Mohinder Kumar Vs. State of Haryana
& ANR [1985] INSC 198 (18 September 1985)
SEN, AMARENDRA NATH (J) SEN, AMARENDRA NATH
(J) BHAGWATI, P.N. (CJ) PATHAK, R.S.
CITATION: 1986 AIR 244 1985 SCR Supl. (2) 859
1985 SCC (4) 221 1985 SCALE (2)795
CITATOR INFO:
R 1987 SC2117 (28)
ACT:
Haryana Urban (Control of Rent and Eviction)
Act 1973, section 1(3) - Validity of.
HEADNOTE:
The Haryana Urban (Control of Rent and
Eviction) Act 1973 by Section 1(3) as amended by the Amending Act 1978 (Act 16
of 1978) provides: "Nothing in this Act shall apply to any building the
construction of which is completed on or after the commencement of this Act for
a period of ten years from the date of its completion".
The petitioners challenged the constitutional
validity of Section 1(3) of the Act on the grounds: (i) that the provision
seeks to make an invidious distinction between buildings constructed before the
commencement of this Act and buildings the construction of which was completed
on or after the commencement of this Act and on the basis of this invidious
distinction this provision discriminates between the landlords and tenants of
buildings constructed before the Act and after the Act inasmuch as a landlord
enjoys in case of buildings construction of which is completed on or after the
commencement of the Act an exemption from the operation of the Act and the
tenant in respect of such building is denied the protection and the benefits of
the Act for a period of 10 years from the date of completion of the
construction of the building, whereas the landlord of any building constructed
before the commencement of the Act does not enjoy any such exemption and the
tenant of such building enjoys the protection and all the benefits of the Act.
Thus, the discrimination between one class of landlords and their tenants and
the other class of landlords and their tenants on the basis of the time of
completion of the buildings is clearly arbitrary and is violative of Art. 14 of
the Construction; and (ii) that the retrospective operation of the Act has the
effect of taking away the vested right of the tenant and must, therefore, be
held to be illegal and bad.
Dismissing the writ petitions, 860 ^
HELD: 1(1) Section 1(3) of the Act as amended
by the Amending Act of 1978 (Act 16 of 1978) is constitutionally valid. Any
incentive offered for the purpose of construction of new buildings with the
object of easing the situation of scarcity of accommodation for ameliorating
the conditions of the tenants, cannot be said to be unreasonable, provided the
nature and character of the incentive and the measure of exemption allowed are
not otherwise unreasonable and arbitrary. The exemption to be allowed must be
for a reasonable and a definite period. An exemption for an indefinite period
or a period which in the facts and circumstances of any particular case may be
considered to be unduly long, may be held to be arbitrary. The exemption must
necessarily be effective from a particular date and must be with the object of
promoting new constructions. In the instant case, the provision for exemption
from the operation of the Rent Control Legislation by way of incentive to
persons with means to construct new houses has been made in Section 1(3) of the
Act by the Legislature in the legitimate hope that construction of new
buildings will ultimately result in mitigation of the hardship of the tenants.
Such incentive has a clear nexus with the object to be achieved and cannot be
considered to be unreasonable or arbitrary.
With the commencement of the Act, the provisions
of the Rent Act with all the restrictions and rigours become effective.
