S. Kandaswamy Chettiar Vs. State of
Tamil Nadu & ANR [1984] INSC 235 (12 December 1984)
TULZAPURKAR, V.D.
TULZAPURKAR, V.D.
PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION: 1985 AIR 257 1985 SCR (2) 398 1985
SCC (1) 291 1984 SCALE (2)933
CITATOR INFO :
F 1987 SC2117 (20)
ACT:
Tamil Nadu Buildings (Lease and Rent Control)
Act, 1960 (Tamil Nadu Act 18 of 1960). Section 29-Notification issued there
under granting total exemption to all buildings own-d by the Hindu, Christian
and Muslim religious Public Trusts and Public Charitable Trusts from all the
provisions of the Act- Whether suffers from the vice of excessive delegation of
legislature powers, and therefore, violative of, Article 14 of the
Constitution-Whether the total exemption is excessive unwarranted and
unsupportable in as much as o partial exemption would have sufficed.
HEADNOTE:
In exercise of the powers conferred by
section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 the
Government of Tamil Nadu issued a Notification G.O. Ms. 2000 (Homo Department)
dated 16th August, 1976 exempting all the buildings owned by the Hindu,
Christian and Muslim religious public trusts and public- charitable trusts from
all the provisions of the Act. The tenants challenged the Notification granting
total exemption through the said Notification on three grounds namely; (a) that
section 29 of the Act suffers from the vice of excessive delegation of
legislative powers in as much as it vests in the State Government unguided and
uncontrolled discretion in the matter of granting exemptions and is, therefore,
violative of Article 14 of the Constitution; (b) that the Notification dated
16th August, 1976 deprives the tenants of all such buildings (belonging to
Hindu. Christian and Muslim religious public trusts and public charitable
trusts) of the equal protection of the beneficial provisions of the Act which
is available to the tenants of other buildings and as such the same is
discriminatory offending against the equal protection clause of Article 14; and
(c) that in any event the total exemption from all the provisions of the Act
granted to such buildings, where partial exemption would have sufficed is
excessive, unwarranted and unsupportable.
The State Government and the respondent
landlords have refuted all the grounds on which the exemption has been
challenged and further sought to justify the grant of total exemption mainly on
the basis that the freedom (right) to recover the reasonable market rent would
be ineffective without the freedom to evict the tenant.
Dismissing the writ petitions and the civil
appeals the Court, 399
HELD: 1.1 In view of the decision of the
Supreme Court in P.J. Irani v. The State of Madras, [1962] 2 SCR 169 dealing
with an identical provision contained in the earlier Madras enactment the
challenge to the Constitutional validity of section 29 cannot be sustained.
[405A-B] P. J. Irani v. State of Madras, [1962] 2 SCR 169;
State of Madhya Pradesh v. Kanhaiyalal, 1970
(15) M.P.L.U SC 973 relied on.
1. 2. The rationale behind the conferal of
such power to grant exemptions or to make exceptions is that an inflexible
application of the provisions of the Act may under some circumstances result in
unnecessary hardship entirely disproportionate to the good which will result
from a literal enforcement of the Act and also the practical impossibility of
anticipating in advance such hardship to such exceptional cases. In the matter
of beneficial legislations also there are bound to be cases in which an
inflexible application of the provisions of the enactment may result in
unnecessary and undue hardship not contemplated by the legislature. The power
to grant exemption under section 29 of the Act, therefore, has been conferred
not for making any discrimination between tenants and tenants but to avoid
undue hardship or abuse of the beneficial provisions that may result from
uniform application of such provisions to cases which deserve different
treatment. Of course, the power to grant exemption has to be exercised in
accordance with the policy and object of the enactment gatherable from the
preamble as well as its operative provisions without subverting the general
purpose of the enactment. [406G-H, 407A-B] P. J. Irani v. State of Madras,
[1962] 2 SCR 169 relied on.
Gorieb v. Fox, [1926] 71 Lawyers Edition at
page 1230 quoted with approval .
