Vivian Joseph Ferreira & ANR Vs.
Municipal Corporation of Greater Bombay & Ors [1971] INSC 301 (4 November
1971)
SHELAT, J.M.
SHELAT, J.M.
SIKRI, S.M. (CJ) DUA, I.D.
ROY, SUBIMAL CHANDRA MITTER, G.K.
CITATION: 1972 AIR 845 1972 SCR (2) 257 1972
SCC (1) 70
CITATOR INFO :
R 1972 SC1982 (47) R 1976 SC 670 (24) RF 1987
SC1527 (21)
ACT:
Constitution of India, 1950, Articles 14 and
19(1) (f)--Bombay Building Repairs and Reconstruction Board Act, XLVII of
1969--Ss. 27, 28, 29--Enactment to solve housing problem in the city and the
danger arising from collapse of old buildings--Tax on all residential buildings
occupied by tenants at the time of the commencement of the Act--Classification
of buildings according to age and type of construction--Varying percentage of
the rateable value of buildings charged as basic levy--Constitutional validity
of.
Bombay Building Repairs and Reconstruction
Board Act XLVII of 1969--Constitutional validity of.
Taxing Statute--Principle for determination
of the validity of.
HEADNOTE:
The Bombay Building Repairs and
Reconstruction Board Act, XLVII of 1969 was brought into force on October 1, 1969. It was enacted as a temporary measure and was to expire on December 31, 1970. The preamble of the Act recites collapses of residential buildings,
acute shortage of housing accommodation and the problem of law and order
arising from the increasing influx of persons into the city of Bombay in search of work as having necessitated its enactment. It also recites the
recommendations, suggestions and objections received by the government in
response to the proposals made by it and its conclusion after considering them,
as to the necessity for establishing a Board to deal with the problems. The Act
is confined to residential buildings occupied by tenants at the time of the
commencement of the Act. Section 28 cls. (a) to (J) exempts buildings
exclusively occupied by the owners, buildings exclusively used for
non-residential purposes, buildings exclusively occupied on leave and licence,
open land not built upon, buildings vesting in or leased to cooperative
societies and buildings which might be erected after the commencement of the
Act. Section 27 provides for the levy of tax on buildings and lands, save those
exempted under s. 28, at rates of percentum of the rateable value of the
properties as laid down in the Schedule to the Act, Section 29 divides the
buildings so taxed into categories A, B and C. Buildings built prior to
September 1, 1940 fall into category A; those built between September 1, 1940
and December 31, 1950 fall into category B; and those built between January 1,
1951 and the date on which the Act was brought into force fall into category C,
Varying percentage of the rateable value of the buildings is charged as a basic
levy and at a higher rate when any such building is structurally repaired. The
Act thus makes three kinds of classifications namely, (1) by confining the tax
to the residential tenanted buildings it classifies buildings which are used
for residential purposes and are tenanted, from the rest; (2) by confirming the
tax to such existing building it classifies them from those built after the
date on which the Act is brought into force and (3) by dividing those which are
liable to tax into three categories according to the three periods in which
they were constructed. The amount recovered under the levy 258 is to be first
credited to the Consolidated Fund of the State, and, thereafter, to be
transferred by a suitable appropriation to the fund designated as the Bombay
Building Repairs and Reconstruction Fund. An owner who is required to pay the
tax pays only 10% of the rateable value of .the building and is entitled to
recover the balance from the tenant by making a corresponding increase in the
rent payable by such tenant. During the life of the Act such an owner is not
bound to keep the premises let in good and tenantable repair.
Owners of two residential buildings in the
city of Bombay neither of which was, by reason of its having been recently
constructed, either dilapidated or in dangerous condition challenged the
constitutionality of the Act on the grounds (i) the tax amounted to
unreasonable restriction and could not be said to be for a public purpose in
that it benefited neglectful and defaulting owners, and, therefore, violated Art.
19(1)(f) of the Constitution; (ii) the Act was discriminatory and, therefore,
infringed Art. 14 because, (a) the classification of buildings into three
categories and imposition of different rates of tax was not based on any
rational principle; and (b) the exemption given to buildings under cls. (g),
(h), (i) and (i) of s. 28 and the classification between buildings constructed
before the Act and those constructed thereafter was irrational without being
founded on any principle.
HELD : The Act is valid and the petitions
unsustainable.
(1) The principles arising from the decisions
of this Court wherein the question of validity of taxing statutes have arisen
are : (i) in order that a tax may be valid it must be, first, within the
competence of the Legislature imposing it, secondly, it must be for a public
purpose and thirdly, it should not violate the fundamental rights guaranteed by
Part III of the Constitution. (ii) a taxing statute is as much subject to Art.
14 as any other statute; but in view of the inherent complexity of fiscal
adjustment of diverse elements a larger discretion has to be permitted to the
legislature for classification so long as there is no.
transgression of the fundamental principle
underlying the doctrine of classification; (iii) a taxing statute is not
invalid on the ground of discrimination merely because other objects could have
been, but are not taxed by the legislature; (iv) when a statute divides the
objects of tax into groups or categories so long as there is equality and uniformity
within each group the tax cannot be attacked on the ground of its being
discriminatory; and (v) the mere fact that a tax falls more heavily on some in
the same group or category is by itself not a ground for its invalidity.
[268 E-269 D] K. T. Moopil Nair v. State of
Kerala, [1961] 3 S.C.R. 77, Raja Jagannath v. U.P., [1963] 1 S.C.R. 220, East
India Tobacco Co. v. Andhra Pradesh, [1963] 1 S.C.R. 404, Khandige Sham Bhatt
v. Agricultural income-tax Officer, [1963] 3 S.C.R. 809, Andhra Pradesh v.
Nalla Raja Reddy, [1967] 3 S.C.R. 28, Ravi Varma v. Union of India. [1969] 3
S.C.R.
827, and Twyford Tea Co. Ltd. v. State of
Kerala, [1970] 3 S.C.R. 282, referred to.
Where the object of a tax is directly
private, indirect and incidental benefits which may result to the public do not
make a public purpose. But the purpose of a tax would not be regarded as
private merely because some persons might receive more benefits from the use of
its proceeds than others or, is imposed for a purpose other than revenue.
But. the principle that funds raised by
taxation cannot be expended for private use does not prevent the legislature
from looking at the ultimate rather than the immediate result of the
expenditure, and incurring an expense 259 or creating a liability on the part
of the public which it was under no constitutional obligation to incur or
create if the ultimate effect will be beneficial to the public. The fact that a
statute authorising an expenditure of public tunas for a public purpose may
foster another enterprise which is not a public one does not invalidate the
statute if the purpose of the expenditure is legitimate because it is public.