Buildings which have been constructed before
the commencement of the Act were already there and the question of any kind of
impetus or incentive to such buildings does not arise. The Legislature,
therefore, very appropriately allowed the benefit of the exemption to the
buildings, the construction of which commenced or was completed on or after the
commencement of the Act. This exemption in respect of buildings coming up or to
come up on or after the date of commencement of the Act is likely to serve the
purpose of encouraging new buildings to be contracted. There is therefore,
nothing arbitrary or unreasonable in fixing the date of commencement of the Act
from which the exemption is to be operative. [866 D-H] (ii) The exemption for a
period of 10 years from the operation of the Act allowed to buildings, the
construction of which commenced or was completed on or after the date of
commencement of the Act, is fair and reasonable. It is for a definite period
and that period of exemption cannot be considered to be too long; and this
exemption, the Legislature may be of the view, will serve the purpose of
encouraging the construction of new buildings. It is for the Legislature to
decide the period of exemption that may be allowed and to fix the date from
which the period of 861 exemption should run. This will ordinarily be a matter
of Legislative policy and this Court will not normally interfere unless the
Court is of the opinion that the period of exemption or the date from which the
exemption is to operate is unreasonable and arbitrary. [867 A-C]
2. The classification of buildings with
reference to the date of commencement of the Act, namely, buildings constructed
before the commencement of the Act and buildings the construction of which was
completed on or after the date of the commencement of the Act, has a rational
basis and has a clear nexus with the object to be achieved. The classification
of the landlord and the tenant of a house constructed before the commencement
of the Act and the landlord and tenant of a house, constructed before the
commencement of the Act, is clearly founded on an intelligible differentia
which has a rational relation to the object and this classification does not
result in any invidious discrimination between the classes of landlords and
tenants so classified. This classification is not arbitrary and is not
violative of Art. 14 of the Constitution. [867 C-E]
3. The Section on its proper construction
clearly indicates that the section is not retrospective in operation. Merely
because the buildings the construction of which commenced or was completed
after the date of commencement of the Act in 1973, come within the purview of
the this particular provision which was introduced by amendment in 1978, the
provision does not become retrospective. This provision operates prospectively
and becomes effective after its incorporation in the Act by the Amendment,
though the buildings completed on or after the commencement of this Act in 1973
are brought within the scope of this Section. The argument that the tenants
have acquired a vested right under the Act prior to its amendment is without
any substance. Prior to the amendment of Section 1(3) by the Amending Act of
1978, the provision as it originally stood cannot be said to have conferred any
vested right on the tenants. [871 A-C] Motor General Traders and Others v.
State of Andhra Pradesh and ors., [1984] 1 S.C.C. 222, inapplicable.
M/s. Punjab Tin Supply Co. Chandigarh v.
Central Government and Ors., [1984] 1 S.C.C. 206, relied upon.
ORIGINAL JURISDICTION: Writ Petitions Nos.
8367 and 3939 etc. of 1985.
(Under Article 32 of the Constitution of
India.) 862 S.M. Ashri, Rakesh K. Khanna and Dr. Meera Aggarwal for the Petitioners.
G.K. Bansal and Prem Malhotra for the
Respondents.
The Judgment of the Court was delivered by
AMARENDRA NATH SEN, J. The constitutional validity of S. 1(3) of the Haryana
Urban (Control of Rent and Eviction) Act, 1973 has been challenged in these
writ petitions. This question which is common to all the writ petitions is the
only question which arises for consideration and these writ petitions are
accordingly being disposed of by this common judgment.
The question has been urged as a pure question
of law.
In that view of the matter it does not become
necessary to refer the facts of any of the writ petitions.
S. 1(3) as originally enacted in the Haryana
Urban (Control of Rent and Eviction) Act, 1973 (hereinafter referred to for the
sake of brevity as the Act) was in the following terms:
"Nothing in this Act shall apply to (i)
any residential building the construction of which is completed on or after the
commencement of this Act for a period of ten years from the date of its
completion;
(ii) any non-residential building
construction of which is completed after the 31st March, 1962.
(iii) any rented land let out on or after
31st March 1962.
This provision was amended by the Amending
Act of 1978 (Act 16 of 1978) to read as follows:
"(3) Nothing in this Act shall apply to
any building the construction of which is completed on or after the
commencement of this Act for a period of ten years from the date of its
completion." It is the validity of this amended provision which has been
questioned in these writ petitions.
863 The validity is challenged mainly on the
following grounds:
(1) The provision is arbitrary and is
violative of Art. 14 of the Constitution.
(2) In any event in so far as this provision
operates retrospectively and seeks to take away the vested rights of the
petitioner under the Act, prior to this amendment, the same must be held to be
illegal and invalid.