2. That Tamil Nadu Act is a piece of
beneficial legislation intended to remedy the two evils of rackrenting
(exaction of exhorbitant rents) and unreasonable eviction generated by a large
scale of influx of population to big cities and urban areas in the post Second
World War period creating acute shortage of accommodation in such areas and the
enactment avowedly protects the rights of tenants in occupation of buildings in
such areas from being charged unreasonable rents and from being unreasonably
evicted there from. The Legislature itself has made a rational classification
of buildings belonging to government and buildings belonging to religious,
charitable, educational and other public institutions and the different
treatment accorded to such buildings under section 10(3) (b) of the Act, which
obviously proceeds on the well-founded assumption that the government as well
as the landlords of such buildings are not expected to and would not indulge in
rack- renting or unreasonable eviction. This and similar other provisions
crystalize the policy and the purposes of the Act and furnish the requisite
guidance which can legitimately govern the exercise of power conferred on the
State Government under section 29 of the Act The power to grant exemptions or
make exceptions could be legitimately exercised by the State Government in
areas or cases where the mischief sought to be remedied by 400 the Act is
neither prevalent nor apprehended as also in cases (individual or class of
cases) where a uniform or inflexible application of the law is likely to result
in unnecessary or undue hardship (here the landlords) or in cases where the
beneficial provision is likely to be or is being abused by persons for whom it
is intended there the tenants) [407D-E, 408F-H, 409A] 3.1. Public religious and
charitable endowments or trusts constitute a well recognised distinct group in
as much as they not only serve public purposes but the disbursement of their
income is governed by the objects with which they are created and buildings
belonging to such public religious and charitable endowments or trusts clearly
fall into a distinct class different from buildings owned by private landlords.
Therefore, their classification into one group done by the State Government
while issuing the impugned notification must be regarded as having been based
on an intelligible differentia. [409F-G] 3.2. In view of the counter affidavit
filed by the State Government dated 10-2-1981 and the supplementary counter
affidavit dated 24th September, 1983 to the effect that the government was
satisfied that "in all these cases, the rent paid by the tenants was very
low, meagre and that the provisions of fixation of fair rent under the Act
would not meet the ends of justice and the situation will still continue in
which the tenant will be exploiting the situation and the helplessness of the
public religious trusts and charitable institutions and hence they decided to
withdraw the protection given under the Act to the tenants of such
buildings", not having been challenged by way of rejoinder affidavits by
the petitioners/appellants, it is clear that buildings belonging to such public
religious and charitable endowments or trusts clearly fell into a class where
undue hardship and injustice relating to them from the uniform application of
the beneficial provisions of the Act needed to be relieved and the exemption
granted will have to be regarded as being germane to the policy and purposes of
the Act. In other words, the classification made has a clear nexus with the
object with which the power to grant exemption has been conferred upon the
State Government under section 29 of the Act. [411C, 412B-G] State of Rajasthan
v. Mukanchand and Others, [1964] 6 SCR 903; held inapplicable.
3.3. Granting total exemption cannot be
regarded as excessive or unwarranted. The two objectives of the enactment,
namely, to control rents and to prevent unreasonable eviction are interrelated
and the provisions which sub-serve these objectives supplement each other It is
obvious that if the trustees of the public religious trusts and public
charities are to be given freedom to charge the normal market rent then to make
that freedom effective it will be necessary to arm the trustees with the right to
evict the tenants for non-payment of such market rent. The State Government on
materials before it came to the conclusion that the 'fair rent' filled under
the Act was unjust in case of such buildings and it was necessary to permit the
trustees of such buildings to recover from their tenants reasonable market rent
and if that be so non- eviction when reasonable market rent is not paid would
be unreasonable and if the market rent is paid by the 401 tenants no trustee is
going to evict them. Further, it is conceivable that trustees of buildings
belonging to such public religious institutions or public charities may desire
eviction of their tenants for the purpose of carrying out major or substantial
repairs or for the purpose of demolition and reconstruction and the State
Government may have felt that the trustees of such buildings should be able to
effect evictions without being required to fulfill other onerous conditions
which must be complied with by private landlord when they seek evictions for
such purpose. [413D-E, 414C-G] 3.4. The manner in which exemption from rent
control provisions should be granted, whether it could be partial or total and
if so on what terms and conditions would be matters for each State Government
to decide in the light of the scheme and provisions of the concerned enactment
and the facts and circumstances touching the classification made.
And if the State of Madras has thought fit to
grant the exemption in a particular manner by the impugned notification is
cannot be faulted. if to exemption so granted is not illegal or
unconstitutional. [415A-B]
ORIGINAL JURISDICTION: W.P. Nos
4433,4642-57/78, 337- 339, 757-58, 943, 291 and 1351 of 79,4103 and 6271/80,731
and 1943/81, 8274 and 9879/83 and C.A. NOS. 3108-3109/81 with W.P. NOS. 7941
and 7883/81.
N. Natesan, A. T. M Sampath and P. N.
Ramalingam for the petitioners in W.P. NOS. 4642-57 and 4433 of 1978 Dr. Y S.
Chitale, A T.M. Sampath, S.A. Rajan and P.N. Ramalingam for the petitioners in
W.P. NOS. 337-339 of 1979.
M. Natesan, and Raghuraman for the petitioner
in W.P. No. 1943 of 1981.