The test is not as to who receives the money but the character of the purpose
for which it is expended. What is to be borne in mind is the distinction
between the purpose and the method of its implementation. [272 B-E) Cooley on
Taxation (4th ed.), Vol. 1, Ch. 4, Arts. 174 to 221; American Jurisprudence
Vol. 51, paras 321 and 329.
lbid, para 330 at p. 381; and Carmichael v.
Southern Coal a Coke Co. 81 L. Ed. 1245 and American Jurisprudence, Taxation,
Vol, 51 para 353 at 396.
The incidence of tax may fall upon a class or
individuals who derive no benefit from its expenditure or who are not
responsible for the mischief to remedy which the tax is imposed.. Besides, in
the present case the doctrine of benefits cannot apply first, because the cess
goes directly to the Consolidated Fund and, secondly, because the legislature
has the power to authorise expenditure out of the consolidated fund on any
public purpose. [272 G] Carmichael v. Southern Coal & Coke Co., 81 L. ed
1245, at pp. 1261 and 1265, referred to.
Both the purpose of the tax and its use are,
without doubt, for public purpose., The purpose is to prevent collapses and the
suffering they must cause. The use is for preservation and prolonging the life
of the buildings existing at the date of the enactment. if, in implementing the
purpose, which is demonstrably public, some benefit reaches particular
individuals, the statute which does not directly purport so to do, cannot be
invalidated. [273 C] (ii) When a combination of various factors raised problems
which are of imminent concern to the state as well as the municipal
authorities, if the legislature took a policy decision to give priority to the
residential tenanted premises, in respect of which in its opinion, the danger
was graver and imminent no challenge to the division between residential and
non-residential premises can be sustainable particularly when dealing with a
part of the problem and confining its treatment to residential premises only
was considered feasible. In the light of the studies undertaken by the
government and the corporation if legislature thought it best to preserve and
prolong the life of existing structures no challenge on the ground of
discrimination or arbitrariness can legitimately be made. Therefore the
classification of residential premises from the rest and that between those
existing at the time when the Act was brought into force from the new ones which
might be built thereafter can be regarded as based on intelligible differentia
and related to the objectives and their feasibility which the legislature bad
in mind while undertaking the questioned legislation. [275 A-G] The
classification of buildings into three categories is based on their age and the
construction current during the period of their erection. It is therefore based
on intelligible differentia and is closely related to the objects of the
legislation. There is, therefore, no question of unequals being treated as
equals as each building in respect of which the tax is payable falls within the
surveillance of the Board and has to be structurally repaired if the need were
to arise. Further, the tax is payable on 260 the rateable value of each
building which differs from building to building and it is distributed between
owners and the tenants, the former bearing 10% of it only. [275 H, 276 C, 277D]
The grievance that individual tax-payers get more or less return from the tax
proceeds would not be a sustainable ground for a challenge against its
constitutional validity.
The primary object of the Act is not to
repair all buildings subject to cess but to prevent the annually recurrent
mischief of house collapses and the human tragedy and deprivations they cause.
The tax being thus levied to prevent such disasters, there is no question of
unequal treatment between one class of owners and another. [276 F] Moopil Nair
v. State of Kerala, [1961] 3 S.C.R. 77, New Manck Chowk Spinning & Weaving
Mills Co. Ltd. v. Municipal Corporation of the City of Ahmedabad, [1967] 2
S.C.R. 679 and Railroad Retirement Board v. Alton Railroad Co., 79 L.ed. 1468,
held inapplicable.
The buildings in each of the categories
exempted under s 28, form a distinct class by themselves., Buildings in cls.
(a) to (f) are buildings to which Rent Act does not apply and therefore the
considerations for which the cess is levied do not apply to them. Buildings
used for nonresidential purposes do not fall within the scope of the Act and therefore
had to be excluded from the levy of the cess, Buildings vesting in or leased to
cooperative societies form a class by themselves and cannot be equated with
buildings built by individuals. The relation between a society and its members
are not the same as those between landlords and tenants and besides, there is
considerable control by the registered over .the administration of the funds of
the societies and overall supervision over their affairs. The premises occupied
by licences form a distinct class by themselves, and could not have been lumped
together with tenanted premises without the danger of a challenge under Art.
14. The circumstances which led to the imposition of the cess do not apply to
premises in the occupation of licensees because such licensees have no rights
such as the tenants have, namely, irremovability and the freezing of rents, and
the consequential reluctance or inability of the landlords to maintain their
premises tenantable repairs. If buildings used for non-residential purposes on
the basis of leave and licence are validly treated differently, buildings, if
used partly for one and partly for another such purpose or purposes can also be
similarly treated provided that no part or parts thereof are occupied or used
for a purpose other than those specified in the three clauses. Since these
buildings form separate classes by themselves from the tenanted residential
premises, the provisions for exempting them cannot be held as violative of the
equal protection clause. [277 F-278 G]
ORIGINAL JURISDICTION : Writ Petitions Nos.
187 and 188 of 1970.
Petition under Art. 32 of the Constitution of
India for enforcement of the fundamental rights.
S. J. Sorabjee and B. R. Agarwala, for the
petitioner (in both the petitions).
M. C. Bhandare, P. C. Bhartari, J. B.
Dadachanji and 261 Ravinder Narain, for respondent no. 1 (in W.P. No. 187 of
1970).
P . C. Bhartari, J. B. Dadachanji and
Ravinder Narain, for respondent no. 1 (in W.P. No. 188 of 1970).
M. C. Setalvad, P. K. Chatterjee and B. D.
Sharma, for respondent no. 3 (in W.P. No. 187 of 1970).
M. C. Bhandare and B. D. Sharma, for
respondent no. 3 (in.
W.P. No. 188 of 1970).
S. J. Sorabjee, R. D. Diwan and 1. N. Shroff,
for the intervener(in W.P. No. 187 of 1970).
The Judgment of the Court was delivered by
Shelat, J. These petitions by owners of two residential buildings, in the city
of Bombay, neither of which is, by reason of its having been recently
constructed, either dilapidated or in dangerous condition, challenge the
validity of the Bombay Building Repairs and Reconstruction Board Act, XLVII of
1969.