The argument is that this provision seeks to
make an invidious distinction between buildings constructed before the commencement
of this Act and building the construction of which was completed on or after
the commencement of this Act and on the basis of this invidious distinction
this provision discriminates between the landlords and tenants of buildings
constructed before the Act and after the Act. It is urged that on the basis of
this distinction between building constructed before and after the commencement
of the Act, a landlord enjoys in case of the buildings construction of which is
completed on or after the commencement of the Act an exemption from the
operation of the Act and the tenant in respect of such building is denied the
protection and the benefits of the Act for a period of 10 years from the date
of completion of the construction of the building, whereas the landlord of any
building constructed before the commencement of the Act does not enjoy any such
exemption and the tenant of such building enjoys the protection and all the
benefits of the Act. It is submitted that this discrimination between one class
of landlords and their tenants and the other class of landlords and their
tenants on the basis of the time of completion of the buildings is clearly
arbitrary and is violative of Art.
14 of the Constitution. The submission is
that Rent Control Legislation is enacted for the purpose of affording
protection to the tenants and the Act in question has also been passed for
achieving the same object. Reference in this connection is made to the
Statement of Objects and Reasons for the passing of the Act and to the Preamble
of the Act.
It is contended that this classification of
buildings on the basis of the time of completion of construction has no
reasonable nexus with the object to be achieved and may on the contrary
frustrate the purpose for which the Act has been passed inasmuch as in respect
of the buildings the construction of which was completed on or after the
commencement of the Act, the tenants are denied the entire benefit and
protection of the Act. It is further contended that there can be no rational
basis 864 in fixing the period of the completion of the building with reference
to the date of commencement of the Act which received the assent of the
Governor on the 25th of April, 1973 and was published in the Haryana Gazette on
the 27th of April, 1973 and also in prescribing a period of 10 years for
exemption from the operation of the Act for the buildings, the construction of
which was completed on or after the commencement of the Act. This
discrimination, it is submitted, is arbitrary and violative of Art. 14 of the
Constitution and in this connection reference has been made to the decision of
this Court in the case of Motor General Traders and Others v. State of Andhra
Pradesh and Ors.
[1984] 1 S.C.C. 222, and also to the decision
of this Court in the case of M/s. Punjab Tin Supply Co. Chandigarh v. Central
Government and Ors. [1984] 1 S.C.C. 206.
The next contention is that the amended
provision has been given retrospective effect inasmuch as the amendment which
was introduced in 1978 has been made applicable to any building construction of
which was completed on or after the date of commencement of the Act in 1973 and
the retrospective operation of the Act has been effect of taking away the
vested right of the tenant and must, therefore, be held to be illegal and bad.
It is argued that S. 3(1) of the Act, as originally enacted was void and
unconstitutional inasmuch as no period of exemption of any building which may
qualify for exemption had been fixed and it is well settled that an indefinite
or unlimited immunity to any building from the purview of the Act is arbitrary
and unconstitutional. The argument is that as the original provision contained
in S. 1(3) of the Act, prior to its amendment, was void and unconstitutional,
no building enjoyed any exemption from the operation of the Act and the tenants
of the buildings were entitled to the protection and the benefit of the Act and
had acquired a vested right to be governed by the provision of the Act. It is
submitted that this vested right of the tenants is sought to be interferred
with by the amended S. 1 (3) which has been made applicable to all the
buildings construction of which was completed on or after the date of
commencement of the Act.
We do not see any force in any of the
contentions.
It is true that Rent Control Legislation is
usually enacted, and the present Act was also passed, taking into account the
conditions prevailing in the State, to regulate the relationship between the
landlord and the tenant in the larger interest of the society and or affording
protection to tenants against exploita- 865 tion by landlords on account of
shortage of accommodation.
