Rules to be framed and
also after deducting the peshkash, cesses and other moneys due from the
landholder to the State Government, was to be paid to the landholder. Section 3
(7) laid down that the landholder shall not be entitled to collect rents
thereafter. Sections 5 and 6 made special provisions with regard to religious,
educational and charitable institutions. Section 7 provided for the framing of
rules and sections 4, 8 and 9 made incidental provisions which are however not
material for our purposes.
In pursuance of the provisions of the Act a
notifications was issued by the State Government with respect to the estate of
the respondent fixing the rates of rent for various classes of ryoti lands in
the estate. In the case of wet and dry lands the rate was reduced to half of
the then existing rates and in the case of dry land (when agraharam well water
158 was used) the rate was reduced to one-sixth of the existing rate. Thereupon
the respondent filed a writ petition on March 21. 1952, challenging the above
notification. The first challenge was on the ground that the estate of the
respondent was not an estate within the meaning of the Madras Estates. Land Act
and therefore the Act was not applicable to it. Secondly, it was contended that
the reduction in the 'rents made by the notification was so drastic as to
result virtually in depriving the respondent of his right to hold and enjoy his
property, as the out goings were far in excess of the income after the
reduction in rents. Consequently, the notification amounted to an unreasonable
restriction on the right of the respondent to hold property under Art. 19 (1)
(f) of the constitution.
The petition was opposed on behalf of the
State and it was contended that it was incorrect to say that the outgoings were
more than the income after the reduction of rents made by the impugned
notification. It was pointed out that after meeting the cess, the quit-rent and
ten per centum for collection charges, the respondent would have a net income
of Rs. 603/and the reduction in the circumstances could not be said to be so
drastic as to virtually deprive the respondent of his right to hold property under
Art. 19 (1) (6).
When the matter came to be argued before the
High Court, three points were raised by the respondent, namely, (i) that the
village in dispute was not an estate, (ii) that even if it was an estate the
notification under the Act offended Art. (19) (1) (f) of the Constitution
because of the drastic nature of the reduction, and (iii) that the Act itself
was ultra vires for the reason that it was contrary to the terms of Art. 31 of
the Constitution and s. 299 of the Government of India Act, 1935. The third of
these contentions, though it was not raised in the petition by the respondent,
was eventually referred to a Full 159 Bench and the question put to the Full
Bench was in these terms:"Whether the decision in Rajah of Bobbili V. State
of Madras (1) insofar as that Madras Act XXX of 1947 does not offend against
section 299 of the Government of India Act, 1935, is good law?" It may be
mentioned here that the Act was challenged soon after it was passed by the
Rajah of Bobbili on various grounds one of which was that the Act was bad as it
contravened s. 299 (2) of the Government of India Act. This challenge to the
Act was repelled by the Madras High Court in the case of Rajah of Bobbili(1)
and it was held that mere reduction of rent was not acquisition of property
within the meaning of s. 299 (2) of the Government of India Act and the effect
of the Act was held to be that the landholder continued to be the owner of the
estate as before, his title being left untouched. It was further pointed out
that it was the tenant who was entitled 'to possession, the right of the
landholder being only to recover rent and that right again was left unaffected
by the legislation, the only change being that the collection of rent was to be
made not by the landholder but by the Government. Further though the learned
Judges in Rajah of Bobbili's case (1) were apparently of opinion that the
acquisition contemplated by s. 299 (2) of the Government of India Act was
acquisition of title, they went on to say that even assuming that s. 299 (2) of
the Government of India Act, covered cases of possession, there was no such
taking of possession in the case before them tinder the Act as would attract
that provision.
The reference to the Full Bench in the High
Court was due to the challenge to the narrow view of the word
"acquisition" which was said to have been taken in Rajah of Bobbili'8
case (1) in view of (1) (1952) 1 M.L.J. 174.
160 certain later decisions of this Court.
Eventually, however, the Full Bench held that even if a wider interpretation
was given to the word "'acquisition' as used in s. 299(2) of the
Government of India Act, there was no deprivation of the property of the
landholder by the Act within the meaning of s.299(2) and therefore the decision
in the Rajah of Bobbili's case (1) was still good law. The Full Bench also held
that the provisions of the Act only regulated the relationship of landholder
and tenant and as there was no acquisition by the Government even in the wider
meaning to be given to the word "acquisition" in s. 299(2) of the
Government of India Act, the Act was not hit by Art.