The preamble of the Act recites collapses of
residential buildings, acute shortage of housing accommodation, and the
problems of law and order arising from the unceasing influx of persons into the
city of Bombay in search of work as having necessitated its enactment. It also
recites the recommendations, suggestions and objections received by Government
in response to the proposals made by it and its conclusion after considering
them as to the necessity for establishing a Board to deal with the said
problems by carrying out structural repairs to dangerous buildings, by
acquiring and reconstructing buildings which are beyond repair and by providing
for the rehousing of occupiers, who, because of such repairs would be
dishoused, and to provide for the temporary levy of an additional cess on
buildings and lands to meet the expenditure for the aforesaid purposes. The Act
was brought into force on October 1, 1969 and the cess payable thereunder
became operative as from November 1, 1970.
The Act by s. 1(4) is declared to be a
temporary one and' would expire on December 31, 1979. Structural repairs are
defined by s. 2 (s) as meaning repairs or replacement of decayed, cracked, or
out of plumb structural components of a building or any substantial part
thereof or any part to which the occupiers have common access, by new ones of
the like materials, or of different materials including change in the mode of
construction such as converting load bearing wall type or timber framed
structure to an R.C.C. one, which repairs or replacement, if not carried out
expeditiously, may result in the collapse of the building or any262 part
thereof. Ss. 3 and 4 provide for the establishment and composition of the
Bombay Building Repairs and Reconstruction Board. Ss. 21 and 22 lay down the
duties, powers and functions of the Board including the power to carry out
structural as also tenantable repairs, to move the State Government to acquire
old and dilapidated properties in respect of which the cess is levied and
which, in the opinion of the Board, are beyond repair and to reconstruct new
buildings thereon, to establish transit camps to temporarily accommodate
persons dishoused and to demolish dangerous and dilapidated buildings incapable
of being repaired at reasonable cost. S. 27 provides that subject to the
provisions of S. 28 there shall be levied a tax on buildings and lands called
the Bombay Buildings Repairs and Reconstruction Cess at the rate of so many
percentum of the rateable value of the concerned property as is prescribed
therefor under the Schedule to the Act. Sub-s. 4 of s. 27 provides that the
share of the owner shall be 10 per cent.
of the rateable value of the property and
confers a right on such owner to recover the balance from the tenant by making
a proportionate increase in rent and recovering it as such.
S. 28 ,,enumerates various classes of
buildings which are exempted from the enforcement of the levy. S. 29 lays down
three categories of buildings to which the Act applies. The Schedule to the Act
provides different rates at which buildings falling in each category would be
subject to the cess. The Schedule also provides in respect of each category of
buildings different rates at which the cess would be payable if structural
repairs are carried out to such building. The proceeds of the cess would be
first credited to the ,consolidated fund of the State and thereafter under an
appropriation duly made by law in that behalf would be transferred to a fund,
the amount of which would be placed at the disposal of the Board for carrying
out its several functions. (S. 31). Lastly, s. 71 provides that in the case of
any building subject to the cess, the owner shall not be bound to keep the
premises let to any occupier in good and tenantable repair and accordingly S.
23 of ,the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 shall
be deemed to have been suspended and the provisions of the Transfer of Property
Act, 1882 relating thereto shall apply.
Counsel for the petitioners challenged the
validity of the Act principally under three heads : (1) that in the context of
the ,existing legislation, i.e., the Bombay Municipal Corporation Act, III of
1888 and the Bombay Rent Control Act, 1947, the imposition of a cess on
residential buildings, which are in sound and good condition, and which would
not require structural repairs for the entire period of the Act, amounts to an
unreasonable restriction, and therefore, violates Art. 19(1)(f) of the
Constitution; (2) that the Act is also violative of Art. 14, in that, it fails
to recognise the material differences between various buildings 263 with regard
to their physical conditions and treats unequals as equals; and (3) that the
exemption provided by S. 28 are arbitrary and without any principle, and
therefore, violate Art. 14. Counsel argued that by subjecting residential
buildings in sound condition to the cess, the Act in substance and effect provides
bounties for those owners who have been neglectful of their buildings and have
infringed requisitions issued to them by the Municipal Corporation.
Counsel for the respondents, on the other
hand, urged (1) that the imposition of the tax was by virtue of power under
Art. 246(3) read with entry 49 in List II of the Seventh Schedule of the
Constitution, and being for a public purpose cannot be challenged as an
unreasonable restriction, (2) that there is an intelligible classification of
the buildings and such classification having a rational nexus with the objects
of the Act and the mischief it seeks to avert, it is not challengeable on the
ground of its being discriminatory; and (3) that the exemptions in s. 28 are
provided for in the light of the objects and the scope of the Act and being in
consonance with them, S. 28 is not open to such a challenge.
The argument of Mr. Sorabji, however, was
that the cess amounted to unreasonable restriction and could not be said to be
for a public purpose, in that, it benefits neglectful and defaulting owners at
the cost of owners who have been looking after their properties and
consistently carrying out tenantable repairs, thus preventing their buildings
from being reduced to dangerous conditions. In this connection, he relied on
certain passages from Cooley on Taxation (4th ed.), vol. 1, American
Jurisprudence, vol. 51 on Taxation and the Commissioner, Hindu Religious
Endowments v.
Lakshmindra.(1) The argument was that the tax
was objectionable as it equated buildings in dangerous and dilapidated
conditions with those in good and sound condition, thus, laying down a
fictional equality in the teeth of factual and physical inequality. Counsel
relied for that argument on K. T. Moopil Nair v. The State of Kerala(2) and
urged that the tax should be declared invalid on the principles laid down
therein. He also argued that the classification of buildings into three
categories imposing different rates of tax was not based on any rational
principle as even recently constructed buildings and buildings not needing or
likely to need structural repairs were brought into the class of buildings
subject to the cess. There was next an assumption, he argued, not based on
realities, that a building constructed before a certain number of years would
need structural repairs although it has been kept in proper condition and
therefore not needing such structural repairs. A building constructed several
years ago might be in better condition if consistently taken care (1) [1954]
S.C.R. 1005,1040.
(2) [1961] 3 S.C.R. 77.
264 of than the one built later but not taken
care of, yet such a building, only because it was built earlier, is subjected
to a higher rate of tax. Sec. 27 and the Schedule created discrimination
between properties (a) inter se in the same category, (b) between buildings in
different categories, and (c) in imposing the same percentage, on buildings in
the same category though their actual conditions are totally different and also
between buildings in different ,categories. Thus, buildings in category A,
built say in 1900 and those built in 1939 are treated as equals. Even buildings
erected ,at about the same time need not be equal in condition, as, in the
,case of one tenantable repairs might have been consistently carried ,out or
structural repairs might have recently been carried out than the one in which
no such repairs, tenantable or structural, have so far been carried out. Even
if such a tax was necessary, its levy should have been made dependable on the
actual conditions of the buildings and after a survey of the necessity and the
extent of structural repairs required. Further, buildings in sound condition
and not needing structural repairs ought to have been exempted. The Act, thus,
does not take notice of the actualities in the sense that though a building
built in 1939 but wherein extensive repairs have been carried out in 1968 would
be a better building than another built in 1950, yet the former has to pay .the
tax at a higher percentage than the latter. The categorisation ,of the
buildings, therefore, was arbitrary and not based on any rational principle.