The statement of Objects and Reasons for
passing the Act recites - "Certain provisions of the existing law are not
conclusive to harmonious landlord tenant relationship and also hamper rapid
urban development. In order to remedy these defects and to entitle the tenants
to the amenities of Water supply, electricity and sewerage, necessity of fresh
legislation has been felt. Opportunity has also been taken to rationalise the
basis for determination of fair rent and to provide for eviction of these
tenants, who construct their own houses in the urban area concerned sufficient
for their requirement." The Preamble to the Act reads:
"An Act to control the increase of rent
of certain buildings and rented land situated within the limits of urban areas,
and the eviction of tenants there from." There cannot be any doubt that
the paramount object of every Rent Control Legislation including the present
Act, is to provide safeguards for tenants against exploitation by landlords who
seek to take undue advantage of the pressing need for accommodation of a large
number of people looking for a house on rent for residence or business in the
background of acute scarcity of accommodation is at the very root of the
problem and if houses were freely available at reasonable rent, there would
hardly be any need for Rent Control Legislation. It is entirely for the
Legislature to decide whether any measures, are to be adopted for remedying the
situation and for ameliorating the hardship of tenants.
The Legislature may very well come to a
conclusion that it is the shortage of buildings which has resulted in scarcity
of accommodation and has created a situation where the demand for accommodation
is far in excess of the requisite supply, and it is because of such acute
scarcity of accommodation the landlords are in a position to exploit the
situation to the serious detriment of the tenants. The Legislature in its
wisdom may properly consider that in effecting an improvement of the situation
and for mitigating the hardship of the tenanted class caused mainly due to
shortage of buildings, it will be proper to encourage construction of new
buildings, as construction of new buildings will provide more accommodation,
easing the situation to a large 866 extent, and will ultimately result in
benefitting the tenants. As in view of the rigours of Rent Control Legislation,
persons with means may not be inclined to invest in construction of new houses,
the Legislature to attract investment in construction of new houses may
consider it reasonable to provide for adequate incentives so that new
constructions may come up. It is an elementary law of economics that anybody
who wants to invest his money in any venture will expect a fair return on the
investment made. As acute scarcity of accommodation is to an extent responsible
for the landlord and tenant problem, a measure adopted by the Legislature for
seeking to meet the situation by encouraging the construction of new buildings
for the purpose of mitigating the hardship of tenants must be considered to be
a step in the right direction. The provision for exemption from the operation
of the Rent Control Legislation by way of incentive to persons with means to
construct new houses has been made in Sec. 1(3) of the Act by the Legislature
in the legitimate hope that construction of new buildings will ultimately
result in mitigation of the hardship of the tenants. Such incentive has a clear
nexus with the object to be achieved and cannot be considered to be
unreasonable or arbitrary. Any such incentive offered for the purpose of
construction of new buildings with the object of easing the situation of
scarcity of accommodation for ameliorating the conditions of the tenants,
cannot be said to be unreasonable, provided the nature and character of the
incentive and the measure of exemption allowed are not otherwise unreasonable
and arbitrary. The exemption to be allowed must be for a reasonable and a
definite period. An exemption for an indefinite period or a period which in the
facts and circumstances of any particular case may be considered to be unduly
long, may be held to be arbitrary. The exemption must necessarily be effective
from a particular date and must be with the object of promoting new
constructions. With the commencement of the Act, the provisions of the Rent Act
with all the restrictions and rigours become effective. Buildings which have
been constructed before the commencement of the Act were already there and the
question of any kind of impetus or incentive to such buildings does not arise.
The Legislature, therefore, very appropriately allowed the benefit of the
exemption to the buildings, the construction of which commenced or was
completed on or after the commencement of the Act. This exemption in respect of
buildings coming up or to come up on or after the date of commencement of the
Act is likely to serve the purpose of encouraging new buildings to be
constructed. There is therefore nothing arbitrary or unreasonable in fixing the
date of commencement of the Act from which the exemption is to be operative.
867 The exemption for a period of 10 years
from the operation of the Act allowed to buildings, the construction of which
commenced or was completed on or after the date of commencement of the Act, is
fair and reasonable. It is for a definite period and that period of exemption
cannot be considered to be too long; and this exemption, the Legislature may be
of the view, will serve the purpose of encouraging the construction of new
buildings. It is for the Legislature to decide the period of exemption that may
be allowed and to fix the date from which the period of exemption should run.