A.T.M. Sampath and P.N. Ramalingam for the
petitioner in W.P. NOS. 757-58 of 1979.
S. Srinivasan for the petitioner in W.P. NO.
943 of 1979.
P.R. Ramasesh for the petitioner in W.P. NO.
731 of 1982.
A.T.M. Sampath and P.N. Ramalingam for the
petitioner in W.P. NO. 7941 and 7883 of 82.
A.T.M. Sampath and P.N. Ramalingam for the
petitioner in W.P. NOS. 1357-58 of 79.
P. Sinha for the petitioner in W.P. NO. 8274
of 83.
P.N. Ramalingam for appellants in C. NOS.
3108-09 Of 81, 402 R.S. Ramamurthy, P. Govindan Nair, M.K.D. Namboodry, S.
Balakrishnan and E.C. Agarwala for the respondents in W.P. Nos. 6271/80 and
4642-57 and 4433 of 78.
T.S. Krishnamoorthy, Mrs. S. Gopalakrishnan
and Gopal Subramanian for the respondents is W.P. No. 4103180.
Shanker Ghosh, and D.N. Gupta for the
respondents in W.P. No. 943/79.
S.T. Desai, T.S. Krishnamurthy, A.V. Rangam,
K. Ramamurthy and S.Balakrishnan for the respondents in W.P. No. 731182.
Mohan Pandey and Ali Ahmed for the
interveners in W.P. Nos. 4642-57 of 78. K. Ram Kumar for the respondent in C.A.
Nos. 3108-3109/81 and W.P. Nos. 7941 and 7883/82.
The Judgment of the Court was delivered by
TULZAPURKAR, J. In these writ petitions and civil appeals by special leave the
petitioners and appellants, who are tenants of several buildings belonging to
the Hindu, Christian and Muslim religious public trusts as also to public
charitable trusts in the State of Tamil Nadu, have challenged the legality and
or validity of the total exemption granted to all such buildings from all the
provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
(Tamil Act 18 of 1960) (for short 'the Act') in exercise of the powers
conferred upon the State Govt. under s. 29 of the Act.
Section 29 of the Act runs thus:
"22. Exemptions-Notwithstanding anything
contained in this Act, the Government may, subject to such condition as they
deem fit, by notification, exempt any buildings or class of buildings from all
or any of the provisions of this Act" It appears that initially by G. O.
Ms. No. 1998 (Home) dated 12th August, 1974, the State Government had, in
exercise of its powers under s. 29 exempted all the buildings owned by the
Hindu Christian and Muslim religious trusts and charitable institutions from
all the provisions of the Act; in other words the exemption was available to
buildings of private religious trusts as also private charitable trusts. But
later on by a fresh G. O. Ms. No. 2000 403 (Home) dated 16th August, 1976, the
State Government, in super- A session of the earlier Notification dated 12th
August, 1974, confined the exemption to all buildings owned by the Hindu,
Christian and Muslim religious public trusts and public charitable trusts. 'the
relevant Notification which is being impugned herein runs thus:
"G O. Ms . No. 2000, Home, 16th August,
1976) No. II (2)/HO/4520/76.-In exercise of the powers conferred by section 29
of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu Act
18 of 1960), and in supersession of the Home Department Notification No. II
(2)/HO/3811/74, dated the 12th August, 1974, published at page 444 of Part
ll-section 2 of the Tamil Nadu Government Gazette, dated the 12th August, 1974,
the Governor of Tamil Nadu hereby exempts all the buildings owned by the Hindu,
Christian and Muslim religious public trusts and public charitable trusts from
all the provisions of the said Act." The tenants have challenged the
aforesaid Notification granting total exemption to all buildings belonging to
the Hindu, Christian and Muslim religious public trusts and public charitable
trusts from all the provisions of the Act on three grounds-(a) that s. 29 of
the Act suffers from the vice of excessive delegation of legislative powers in
as much as it vests in the State Government unguided and uncontrolled
discretion in the matter of granting exemptions and is, therefore, violative of
Art. 14 of the Constitution, (b) that the Notification dated 16th August, 1976
deprives the tenants of all such buildings (buildingsr belonging to Hindu,
Christian and Muslim religious public trusts and public charitable trusts) of
the equal protection of the beneficial provisions of the Act which is available
to the tenants of other buildings and as such the same is discriminatory
offending against the equal protection clause of Art. 14 and (c) that in any
event the total exemption from all the provisions of the Act granted to such
buildings, where partial exemption would have sufficed, is excessive,
unwarranted and unsupportable.