Counsel also attacked the exemptions given :to buildings falling under cls.
(g), (h), (i) and (j) of S. 28 as being irrational and without being founded on
any principle. Lastly, he urged that the classification between buildings
constructed before the Act and those constructed thereafter was not valid since
there was no nexus between the date fixed under the Act and the objects of the
Act. Even assuming that the Act were to be found to be valid, those buildings
which were sound in condition and were likely to remain so throughout the life
of the Act ,could be separated from the rest and a restraint against tax being
enforced in respect of them can be imposed. The attack against ,the validity of
the Act thus falls under two heads : (a) that the cess is not for a public
purpose as it results in bounties to owners whose buildings need structural
repairs at the expense of those whose buildings are sound and are not likely to
need any such repairs, and (b) that it suffers from arbitrariness and is
violative of Art. 14.
Before these contentions are examined it is
necessary to consider the background in which the Act was passed as that would
throw light upon the targets which the Legislature had in mind while enacting
it.
Prior to the last World War, buildings had
been one of the major investments in the city of Bombay. The cost of construction,
owing to the easy availability of building materials, was fairly reasonable and
the cost of upkeep and maintenance correspondingly low. It was then a tenant's
market as there was then no pressure of population on the city as it is now due
to rapid industrialisation, concentration of industries and other allied
reasons. The owners of properties then had sufficient incentives to keep their
properties in satisfactory repairs. The situation, however, was completely
reversed at the end of the last World War as the gap between the demand and
supply had by then widened at an alarming rate. The result was the emergence of
the Rent Control Act which froze the rent at the pre-war level and gave
security to the tenants by conferring on them the status of irremovability. The
building materials in the meantime became scarce, and consequently, with the freezing
of rents and the rising costs of materials, the incentive to maintain
properties in good repair gradually vanished. As the gap between demand and
supply of accommodation grew wider, the pressure on the existing premises
substantially increased. The situation got worsened by reason of the reluctance
of the owners of the buildings to maintain their properties in tenantable
repairs as they found carrying out the repairs uneconomical. A more
comprehensive Rent Control Act then replaced in 1947 the existing 1939 Act
which had by them, been found inadequate. But while it guaranteed to the
tenants security of tenancy rights it generated an increasing reluctance on the
part of the owners to invest any more capital on their buildings as that type
of investment was found to be less and less attractive.
One of the features of the city is that a
large percentage of the existing residential buildings in it had been
constructed several years ago. Being almost an island city with limited
construction space, the buildings had to expand vertically, a feature not then
prevalent in other cities.
These buildings were built on timber frames
as R.C.C.
construction had not then come into vogue.
Several of them had been built upto five or six storeys having mostly one or
two rooms tenements, each of which was habited by a large number of persons.
The saline atmosphere of the city coupled with the absence of repairs carried
out on this type of structures began to have its inevitable consequences.
Collapses of houses which were almost unknown
in pre-war days began to occur in increasing numbers till the figures rose to
about 125 on an average per year. These collapses had their toll in the loss of
human life, physical injuries to the residents of those buildings and the
dishousing of a large number of persons from amongst the teeming population
residing in them.
The problem became so alarming that the city
Corporation carried out in 1956 a comprehensive survey of buildings in all its
266 seven words. The survey was confined mainly to building used for
residential purposes. That was not due to the absence of likelihood of human
loss, suffering and deprivation of accommodation occurring in non-residential
premises, but presumably because the need for such a survey of residential
premises was found to be of a more urgent character. The survey revealed that
there were within the city 36,000 residential buildings, of which 17,490 were
built prior to 1905. The survey showed that residential buildings fell into six
categories, namely, 7.48% being buildings in steel or R.C.C. frame, 1.58% with
external masonry walls and steel or R.C.C. frame, 33% with timber frames, 42%
with external masonry walls and internal timber frames, 1% with masonry walls
and jackarch floors and 15% temporary tin sheds. The report further revealed
that of the said 17,490 buildings, (a) 5,081 of them had a future life of five
years only, (b) 3,549 a future life of six to ten years, (c) 3,286 a future
life of eleven to fifteen years, (d) 3,583 a future life of sixteen to twenty-five
years, (e) 1,716 a future life of more than twenty-six years, and (f) 275 in a
sound condition. Therefore, by 1969 when the impugned legislation was
undertaken, buildings in (a), (b) and (c) and partly in (d) classes had already
outlived the period of their survival. The total number of families living in
buildings which imminently required substantial repairs, if they were to
survive, came to 1,04,270, 80% of whom were occupying one room tenements.
The Report on the development plan for
Greater Bombay, submitted to the State Government in 1964, stated that out of
about seven lacs tenements in Greater Bombay as on March 31, 1961, 23% of them
containing 18,000 buildings would need extensive repairs in the next fifteen
years and about 1,000 of them would have to be immediately demolished. 10,000
buildings would have a life of about ten years, and 7,000 a life of fifteen
years.
With such a situation it was no wonder that
collapses of buildings became almost an annual occurrence particularly during
rainy seasons. In 1965, the State Government appointed the Bedekar Committee to
examine the problem. The Committee reported the following principal causes of
collapses;
1. Indifference of owners to repair due to
the freezing of rents, on the one hand, and the rise in the cost of building
materials, on the other;
2. Resulting leakages in sanitary blocks;
3. Failure to demolish buildings even where
they were incapable of being sustained with repairs only;
4. Overcrowding in the tenements, and the
consequent increasing pressure on sanitary services therein, and 267
5. Soaring land values tempting owners to let
their buildings collapse rather than continue to have them let out on frozen
rents.
Amongst the difficulties presented by the
current law, the Committee found one of them in the absence of an independent
agency to finance and execute repairs on behalf of owners or tenants who have
no means to carry them out even when otherwise willing to do so. Such was the
reluctance of the owners to invest capital in these buildings that though
18,000 notices for major repairs were issued by the Corporation since 1960,
only one third of them were complied with. The Committee also noted that
according to the Municipal engineering staff incharge of the several wards in
Greater Bombay, 386 buildings had already been declared unsafe and by 1970 and
1980 751 and 2416 more buildings would respectively be due for demolition.