19(1)(f) and was a reasonable restriction on
the right to hold property and in the interest of the general public.
The Full Bench further held that, though
prima facie .the reduction of rents to the ryotwari level could not be said to
be unreasonable, the view expressed in the Rajah of Bobblli's case (1) that if
in a particular case the result of the reduction of rates of rent had the
effect of total or substantial deprivation of the landholder of his net income
it would offend Art. 19(1)(f) of the Constitution.
After this opinion of the Full Bench, the
matter was again placed before a Division Bench, for final decision. At that
stage it seems that the point that the village in dispute was not an estate was
given up and the only point urged was that the reduction was so drastic as to
amount to an unreasonable restriction on the fundamental right to hold property
under Art. 19(1)(f). The learned Advocate General placed before the Bench the
effect of the reduction based on the notification of June 27,1950. It was found
that prior to the reduction the net income of the respondent was Rs. 3,875/-,
and after the reduction his net income was reduced to Rs. 457/13/8. It was
urged by'. the learned Advocate General that the respondent was getting the
rent at the highest rate prevalent inthe ryotwari (1) (1952) 1 M.L.J. 174.
161 areas of the district and that it could
not be said that the reduction of rates of rent to the level of the highest
ryotwari rate was an unreasonable restriction on the right of the respondent to
hold property. The Bench, however, observed that though ordinarily the
reduction of rates of rent of the ryotwari level might be reasonable, there
might be circumstances in a particular case to hold that the.
reduction was so drastic that it would be an
unreasonable restriction. It was observed that the State might reduce the rent
to such a level after deducting the legal charges and the cost of collection fixed
on an arbitrary basic that there might be nothing left to the landholder. In
such a case in the name of regulation of rents and collection thereof the State
took away the grain and gave the husk to the landholder. The Bench then added
that though it was easy to state the principle it was difficult to apply it to
the facts of each case. It then :went on to consider the circumstances under
which it could be held that reduction was so drastic that the landholder was
substantially deprived of his income., and was of opinion that having regard to
the object of the Act, if the income of the landholder after reduction of rents
did not fall below 25 per centum of his previous income it could be held that
the reduction was not an unreasonable restriction on the right to hold property
enshrined in Art. 19 (1) (f). As in this case, however, the income of the
respondent fell far below 25 per centum of the income which be was getting
before the reduction, the Bench held that the notification was bad.
Thereupon the State Government asked for a
certificate to appeal to this Court, which was granted; and that is how the
matter has come up before us.
So far as the constitutionality of the Act is
concerned, there was no serious challenge to it by the respondent. If one refers
to the main provisions of the Act relating to reduction of rents 162 which we
have already set out above, it will appear that the object of the Act was to
put a check on rack-renting in estate as defined in the Madras Estates Land
Act. As such agricultural tenants formed a considerable group of cultivators in
the State, it was thought necessary to ameliorate their condition. The Act was
therefore enacted under the powers conferred on the provincial legislature
under item 21, of List II of Schedule VII to the Government of India Act
dealing with land. It provided for reduction of rent to the level at which the
rents prevailed in the neighbouring area where there was ryotwari settlement.
In these circumstances it cannot possibly be said that the reduction of the
prevailing rents to the ryotwari level was an unreasonable restriction on the
right of the landholder of an estate to hold property under Art. 19 (1) (f). We
must therefore hold that the Act is constitutional and lays down reasonable
restrictions on the right of the landholder to hold his estate.
The attack based on reading the term
',acquisition" in s.299 of the Government of India Act, 1935 in the wide
sense of any interference with property even when the title thereto does not
pass to the State, which was the point debated before the Full Bench is no
longer a live issue since the matter is concluded against the respondent by the
decision of this Court in Guru Dutt Sharma v. State of Bihar (1).