On the other hand, the State Govt. and the
respondent landlords have refuted all the grounds on which the exemption has
been challenged. It is denied that unguided and uncontrolled discretion has
been conferred upon the State Govt. by s. 29 of the Act and it is contended
that enough guidance is afforded by the Preamble and the operative provisions
of the Act for the exercise of the 404 discretionary powers vested in the State
Govt. It is pointed out that in P. J. Irani v. The State of Madras(') an
identical provision contained in the earlier enactment, namely, the Madras
Buildings (Lease and Rent Control) Act, 1949 was upheld in the context of Art.
14 of the Constitution by this Court on the basis that the Preamble and the
operative provisions of that Act gave sufficient guidance for the exercise of
the discretionary power vested in the State Govt., namely, that the said power
was to be exercised in cases where the protection given by the Act caused great
hardship to the landlord or was the subject of abuse by the tenant; and it is
urged that similar guidance is afforded by the Preamble and the operative
provisions of the instant Act and s. 29 cannot be said to be violative of Art.
14. The respondents have further contended that even the point regarding the
constitutional validity of granting exemption to buildings belonging to
charities, religious or secular in the context of the equal protection clause
of Art. 14 could be said to have been concluded against the tenants of such
buildings by the observations of this Court in P.J. Irani's case (supra), it is
pointed out that though in that case this Court was dealing with a Notification
granting exemption in favour of a particular individual building, the Court has
made observations which clearly indicate that where it is a case of granting
exemption in favour of a class of buildings all that is required is that the
classification must be based on rational grounds i.e. grounds germane to carry
out the policy or the purpose of the Act and by way of illustration the Court
has in terms stated that if such exemption were to be granted in favour of all
buildings belonging to charities, religious or secular, such classification
would be reasonable and proper, being based on intelligible differential having
nexus to the object sought to be achieved by the exercise of power of
exemption. Even otherwise, the State Govt. in their counter- affidavit dated
10th February, 1981 and supplementary counter-affidavit dated 24th September,
1983 have furnished material on the basis of which it has sought to justify the
said exemption and it has been urged that the same conforms to and falls within
the guidelines indicated in that decision governing the exercise of the power.
The respondents have further sought to justify the grant of total exemption
mainly on the basis that the freedom (right) to recover the reasonable market
rent would be ineffective without the freedom to evict the tenant.
As regards the attack directed against s.29
of the Act itself we would like to observe at the outset that though the
challenge to the (1) [1962] 2 SCR 269.
405 section under Art. 14 has been made in
the petitions and the appeals A Counsel appearing for the petitioners and the
appellants fairly stated before us, and in our view rightly, that in view of
the decision of the Constitution Bench of this Court in P. J. Irani's case
(supra) dealing with an identical provision contained in the earlier Madras
enactment (Madras Act XXV of 1949) the challenge cannot be sustained. Section
13 of the Madras Act XXV of 1949 with which this Court was concerned in that
case ran thus:
"Notwithstanding anything contained in
this Act the State Government may by a notification in the Fort St. George
Gazette exempt any building or class of buildings from all or any of the
provisions of this Act." This Court upheld the constitutional validity of
that provision in the context of the challenge thereto under Art. 14 on the
basis that sufficient guidance was afforded by the Preamble and the operative
provisions of the Act for the exercise of the discretionary power vested in the
Government in the matter of granting exemptions to a building or class of
buildings from all or any of the provisions of the Act. It may be stated that
following the said decision this Court in the case of State of Madhya Pradesh
v. Kanhaiyalal(l) did not find any infirmity in s.
3(2) of the Madhya Pradesh Accommodation
Control Act, 1961 (Act 41 of 1961) which ran thus:
"The Government may, by notification
exempt from all or any of the provisions of this Act any accommodation which is
owned by any educational, religions or charitable institution or by any nursing
or maternity home, the whole of the income derived from which is utilised for
that institution or nursing home or maternity home." 'The challenge to s.
29 of the instant Act, which was not pressed, has therefore to be rejected.