Thus, a total of 3,600 buildings having about 2 lacs of people living in them
would be threatening collapse and would have either to be demolished or
repaired in time to prolong their lives. On the several recommendations made by
the Committee, one was to have a separate department to deal with problems
connected with the demolition of old structures, construction of new buildings
replacing old ones, and annual and special inspection of buildings. For
prevention of collapses it suggested, (a) timely demolition where collapses
were inevitable, (b) special repairs where it was possible to prolong the life
of old structures, (c) acquisition of old buildings and replacing them with new
ones, (d) provision for temporary transit accommodation for persons dishoused
in this process, and (e) encouragement to local bodies and housing cooperatives
to construct residential accommodation, since that was the only way of
augmenting residential premises.
The problem confronting the State Legislature
as appearing from these reports was that of the 17,490 buildings out of the
total 36,000 surveyed by the Corporation, barring only 1991 such buildings, the
rest of them would have outlived their lives by about 1980. On June 3, 1968 the
Government Published certain proposals for eliciting public opinion for a
legislation to prevent collapses and salvaging dilapidated structures. It was after
considering the recommendations, suggestions and objections received by the
Government that the impugned Act was brought before the Legislature. The Act
was confined to the problem of residential houses only.
That was not because there was no danger of
collapses of non-residential buildings, but because it was considered feasible
to deal with a limited problem, namely, that of residential Premises in respect
of which the distress was accuter As the Minister for Housing said during the
Passage of the bill. the intention of the Government was "to bit the evil
where it is 500SUP.CI/72 268 greatest". It is also clear that following
the reports, such as the survey report, and the report of Bedekar Committee,
the Act placed the residential buildings into three categories according to the
periods during which they were constructed and the construction in vogue during
those periods. The date, September 1, 1940, in respect of category A was chosen
as it was from that date that the rents were frozen under the Rent Control Act.
The life of the Act upto 1979 only,
restricting it to residential buildings only, their division into three
categories, the raising of the fund for implementing the purposes of the Act
from three agencies immediately concerned with the problem, the Government, the
Corporation and the owners and occupiers, the exemptions from the operation of
the Act in s. 28, all these emerge from the earlier investigations and reports
of which the Legislature and the Government were aware of. As aforesaid, the
mischief which the Legislature intended to avert applied also to
non-residential premises. But the Legislature was entitled to choose priorities
according to the degree of danger apprehended by it, and therefore, no
infirmity, constitutional or otherwise, can be attributed to such priority if
it chose a part of the problem which it thought should be dealt with
immediately, not because it was blind to the larger problem but because it
considered dealing with a part of it as feasible.
The question of validity of taxing statutes
has arisen before this Court in a number of cases. The principle emerging from
them is that in order that a tax may be valid, it is firstly, within the
competence of the legislature imposing' it, secondly, that it is for a public
purpose, and thirdly, that it does not violate the fundamental rights
guaranteed by Part III of the Constitution. The taxing statute is as much
subject to Art. 14 as any other statute.
(K. T. Moopil Nair v. Kerala(1), Raja
Jagannath v. U. P(2), East India Tobacco Co. v. Andhra Pradesh(8), Khandige
Sham Bhatt v. Agricultural Income Tax officer(4) and Andhra Pradesh V. Nalla
Raja Reddy(5). But in view of the inherent complexity of fiscal adjustment of
diverse elements a larger discretion has to be permitted to the Legislature for
classification so long as there is no transgression of the fundamental
principles underlying the doctrine of classification. (cf. Khandige Sham Bhatt
v. Agricultural Income Tax Officer (4) . These principles are that the
classification must be based on an intelligible differentia which distinguishes
persons or objects grouped together from others left out of the grout), and
that differentiamust have a rational nexus with the object of the statute. So
long as these principles are properly (1) [1961] 3 S C R. 77.
(4) [1963] S.C.R. 809.
(2) [1963] 1 S.C.R. 220.
(3) [1963] 1 S.C.R. 404.
(5) [1967] 3 S.C.R. 28.
269 followed in classifying persons or
objects for taxation, the power to classify must be wide and flexible so as to
enable the Legislature to adjust its system of taxation in all proper and
reasonable ways. (see Khandige Sham Bhatt v. Agricultural Income Tax Officer(1)
It is well recognised that a Legislature does not have to tax everything in
order to tax something. It can pick and choose districts, objects, persons,
methods and even rates of taxation as long as it does so reasonably(2). A
taxing statute is not invalid on the ground of discrimination merely because
other objects could have been, but are not taxed by the legislature.(Ravi Varma
v. Union of India (3)].
When a statute divides the objects of tax
into groups or categories, so long as there is equality and uniformity within
each group, the tax cannot be attacked on the ground of its being
discriminatory, although due to fortuitous circumstances or a particular
situation some included in a class or group may get some advantage over others,
provided of course they are not sought out for special treatment.
Khandige Sham Bhatt v. Agricultural Income
Tax Officer(1).
Likewise, the name fact that a tax falls more
heavily on some in the same group or category is by itself not a ground for its
invalidity, for then hardly any tax, for instance, sales tax and excise tax,
can escape such a charge. [Twyford Tea Co. Ltd. v. State of Kerala(4)].
Definition of taxation imply that a
legislature can impose a tax for public purpose only. A tax for purposes other
than public purposes would constitute taking of property without due process of
law within the meaning of the Fourteenth Amendment in the United States. It
would be objectionable in this country by reason of Art. 31(1) of the
Constitution("). Taxation, however, is, nonetheless, for public purpose
even if particular persons receive more benefit from the use of the tax
proceeds than others(6).
A perusal of the provisions of the Act makes
it clear that its objects were : ( 1 ) to preserve the residential and tenanted
buildings existing at the date of its enactment, (2) for that purpose, to set
up a special agency, the Bombay Buildings Repairs and Reconstruction Board,
whose duties and functions would be, (a) to undertake and carry out structural
repairs to buildings in respect of which the impugned tax is levied, (b) to
provide temporary or alternative accommodation to occupiers of any such buildings
where any such building collapses, (c) to undertake and carry out tenantable
repairs to buildings placed at its disposal, (d) to move the Government to
acquire old and dilapidited buildings in respect (1) [1963] 3 S.C.R. 809. (2)
Willis, Constitutional Law of the United States, 587.
(3) [1969] 3 S.C.R. 827. (4) [1970] 3 S.C.R.
282.
(5) Cooley on Taxation (4th ed.), vol. 1,
381, 382.
(6) Ibid, 392.