This will ordinarily be a matter of Legislative police and this Court will not
normally interfere unless the Court is of the opinion that the period of
exemption or the date from which the exemption is to operate is unreasonable
and arbitrary. The classification of buildings with reference to the date of
commencement of the Act namely, buildings constructed before the commencement
of the Act and buildings the construction of which was completed on or after
the date of the commencement of he Act, has a rational basis and has a clear
nexus with the object to be achieved. For the purpose of achieving the object
and encouraging the construction of new houses with a view to ameliorate the
hardship of the tenants by removing the scarcity of accommodation, the
classification of the landlord and the tenant of a house constructed before the
commencement of the Act and the landlord and tenant of a house, the
construction of which commences or is completed on or after the commencement of
the Act, is clearly founded on an intelligible differentia which has a rational
relation to the object and this classification does not result in any invidious
discrimination between the classes of landlords and tenants so classified. This
classification is not arbitrary and is not violative of Art. 14 of the
Constitution.
The decisions on which reliance has been
placed on behalf of the petitioners is indeed of no assistance. In the case of
Motor General Traders (supra), this Court had to consider the constitutional
validity of S. 32 (b) of the Andhra Pradesh Buildings (Lease, Rent and Eviction)
Control Act, 1960. This provision exempted all buildings constructed on or
after August 26, 1957 from the operation of the Act.
No period had been fixed for which this
exemption will be enjoyed by owners of buildings constructed on or after 26th
August, 1957 and the exemption appeared to be in the nature of a permanent one.
This Court after referring to various authorities naturally declared the said
provision to be invalid, holding:
"After giving our anxious consideration
to the learned arguments addressed before us, we are of the view that 868
clause (b) of Section 32 of the Act should be declared as violative of Article
14 of the Constitution because the continuance of that provision on the statute
book will imply the creation of a privileged class of land lords without any
rational basis as the incentive of build which provided a nexus for a
reasonable classification of such class of landlords no longer exists by lapse
of time in the case of the majority of such landlords. There is no reason why
after all these years they should not be brought at par with other landlords
who are subject to the restrictions imposed by the Act in the matter of
eviction of tenants and control of rents." It is, however, to be noted
that this Court in this very case observed at pp. 243 & 244 as follows:-
"We do relize the adverse effect of this decision on many who may have
recently built houses by spending their life savings or by borrowing large
funds during these inflationary days at high rates of interest, on the expectation
and belief that they would not be subjected to the restrictions imposed by the
Act. The incentive to build provides a rational basis for classification and it
is necessary, to the national interest, that there should be freedom from
restrictions for a limited period of time. It is always open to the State
Legislature or the State Government to take action by amending the Act itself
or under Section 26 of the Act, as the case may be, not only to provide
incentive to persons who are desirous of building new houses, as it serves a
definite social purpose but also to mitigate the rigour to such class of
landlords who may have recently built their houses for a limited period as it
has been done in the Union Territory of Chandigarh as brought out in our recent
judgment in Punjab Tin Supply Co. Chandigarh v. Central Government. The
question whether new legislation should be initiated to exempt newly
constructed buildings for a limited period of time on the pattern of similar
legislation undertaken by different States or to exempt such class of buildings
for a given number of years from the provisions of the Act by the issue of a
notification under Section 26 of the Act is one for the State Government to
decide." 869 In the other decision, namely Punjab Tin Supply Co.
Chandigarh (supra), the validity of S. 3 of
the East Punjab Rent Restrictions Act, 1949 and all three notifications issued
under the said section provided for exemption of every building constructed in
the urban area of Chandigarh for a period of 5 years from the respective date
applicable to it from the operation of the Act came to be challenged.