Even so, since the Notification dated 16th
August 1976 issued under s. 29 has been challenged the guidance afforded by the
Preamble and the operative provisions of the Act will have a bearing on the
question Whether this particular exercise of the power conforms to such
guidance or not and, therefore, it will be useful to advert briefly to the
guidance so afforded. At the outset we would like to point out that the
rationable behind the conferal of such power to (1) [1970] IS M.P.L.J. 973 406
grant exemptions or to make exceptions has been very succinetly elucidated by
the American Supreme Court in the leading case of Gorieb v. Fox. (1) In that
case the Court was concerned with an Ordinance which related to the
establishment of a building line on public streets but it contained a
reservation of power in the City Council to make exceptions and permit the
erection of buildings closer to the street. It was contended that this
reservation rendered the Ordinance invalid as denying the equal protection of
the laws, Negativing the contention Sutherland J. speaking for the court,
observed thus:
"The proviso under which the Council
acted also is attacked as violating the equal protection clause on the ground
that such proviso enables the Council unfairly to discriminate between
lot-owners by fixing unequal distances from the street for the erection of
buildings of the same character under like circumstances.. The proviso
evidently proceeds upon the consideration that an inflexible application of the
Ordinance may under some circumstances result in unnecessary hardship In laying
down a general rule, such as the one with which we are here concerned, the
practical impossibility of anticipating in advance and providing in specific
terms for every exceptional case which may arise, is apparent. And yet the
inclusion of such cases may well result in great and needless hardship,
entirely disproportionate to the good which will result from a literal
enforcement of the general rule. Hence the wisdom and necessity here of
reserving the authority to determine whether, in specific cases of need,
exceptions may be made without subverting the general purposes of the
ordinance. We think it entirely plain that the reservation of authority in the
present ordinance to deal in a special manner with such exceptional cases is
unassailable on constitutional grounds." In our view the same rationale
must apply to the conferal of such power on the State Government to grant
exemptions or to make exceptions even in cases of beneficial legislations like
the present enactment. In the matter of beneficial legislations also there are
bound to be cases in which an inflexible application of the provisions of the
enactment may result in unnecessary and undue hard- (1) [1926] 71 Las Ed. 1228
at 1230.
407 ship not contemplated by the legislature.
Obviously the power to grant exemptions under s. 29 of the Act has been
conferred not for making any discrimination between tenants and tenants but to
avoid undue hardship or abuse of the beneficial provisions that may real it
from uniform application of such provisions to cases which deserve different
treatment. Of course, as observed by this Court in P. J. Irani's case (supra)
the power has to be exercised in accordance with the policy and object Or the
enactment gatherable from the preamble as well as its operative provisions or
as said in the American decision without subverting the general purposes of the
enactment.
As the preamble of the instant Act shows the
three purposes, to achieve which it has been enacted are the same as those
under the earlier enactment, the Madras Act XXV of 1949, namely, (1) the
regulation of letting of residential and non-residential buildings, (2) the
control of rents of such buildings, and (3) the prevention of unreasonable
eviction of tenants from such buildings, except that the enactment is of a
comprehensive nature by way of amending and consolidating the rent-control law
obtaining in the State till then Unquestionably it is a piece of beneficial
legislation intended to remedy the two evils of rack-renting (exaction of
exhorbitant rents) and unreasonable eviction generated by large scale of influx
of population to big cities and urban areas in the post Second World War period
creating acute shortage of accommodation in such areas and the enactment
avowedly protects the rights of tenants in occupation of buildings in such
areas from being charged unreasonable rents and from being unreasonably evicted
therefore; it further protects their possession even after the determination of
their contractual tenancies by enlarging the definition of a 'tenant' so as to
include persons who have held over after such determination.
Sections 3 and 3-A deal with the regulation
of letting while ss.4 to 8 effectuate the objective of controlling the rents
and ss.l0 and 14 to 16 confine eviction of a tenant to stated grounds subject
to certain terms, qualifications and/or reservations thereby preventing unreasonable
eviction In other words a landlord's freedom of contract to charge even the
market rent (if it is in excess of 'fair rent' as defined) and his freedom to
evict a tenant on several grounds available to him either nuder his lease-deed
or the Transfer of Property Act have been curtailed to a large and substantial
extent. At the same time the enactment contains other significant provisions
which indicate that the legislature itself felt that there might be areas and
cases where the two evils were neither prevalent nor apprehended and as such
the landlord's 408 freedom need not be curtailed at all, as also cases where
attenuated freedom could be allowed to the landlord and limited protection be
extended to the tenant. not instance, under s.1 (2) (a) (i) of the Act itself
does not apply to the entire State but only to the city of Madras, the city of
Madurai and to all Municipalities (i.e Municipal areas) which shows that
non-urban areas or rural areas are excluded from the operation of the Act,
presumably because in such areas the evils of rack-renting and unreasonable
eviction do not obtain; and under the proviso there to power has been reserved
to the Government to withdraw the application of the Act to any municipal areas
or to the city of Madras or to the city of Madurai from such date as may be
mentioned in the notification as also to reintroduce the Act in such areas
where it has ceased to apply by reason of the notification issued under the
proviso; similarly, s.1 (2) (c) confers powers on the Government to apply all
or any of the provisions of the Act by notification to any other area in the
state to which it has not already been made applicable by the Act itself and to
cancel or modify any such notification. Again by the proviso to s.10 (1) the
restrictions imposed by ss.10 and 14 to 16 (which enumerate the grounds and the
circumstances under which alone eviction can be sought under the Act) have been
made inapplicable to tenants in buildings of which the landlord is the
Government. Similarly, under s.10 (3) (b) a much wider latitude to evict a
tenant is afforded to landlords of religious, charitable, educational or other
public institutions if possession is required for the purposes of such
institutions, inasmuch as, unlike in the cases falling under s. 10 (3)(a) (i)
(ii) and (iii), there is no insistence that such landlords should not be
occupying any other building of his own in the city, town or village concerned.