270 of which the cess is levied and which are
beyond repairs or buildings in which structural repairs have once been carried
out but further repairs are not possible, (e) to reconstruct new buildings, (f)
to set up transit camps for those dis-housed on account of collapses, fire,
rain or tempest, and (g) to undertake demolition of dangerous buildings or
portions thereof. These objects obviously were, fixed upon as a result of the
earlier studies undertaken by the Government and the Corporation and the
recommendations made by members of the public in answer to the proposals
published by Government in connection with collapses of residential buildings
and the tragic consequences following them.
To ensure implementation of these functions
and duties, the Act provides the levy of tax on buildings and lands, save those
exempted under s. 28, at rates of percentum of the rateable value of the
properties as laid down in the Schedule to the Act. Under S. 27 and the
Schedule the properties are grouped into three categories in respect of which
varying percentage of the rateable value of the buildings is charged as a basic
levy and at a higher rate where any such building is structurally repaired. The
three categories are formulated on two principles, the age of the buildings and
the type of construction in vogue during the periods when they were
constructed. These principles appear to have been adopted from the earlier
studies made at the instance of the Government and the Corporation. The amount
recovered under this levy is to be first credited to the Consolidated Fund of
the State, and thereafter to be transferred by a suitable appropriation to the
fund designated as the Bombay Building Repairs and Reconstruction Fund. (S.
31). For providing initial expenditure of the Board, the Government and the
Corporation have been empowered to make advances. (s. 48). The Act also provides
that the Government may and the Corporation shall make an annual grant of Rs.
1,00,00,000/each.
Two further provisions in this connection
need be noted.
The first is S. 27(4) under which an owner
who is required to pay the cess pays only 10% of the rateable value of his
building and is entitled to recover the balance from the tenant by making a
corresponding increase in the rent payable by such a tenant. Default by the
tenant gives him the right to sue for eviction under s. 12 of the Bombay Rent
Act, 1947, or, on intimation to the Municipal Commissioner, for recovery
thereof as arrears of tax due under the Bomay Municipal Corporation Act. The
second is that during the life of the Act such an owner is not bound to keep
the premises let to any occupier in good and tenantable repair and S. 23 of the
Bombay Rent Act is deemed to have been suspended and s. 108 (m) of the Transfer
of Property Act is to apply, which means that it is the obligation of the
tenant to keep the premises in tenantable 271 repairs. It is, however, true
that s. 5 8, as amended by Act 6 of 1971, saves the power of the Commissoner
under the Bombay Municipal Corporation Act to require the owner to carry out
repairs to such things as drains, water-closets, latrines etc., to pull down or
repair dangerous structures and to prevent causes of danger by such structures,
to stop nuisance caused by a leaking roof or by a ditch, tank etc.
or by collection of water, and also saves his
powers to enforce his orders to execute works, and the right of the occupier to
execute any such work in the event of default by the owner. The section also
saves the right in such an event of a tenant to execute such work required by
the Commissioner under s. 10-D of the Bombay Rent Act. This saving of cannot be
equated the powers of the Commissioner, however, with the obligation to carry
out tenantable repairs under s. 23 of the Bombay Rent Act or the right of the
tenant to carry out such repairs in the case of the landlord's default and to
reimburse himself to the extent of two months' rent.
Such being the scheme and the objects of the,
Act, can it be said that the cess imposed there under is not for a public purpose?
It may be that some of the existing buildings, by reason of their having been
recently constructed or their having been properly cared for or structural
repairs having been recently made therein, might not require repairs
contemplated by the Act. Yet, their owners are required to pay the cess from
out of which the Board would carry out structural repairs to buildings whose
owners have been neglectful or even defaulters in carrying out the Municipal
requisitions. Does it, however, follow from such a result that the purpose of
the Act is to confer bounty on such owners, and that therefore, the purpose of
the tax is to serve a private and not a public purpose, and therefore,
violative of Art. 19 (1) (f) ? The rule, no doubt, is that taxes can be levied
for public purposes and indirect and incidental benefits which may result to
the public do not make a public purpose, where the object is directly private.
But the purpose of a tax would not be regarded as private merely because some
persons might receive more benefits from the use of its proceeds than others or
is imposed for a purpose other than revenue, such as tarff duties for
encouragement of manufactures or licence fees with a view to regulate a
particular trade or industry.
A law, not only exempting from taxation the
limited means of poor and afflicted persons but providing public funds to
ameliorate their conditions, is undoubtedly one for public purpose. A clear
example of such a tax is the provision for hospitals and asylums where medical
and other aid is given to the poor and the dependent free of any charge. A tax
in aid of private enterprises would undoubtedly be regarded as 272 loading
"the table of the few with bounty that the many may partake of the crumbs
that fall there from", unless such an enterprise is one of such magnitude
or promise that its prosperity constitutes a substantial element of public
welfare or which renders it important to national defence or other such
national interest(1). But the principle that funds raised by taxation cannot be
expended for private use does not prevent the Legislature from looking at the
ultimate rather than the immediate result of the expenditure, and incurring an
expense or creating a liability on the part of the public which it was under no
constitutional obligation to incur or create if the ultimate effect will be
beneficial to the public. Upon this theory laws establishing minimum wage or
limiting the hours of labour have been sustained. The fact that a statute
authorising an expenditure of public funds for a public purpose may foster another
enterprise which is not a public one does not invalidate the statute if the
purpose of the expenditure is legitimate because it is public. It will not be
defeated merely because the execution of it involves payments to individuals.
The test is not as to who receives the money but the character of the purpose
for which it is to be expended(2). What is to be home in mind is the
distinction between the purpose and the method of its implementation. If in the
course of the latter some benefit incidentally reaches to a particular person
or persons, the former neither changes its character nor is it invalidated for
that reason. For instance, when a sudden or an overwhelming disaster strikes,
such as flood or a destructive fire, a Legislature may legitimately authorise
expenditure of public money to provide succor to the victims. Persons living in
the area may become helpless or destitute, irrespective of whether rich or
poor, but it is a public purpose to supply the sufferers with food, clothing
and shelter in order to relieve their immediate needs.
Expenditure of public funds in such cases
have been treated as necessary for the proper exercise of the police powers of
the State (3).
It is a common experience in the field of
taxation that the incidence of tax falls upon a class or upon individuals who
derive no direct benefit from its expenditure or who are not responsible for
the mischief to remedy which the tax is imposed. Besides, in the present case
the cess on collection has. in the first instance, to be credited to the
State's Consolidated Fund and then under an appropriation duly made after
deducting the cost of collection the balance is to be transferred to the
Repairs and Reconstruction (1) Cooley on Taxation, (4th ed.). vol. 1, Ch. 4,
Arts, 174 to 221 ; and American Jurisprudence vol. 51, paras 321 and 329.