This brings us to the main point that has
been argued before us by counsel for the parties. It is urged on behalf of the
appellant that the High Court was wrong in holding that where the reduction is
such that the previous net income is reduced below 25 per centum there would be
an unreasonable restriction on the right to hold property, merely because of
this circumstances It is said that the fixation of this percentage at 25 per
centum is more (1) [1962] 2 S. C. R, 29 163 or less arbitrary. In any case it
means that where a landholder had been successful enough previously to practice
rack-renting as an art and to increase the rents of his tenants unconscionably,
he would get protection because in such a case it was likely that the reduction
would be drastic and may even result in the reduced net income being less than
25 per centum of the previous net income. On the other hand in the case of a
landholder who was a humane person and did not increase his rents
unconscionably, the reduction of 'rents on the basis of the same rate which
might be used in the case of the former landholder who was a rack-renter may
not be hit because in his case the reduction may not be below 25 per centum. So
it is urged that if the reasonableness is to depend upon by how much the
previous net income is reduced after the reduction, it will always work in
favour of a landholder who was a rack-renter even though the basis of reduction
may be on the same rates in the case of a rack-renting landholder and in the
case of a humane landholder. Therefore, it is urged that if the reduction is
reasonable in the case of a humane landholder because it is brought into line
with the prevailing rates of rent in the neighbouring areas under the ryotwari
settlement, there is no reason why such reduction should not continue to be
reasonable in the case of the other landholder. The fact that in one case the
reduction may not be below 25 per centum while in the other case it may go
below 25 per centum will make no difference to the reasonableness of the
reduction, for in either case the basis of the reduction is the same. We are of
opinion that there is force in this argument and it must be accepted. What we
have to see is whether the Act when it provides for reduction of rent proceeds
on a reasonable basis i.e. whether the reduction of rent to the level of the
prevailing rent for the same class of land in the neighbouring areas where
ryotwari settlement prevails is reasonable. This in our 164 opinion is a
reasonable basis on which the rent in estates covered by the Madras Estates
Land Act can be reduced. Once this basis is accepted 'as reasonable, we fail to
see how the ratio between what the landholder was getting before the reduction
and what he gets after the' redaction will' make what is per se reasonable into
an unreasonable restriction.
Theoretically. it may be possible to say that
the reduction may be so much that nothing may be left to the landholder.
This is what the respondent tried to make out
in his writ petition, for his case therein was that the rents were so far
reduced in his case that instead of getting an income of Rs. 3,875/he would be
getting no income at all and would be actually suffering a net loss of Rs. 655/by
his holding the estate after reduction of rents.' This of course has been found
by the High Court to be incorrect and in actual fact the landholder is left
with a net income of Rs. 457/and odd after the reduction in rent. Therefore.
except for the theoretical possibility where the landholder may be left with
nothing on reduction of rents, it cannot be said from the mere fact that in
some cases the ratioof net income falls after reduction of rent as compared to
the net income before reduction below 25 per centum that the restrictions
imposed by the Act are unreasonable. , Actually 'we feel that there cannot
possible be any case where after the reduction there will be nothing left to
the landholder. We cannot therefore agree with the High Court that simply
because in a particular case the net income after reduction falls below 25 per
centum of the net income before reduction the notification which results in
such a position, is an unreasonable restriction on the right of the land-holder
to hold his estate. As we have said already, the ratio by which the net income
will fall after reduction will depend upon whether the landholder whose rents
are being reduced was a rack renter or humane person; in the case of a
rack-renter the 165 fall may be heavier while in the case of a humane person
the fall may be less. But if the basis on which the, reduction is made is the
same in both cases and is reasonable, we see no reason for holding that a
notification which may in a given case result in a fall of the net income which
is even below 25 per centum of the previous net income would necessarily be bad
as an unreasonable restriction on the right of the landholder to hold his
estate. It is important in this connection to remember that the rent allowed to
the respondent compares favorably with the highest rent payable by the ryotwari
tenants in the locality. Therefore, the basis on which rents are being reduced
under the Act being good and reasonable the result of such reduction would not
make the notification in a particular case bad except where that theoretical
case is reached where there is no income left to the landholder after reduction,
which in our opinion is impossible. We therefore allow the appeal and setting
aside the order of the High Court dismiss the writ petition with costs
throughout.
Appeal allowed.
Back