In other words the legislature itself has made a rational classification of
buildings belonging to Government and buildings belonging to religious,
charitable, educational and other public institutions and the different
treatment accorded to such buildings obviously proceeds on the well-founded
assumption that the Government as well as the landlords of such buildings are
not expected to and would not indulge in rack-renting or unreasonable eviction.
These and similar other provisons crystalize
the policy and purposes of the Act and furnish the requisite guidance which can
legitimately govern the exercise of power confered on the State Government
under s 29 of the Act. The guidance thus afforded may illustratively be
indicated by stating that the power to grant exemptions or make exceptions
could be legitimately exercised by the State Government in areas or cases where
the mischief sought to be remedied by the Act is neither 409 prevalent nor
apprehended as also in cases (individual or class of A cases) where a uniform
or inflexible application of law is likely to result in unnecessary or undue
hardship (here to landlords) or in cases where the beneficial provision is
likely to be or is being abused by persons for whom it is intended (here the
tenants). The question is whether in issuing the Notification dated 16th August
1976 the State Government has exercised the power in conformity with such
guidance and the same is valid as not offending Art. 14 of the Constitution.
We have already stated that the respondents
have contended that the question of constitutional validity of granting
exemption to buildings belonging to charities, religious or secular from rent
control legislation as offending the equal protection clause of Art. 14 has
been concluded by the observations made by this Court in P J.
Irani's case (supra) while Counsel for the
petitioners and the appellants on the other hand have urged that it is not;
according to Counsel for the petitioners and
the appellants all that the observations made by this Court in that case decide
is that the classification of buildings belonging to Hindu, Christian and
Muslim religious public trusts as also to public charitable trusts could be
regarded as a reasonable classification based on intelligible differentia but
that test of nexus which is also required to be satisfied for purposes of Art.
14 has not been pronounced upon by this Court and this aspect is still open to
argument- We shall proceed on the basis that the question is res integra and
consider whether the respondents, particularly the State Government have
furnished proper material on the basis of which the exemption granted can be
justified.
lt cannot be disputed that public religious
and charitable endowments or trusts constitute a well recognised distnict group
inasmuch as they not only serve public purposes but the disbursement of their
income is governed by the object with which they are created and buildings
belonging to such public religious and charitable endowments or trusts clearly
fall into a distinct class different from buildings owned by private landlords
and as such their classification into one group done by the State Government
while issuing the impugned notification must be regarded as having been based
on an intelligible differentia. Counsel for the petitioners and the appellants
also fairly conceded that such classification would be a rational one, more so
in view of the observations made by this Court in that behalf in P.J. Irani's
case (supra). The question is whether the said classification has any nexus
with the object with which the powers to H 410 grant exemptions has been
conferred upon the State Government under s. 29 of the Act. On this aspect of
the matter before we go to the material furnished by the State Government on
the basis of which such nexus is sought to be established it will be useful to
refer to certain observations made by this Court in the case of State of Madhya
Pradesh v. Kanhaiya Lal (supra) which afford a clear indication as to what kind
of material would go to establish such nexus, The facts of that case were
these. Respondent No. 4 in that case was a public trust registered under the
Madhya Pradesh Public Trusts Act and it owned a house property, one portion
whereof was occupied by girls school, the rest being let out to tenants. Since
the rents issuing from the property were wholly utilised for the pure poses of
the schools respondent No. 4 became entitled to get exemption from the
provisions of the M. P. Accommodation Control Act under s. 3(2) thereof for
that house-property.