(2) Ibid, Para 330, at P. 381; and Carmichael
v. Sourthern Coal & Coke Co., 81 Law. ed., 1245.
(3) American Jurisprudence, Taxation, vol.
51, Para 353, at 396.
273 fund. The doctrine of benefits cannot apply
to such a case, firstly, because the cess goes directly to the Consolidated
Fund in augmentation of that fund and not to a specific fund, and secondly,
because the legislature has the power to authorise expenditure out of the
Consolidated Fund on any public purpose which it thinks necessary and
proper(1).
Both the purpose of the cess and its use are
without doubt for public purpose. The purpose is to prevent collapses and the
suffering they must cause including rendering several persons homeless, a condition
accentuated by the demand for accommodation outrunning the supply. The use is
for preservation and prolonging the life of the buildings existing at the date
of the enactment of the Act by carrying out structural repairs where owners due
to diverse reasons refuse or are reluctant to spend their capital on such
preservation, jeopardising the life of their properties and due to the peculiar
conditions in the property market find it profitable to render buildings into
vacant plots. If in implementing the purpose, which, as aforesaid, is
demonstratably public, some benefit reaches particular individuals, the
statute, which does not directly purport so to do, cannot be invalidated.
Ch. IV of the Act deals with the levy of the
cess and the buildings subjected to its imposition. Though s. 27 imposes the
tax on buildings and lands, the exemptions given to buildings exclusively
occupied by the owners, to buildings exclusively used for non-residential
purpose, to residential buildings exclusively occupied on leave and licence, to
open lands not build upon and to buildings which might be erected after the
date on which the Act comes into force. have the effect of confining the tax to
residential houses occupied by tenants existing at the date of the commencement
of the Act. Sec. 29 divides the buildings so taxed into categories A, B and C.
Buildings built prior to September 1. 1940 fall into category Al. those build
between September 1, 1940 and December 31, 1950 fall into category B and those
built between Janury 1, 1951 and the date immediately before the date on which
the Act was brought into force fall into category C. Under the Schedule,
category A buildings are charged at the rate of 25% of the rateable value and
at 4% if any building in that category is structurally repaired by the Board.
If a building falls in category B, it is charged at 20% and at 30% if it is
structurally repaired, and buildings falling in category C have to bear the tax
at 15%, and at 20% if any one of them is structurally repaired by the Board.
The Act thus makes three kinds (1) Carmichael v. Southern Coal & Coke Co.,
81 Law Ed. 1245 at pp. 1261 and 1265.
274 of classification, (1) by confining the
tax to the residential tenanted buildings, it classifies buildings which are
used for residential purpose and are tenanted, from the rest; (2) by confining
the tax to such existing buildings it classifies them from those built after
the date on which the Act is brought into force, and (3) by dividing those
which are liable to tax into three categories according to the three periods in
which they were constructed.
To such a classification, the challenge,
firstly was that there was no rationale in dividing the residential and the
non-residential buildings as a number of buildings falling in both the groups
had been found to be in imminent dangerous condition, and posed the problem of
danger to human lives and of collapse. It was said, therefore, that both the
kinds ought to have been subject to the provisions of the Act. The second
challenge was to the equality of the percentum of the rate to buildings falling
in any on of the three categories without regard to their actual physical
conditions. Counsel sought to work out several permutations and combinations to
show that such equal treatment to buildings in each one of the three categories
created inequality by reason of disregard to their unequal conditions. Thus, a
building built in 1900 was treated equal with one built in 1939 and both bore
the tax at the same rate. Similarly, a building totally neglected by the owner,
and therefore, needing structural repairs was treated on equal footing with
another in the same category, but on which the owner has recently carried out
full structural repairs and was therefore in a sounder condition than the former.
There was, according to counsel, inequality writ large in secs. 27 and 28, and
the Schedule to the 'the Act.
The third attack was on the exemptions, the
ground of attack being that some of them had no foundation in principle and
were totally arbitrary. Reliance was placed in this connection on some of the
decisions of this Court to show that discrimination results where
classification among equals is based on no rational principle and which has no
reasonable nexus with the object with which the impugned legislation is
enacted. Similarly, such discrimination arises where there is no classification
even though the objects which are subjected to tax are unequal and yet treated
alike. [see K. T. Moopil Nair v. Kerala(1), State of Madras v. R. Nand Lal
& Co. (2) and Andhra Pradesh v. Nalla Raja Reddy(3)].
Counsel for the respondents, on the other
hand, urged that those decisions had no application to the Present Act as the
classifications made and the exemptions provided thereunder were based on
principles which had intimate relation to the objects with which the Act was
passed and the evil it sought to avert.
(1) [1961] 3 S.C.R 77. (2) [1967] 3 S.C.R.
645.
(3) [1967] 3 S.C.R. 28.
275 From what has been earlier stated, it is
manifest that a combination of factors, such as geographical limitations on
living space in the city, the consequent limited number of buildings, the fact
of a large number of them having been constructed as early as 1905 and even
before, the fact of many of then having had to be built vertically and that too
on timber frames, the effect of freezing of rents together with obligations
imposed on the owners by the Rent Act rendering the maintenance of buildings
economically unattractive, reluctance and sometimes inability of the owners to
carry out repairs and even to comply with Municipal requisitions, the alarming
spurt in the city's population, immigration of labour in large numbers from the
hinterland, increasing pressure on the existing residential premises and on
sanitary facilities therein, house collapses in large numbers every year
entailing human tragedy and rendering hundreds homeless, had raised problems
which were of imminent concern to the State as well as the Municipal
authorities. In these circumstances, if the legislature took a policy decision
to give priority to the residential tenant premises in respect of which, in its
opinion, the danger was graver and more imminent, no challenge to the division
between residential and non-residential premises can be sustainable particularly
when dealing with a part of the problem and confining its treatment to
residential premises only was considered feasible. From the studies undertaken
by the Government and the Corporation earlier referred to, it appears that
there were two alternatives.
the first was reconstruction of large
sections of the city and replacing new buildings in place of the old, and the
second was the preservation and prolonging the life of the existing structures
by carrying out structural repairs and alterations therein. The first obviously
would have raised numerous problems, legal and economic. The second would
create lesser number of them. If the Legislature thought it best in "lie
circumstances to choose the second instead of the first and confined its
attention to the existing structures no challenges on the ground of
discrimination or arbitrariness can legitimately be made. The classification of
residential premises from the rest and that between those existing at the time
when the Act was brought into force from the new ones which might be built
thereafter can be regarded as based on intelligible differentia and related to
the objectives and their feasibility which the legislature had in mind while
undertaking the questioned legislation.