On an application made in that behalf by
respondent No. 4 the State Government granted the exemption by issuing a
notification under that provision. The notification was challenged on two
grounds, (i) that s. 3 (2) was void on the ground of the excessive delegation
of Legislative powers to the State Government; (ii) that the notification
itself was discriminatory as the grant of exemption was not germane to the
policy of the Act. The High Court upheld the validity of s. 3 (2) but struck
down the notification as being discriminatory. This Court confirmed the High
Court's view eon both the points. While holding the notification bad on the
ground that the exemption granted was not germane to the policy of the Act this
Court observed thus:
"In this case there is no affidavit by
any officer who had anything to do with the order granting exemption. The
returns filed on behalf of the State Government do not throw any light on this
question. It would appear that in granting the exemption the State applied
merely a rule of thumb and issued the notification on the basis of the
assertion by the trust that the entire rental income from the property was
being applied to meet the expenses of the trust. Such a statement on allows an
institution to apply for exemption. It was not the case of the trust that they
wanted to evict the tenants because they wanted the whole of the accommodation
itself nor was it their plea that the income according to them was very low
compared to prevailing rates of rent and that it was wholly inadequate for
meeting the expenses of the trust. If grounds like these or other relevant
grounds had 411 been alleged it would have been open to the State Government to
consider the same and pass an order thereon. In our view the State Government
did not apply its mind which it was required to do under the Act before issuing
a notification and the return does not disclose any ground which was germane to
the purposes of the Act to support the claim for exemption ." (Emphasis
supplied) The above observations clearly indicate what kind of material the
State Government is required to take into consideration which would justify the
grant of an exemption in favour of a particular ill building or class of
buildings. C Coming to the material furnished by the State Government on the
basis of which the impugned exemption is sought to be justified it may be
stated that in paragraph 4 of its Counter Affidavit dated 10.2.1981 Shri J.
Ramachandran, Joint Secretary, Home
Department, has stated:
D "The prime object behind the grant of
exemption to the buildings belonging to religious institutions is to enable J
the institutions to get enhanced income by increasing their rents. The
buildings were endowed to the public religious and charitable trusts for
carrying out certain religious or charitable purposes. With the escalation of
prices, the religious and charitable trusts are not in a position to carry out
the endowment, if the income of the property is not - increased suitably and
this nullifies the specific purpose of endowment." In para 13 the deponent
has further stated:
"As stated already, numerous
representations were made to the Government about the plight of the temples and
the public charities like poor feeding, etc. and the ridiculous position which
is prevailing, and the Government on a consideration of all the aspects of the
matter was fully satisfied that the tenants are fully exploiting the situation
and the fixation of a fair rent under the Rent Control Act is no criterion at
all and that it would cause immense in justice and would be highly oppressive
so far as temples and religious endowments and public charities are concerned.
lt is only in the context of such a serious predicament and 412 critical
situation that the Government intervened and issued the notification under s.
29 of the Act to relieve the hard ship and injustice." It has also been
pointed out that the procedure and machinery indicated in s. 4 of the Act and
the concerned Rules for fixing fair rent only yields on the total cost of the
building together with the market value of the site, a gross return of 9 per
cent for residential buildings and 12 per cent for non-residential buildings
which is very low as compared to the bank rate of interest and grossly
inadequate when compared to the reasonable rents at the market rate obtaining
in the locality or the neighbourhood (i.e., rent which a willing land lord will
charge to a willing tenant) and it was a case of the tenants of all such
buildings exploiting the situation arising from the beneficial provisions of
the Act. In the supplementary counter affidavit dated the 24th September 1983,
Shri N. Srinivasan, Deputy Secretary. Home Department, has categorically
asserted that "in all these cases the Government was satisfied that the
rent paid by the tenants was very low, meager and that the previsions of
fixation of fair rent under the Act would not meet the ends of justice and the
situation will still continue in which the tenant will be exploiting the
situation and the helplessness of the public religious trusts and charitable
institutions" and that, therefore, the Government felt that it was
necessary to withdraw the protection given under the Act to the tenants of such
buildings.
It may be stated that no rejoinder affidavit
has been filed on behalf of the writ petitioners or the appellants and as such
the before said material furnished by the two counter affidavits and the
averments made therein have gone unchallenged. In our view, the aforesaid
material clearly shows that buildings belonging to such public religious and
charitable endowments or trusts clearly fell into a class where undue hardship
and injustice resulting to them from the uniform application of the beneficial
provisions of the Act needed to be relieved and the exemption granted will have
to be regarded as being germane to the policy and purpose of the Act. In other
words the classification made has a clear nexus with the object with which the
power to grant exemption has been conferred upon the State Government under s.
29 of the Act.
It may be stated that counsel for the
petitioners and the apple lands during the course of the hearing placed
reliance upon a decision of this Court in State of Rajasthan v. Mukanchand and
Others(l) (1) [1964] 6 S.C.R. 903.
413 where the impugned part of s. 2(c) of the
Jagirdar's Debt Reduction A Act (Rajasthan Act 9 of 1937) was held to be
violative of Article 14 on the ground that the test of nexus between the
classification made and the object sought to be achieved by the statute in
question had not been satisfied.
The ratio of the decision was that Jagirs
having been deprived of their lands were entitled to the benefits of the Act
providing for reduction of debts and it made no difference whether the debts
were owed to the Government or local authority or other bodies mentioned in the
impugned part of s. 2(e) of the Act and such debts due to the Government, local
authority and other bodies could not be excluded while granting the benefit of
reduction of debts.