The division of such existing structures into
three categories was evidently made in the light of the survey of buildings by
the Corporation and the report of Bedekar Committee and the classification of
buildings made therein on the basis of age and the kind of construction in
vogue in the respective periods in which 276 they were erected. That being so,
it is impossible to say that the aforesaid groupings of buildings was
unprincipled, whimsical or arbitrary.
But, as Mr. Sorabji was at pains to point
out, there might be buildings requiring structural repairs while there might be
some in the same category which might not require them for the reason that they
had been consistently looked after by their owners, and yet the latter are made
to pay the tax and that too to the same degree. To that the answer is twofold.
Firstly, that the tax payable is on the rateable value of each building which
differs from building to building, and secondly, it is distributed between
owners and the tenants, the former bearing 10 % of it only. To make such distribution
reasonable and just, the Legislature suspended during the life of the Act some
of the obligations of the owners under the Rent Act and revived the obligations
of the tenants under s. 108(m) of the Transfer of Property Act, though
retaining the powers of the Corporation obviously en the overriding
consideration of public health. It is true that even so, some of ',lie owners,
whose buildings do not need structural repairs, have to pay the tax, the
proceeds of which would be spent for carrying out repairs to buildings whose
landlords have been neglectful. The argument, in other words, is reduced to
this, namely, that there would be one class of tax-payer who would not get the
return and individual benefit while the other' would get it at the expense of
the former. Such an argument, however, can be urged almost against every tax
and every public expenditure and no tax can ever escape such a censure. The
grievance that individual tax-payers get more or less return from the tax
proceeds has hardly ever been entertained and would not be a sustainable ground
for a challenge against its constitutional validity. The decision in Railroad
Retirement Board v. Alton Railroad Co., (1) leaned heavily by counsel,
disapproving a provision establishing a compulsory bonus system of employees on
all carriers treating them all as a single employer, on the around that in
imposed upon solvent carriers the burden of furnishing money necessary to meet the
demands of the system upon insolvent carriers. cannot apply as the decision
turned on due process clause, a clause not available in our Constitution.
The levy of the cess under s. 27 of the Act
is not based on the principle of qid pro quo. Its object is not to repair all
residential premises, but to preserve and prolong their lives in order to avert
the dilema caused by the acute shortage of residential accommodation on the one
hand, and the reluctance and/or inability of the owners to carry out repairs resulting
from the (1) 79 Law. Ed. 1468.
277 Rent Act, on the other, and to establish
an agency so that structural repairs to buildings in dangerous or ruinous
conditions can be carried out. The finances for these objects are provided
from. a fund from the impugned cess and contributions by the State and the
Corporation.
The contention that some of the buildings
falling in categories B and C would not need structural repairs throughout the
life of the Act or that such repairs would be carried out in buildings not
cared for by defaulting landlords, takes no notice of the fact that the primary
object of the Act is not to repair all buildings subject to cess but to prevent
the annually recurrent mischief of' house collapses and the human tragedy and
deprivations they cause. The cess being thus levied to prevent such disasters,
there is no question of unequal treatment between one class of owners and
another. The classification of buildings into three categories is based, as
already stated, on their age and the construction current during the periods of
their erection.
It is, therefore, based on an intelligible
differentia and is closely related to the objects, of the legislation.
There is, therefore, no question of unequals
being treated as equals, as each building in respect of which the cess is
payable falls within the surveillance of the Board and has to be structurally
repaired if the need were to arise. The principle laid down in Moopil Nairs
case(1) or in New Manek Chowk Spinning and Weaving Mills Co. Ltd. v. Municipal
Corporation of the City of Ahmedabad(2) clearly does not apply to the present
case.
The objection to the exemptions under s. 28
can be met by the fact that buildings in each of the groups therein set out
form a distinct class by themselves. Buildings in cls.
(a) to (f) are buildings to which the Rent
Act does not apply, and therefore, the considerations for which the cess is
levied do not apply to them. Buildings used for nonresidential purposes do not
fall within the scope of the Act, and therefore, had to be excluded from the
levy of the cess. Cls. (g), (h) and (j) read with the newly inserted cl. (ja)
were, however, objected to. Buildings vesting in or leased to cooperative
housing societies registered' under the Maharashtra Cooperative Societies Act,
1960 form a class by themselves and cannot be equated with buildings built by
individuals. A perusal of that Act is sufficient to satisfy that the relations
between a society and its members to whom apartments are either allotted or
leased are not the same as those between landlords and tenants.' There is,
besides, considerable, control of the Registrar, Cooperative Societies, over
the administration of the funds of the societies and their expenditure and an
overall supervision over their affairs. The Bedekar Committee;, (1) [1961] 3 S
C.R 77.
(2) [1967] 2 S.C.R. 679.
278 no doubt, sounded a warning in respect of
some of the buildings put up by some of such societies. But these are
exceptions and the Legislature could not have carved out a sub-clause in
respect of them. The Committee, however, had observed that these societies in
the present state of the property market were the only real instrumentalities
through which an increase in the residential accommodation can at present be
achieved, and therefore, should be encouraged.
Likewise, the relations between the owners
and persons occupying their buildings under leave and licence cannot be equated
with relations between landlords and tenants. The circumstances which led to
the imposition of the cess do not apply to premises in the occupation of
licensees because such licensees have no rights such as the tenants have,
namely, irremoveability and. the freezing of rents, and the consequential
reluctance or inability of the landlords to maintain their premises in
tenantable repairs. There is no such statutory control over compensation paid
by them as there is in the case of standard rent. Considerations ,applicable to
them are, therefore, quite different. The two classes of occupiers, therefore,
cannot be equated. The premises ,occupied by licensees thus form a distinct
class by themselves and could not have been lumped together with tenanted
premises without the danger of a challenge under Art. 14.
So far as the building occupied by owners
themselves and falling under cl. (h) are concerned, counsel frankly conceded
that different considerations would apply and therefore no objection could be
taken to their being exempted from the tax. If buildings used for nonresidential
purposes or on the basis of leave and licence are validly treated differently,
buildings, if used partly for one and partly for another such purpose or
purposes can also be similarly treated provided that no part or parts thereof
occupied or used for a purpose other than those specified in the three clauses.
Since these buildings forming separate classes by themselves from the tenanted
residential premises, the provisions for exempting them cannot be held as
violative of the equal protection clause.
For the reasons stated above, the Act has to
be held valid and the petitions unsustainable. Accordingly, the petitions are
,dismissed but in the circumstances of the case there will not be any order of
costs.
K.B.N.
Petitions dismissed.
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