The ratio, in our view, is clearly
inapplicable to the facts of the instant case inasmuch as we have come to the
conclusion that the classification of buildings made in the impugned
notification has a clear nexus with the object with which the power to grant
exemption has been conferred upon the State Government.
It was next contended that If the main object
of granting exemption to buildings belonging to public religious institutions
or public charities was to enable these institutions to augment their income by
increasing rentals of their buildings such object could have been achieved by
granting exemption from these provisions of the Act which deal with the
controlling of rents (ss 4 to 8 and the Rules made in that behalf) but a total
exemption granted to them from all the provisions of the Act particularly those
which prevent unreasonable eviction of tenants must be regarded as excessive
and unwarranted. And in this behalf counsel for the petitioners and the
appellants referred to a Saurashtra Notification No. AB/15(17)/54-55 dated the
27th December, 1954 issued by the State Government under s.4(3) of the
Saurashtra Rent Control Act, 1954 where under partial exemptions p from
changing only the standard rent subject to certain conditions was granted to
buildings belonging to public trusts for religious and charitable purpose. It
was pointed out that the Notification provided that the provisions of the Act
except provisions in ss 23, 24 and 25 shall not, subject to conditions and
terms specified in the schedule thereto apply to such buildings and term No. l
in schedule A stated that no tenant of such premises to whom the same has been
leased on or before 30th December, 1948 shall be evicted provided such tenant
agrees to increase the monthly rent paid by him immediately before the said
date by 50 per cent and does not allow, except for valid reasons, the rent
amount due at any time to run in arrears for more than two consecutive
months." In other words the Saurashtra Notification was relied upon as an
illustration where 414 partial exemptions from the provisions of the Rent
Control enactment subject to terms and conditions could be granted.
Thus counsel urged that similarly in the
instant case the State Government of Tamil Nadu could have given partial
exemption to buildings belonging to public religious institutions and public
charities only in the matter of 'fair rent' and need not have taken away the
protection available to the tenants under the provisions which prevented
unreasonable eviction.
In our view there is no substance in the
contention.
It cannot be disputed that the two objectives
of the enactment, namely, to control rents and to prevent unreasonable eviction
are interrelated and the provisions which sub-serve these objectives supplement
each other. Tn P. J. Irani's case (supra), Sarkar, J, has also observed at page
193 of the Report that "the purpose of the Act, quite clearly, is to
prevent unreasonable eviction and also to control rent. These two purpose are
intertwined." it is obvious that if the trustees of the public religious
trusts and public charities are to be given freedom to charge the normal market
rent then to make that freedom effective it will be necessary to arm the
trustees with the right to evict the tenants for non-payment of such market
rent. The State Government on material before it came to the conclusion that
the 'fair 'rent' fixed under the Act was unjust in case of such buildings and
it was necessary to permit the trustees of such buildings to recover from their
tenants reasonable market rent and if that be so non-eviction when reasonable
market rent is not paid would be unreasonable and if the market rent is paid by
the tenants no trustee is going to evict them. It is, therefore, clear that
granting total exemption cannot be regarded as excessive or unwarranted.
Apart from this aspect of the matter it is
conceivable that trustees of buildings belonging to such public religious
institutions or public charities may desire eviction of their tenants for the
purpose of carrying out major or substantial repairs or for the purpose of
demolition and reconstruction and the State Government may have felt that the
trustees of such buildings should be able to effect evictions without being
required to fulfill other onerous conditions which must be complied with by
private landlords when they seek evictions for such purpose. In our view,
therefore, the total exemption granted to such buildings under the impugned
notification is perfectly justified.
The reliance on Saurashtra Notification, in
our view, would be of no avail to the petitioners or the appellants.
The manner in 415 which exemption from rent
control provisions should be granted, whether it could be partial or total and
if so on what terms and conditions would be matters for each State Government
to decide in the light of the scheme and provisions of the concerned enactment
and the facts and circumstances touching the classification made. And if the
State of Madras has thought fit to grant the exemption in a particular manner
by the impugned notification it will be difficult to find fault with it if the
exemption so granted is not illegal or unconstitutional. It will be interesting
to note that even under the Saurashtra Notification the term or condition
contained in Schedule 'A' thereto also makes the position clear that eviction
may follow if the permitted enhanced rent is not paid or allowed to fall in
arrears for two consecutive months by the tenant of such buildings belonging to
public religious or charitable trusts.
In the result the challenge to impugned
notification fails and the writ petitions and the civil appeals are dismissed.
All interim orders, if any, are vacated. Where
will be no order as to costs.
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