This Court upheld the validity of S. 3 of the
Act and the notifications impugned observing:- In the result we declare that
Section 3 of the Act and the notification dated January 31, 1973 and the other
notifications impugned in these cases are valid and effective. We further
declare that the exemption granted by the notification dated January 31, 1973
applies only to those buildings which are given sewerage connection or electric
connection or which are occupied, as the case may be on or after January 31,
1973 and not to those buildings which satisfied any of the said conditions
before January 31, 1973." The following observations of the Court at pp. 216-17
may be usefully noted:- "The Preamble and the provisions of a statute no
doubt assist the Court in finding out its object and policy but its object and
policy need not always be strictly confined to its preamble and the provisions
contained therein. The object and policy of the Act which is now before us
appears to be slightly wider than some of the key provisions of the Act namely
fixation of fair rent and prevention of unreasonable eviction of tenants. The
acute problem of shortage of urban housing as we all know has become a
permanent feature throughout India. It is on account of the shortage of the
number of houses in urban area, as landlords get an opportunity to exploit
tenants who are in need of housing accommodation by compelling them to enter
into unconscionable bargains. The Act is passed as one of the measures taken to
mitigate the hardship caused to the tenants. The policy and object of the Act
generally is mitigation of the hardship of tenants. Such mitigation can be
attained by several measures, one of them being creation of incentive to
persons with 870 capital who are otherwise reluctant to invest in the
construction of new buildings in view of the chilling effect of the rent
control laws. As part of the said scheme in order to persuade them to invest in
the construction of new buildings exemption is granted to them from the
operation of the Act for a short period of five years so that whatever may be
the hardship for the time being to the tenants of the new buildings, the new
buildings so constructed may after the expiry of the period of exemption be
available for the pool of housing accommodation controlled by the Act.
The impugned notification is not, therefore,
ultra vires Section 3 of the Act as in its true effect, it advances the scheme,
object and purposes of the Act which are articulated in the preamble and the
substantive provisions of the Act. Moreover the classification of buildings
into exempted buildings and unexempted buildings brought about by the
notification bears a just and reasonable nexus to the object to be achieved
namely the creation of additional housing accommodation to meet the growing
needs of persons who have no accommodation to reside or to carry on business
and it cannot be considered as discriminatory or arbitrary or unreasonable in
view of the shortness of the period of exemption available in the case of each
exempted building. The exemption granted for a period of five years only serves
as an incentive as stated above and does not create a class of landlords who are
for ever kept outside the scope of the Act. The notification tries to balance
the interests of the landlords on the one hand and of the tenants on the other
in a reasonable way. We do not, therefore, agree with the submission that the
notification either falls outside the object and policy of the statute or is
discriminatory." The aforesaid observations, in our view, clearly negative
the contentions raised by the petitioners and conclude the question against
them in so far as the validity of S. 1(3) of the Act on the grounds of
arbitrariness and illegal discrimination is concerned.
The other contention that this provision must
be held to be bad inasmuch as this provision operates retrospectively and seeks
to take away the vested rights of the petitioners under the Act 871 is equally
without any merit. The section on its proper construction clearly indicates
that the section is not retrospective in operation. Merely because the
buildings the construction of which commenced or was completed after the date of
commencement of the Act in 1973, come within the purview of this particular
provision which was introduced by amendment in 1978, the provision does not
become retrospective. Thus provision operates prospectively and becomes
effective after its incorporation in the Act by the amendment, though the
buildings completed on or after the commencement of this Act in 1973 are
brought within the scope of this Section. The argument that the tenants have
acquired a vested right under the Act prior to its amendment is without any
substance. Prior to the amendment of Section 1(3) by the Amending Act of 1978,
the provision as it originally stood cannot be said to have conferred any
vested right on the tenants. The provision, as it originally stood prior to its
amendment, might not have been constitutionally valid as the exemption sought
to be granted was for an indefinite period. That does not necessarily imply
that any vested right in any tenant was thereby created. The right claimed is
the right to be governed by the Act prior to its amendment. If the Legislature
had thought it fit to repeal the entire Act could the tenant have claimed any
such right? Obviously, they could not have the question of acquiring any vested
rights really does not arise. Even if it could be said that the tenants had
acquired any right because of any invalidity of the earlier provision before
amendment, it is always open to the Legislature to remove any defect to make it
valid. It is well settled that if any provision made by the legislature is found
constitutionally invalid for some lacunae or otherwise such provision can
always be validated by removing the defect or lacuna by passing a validating
Act. Validating Acts may be passed and, in fact, are usually passed with
retrospective effect to remedy any situation which might have brought about as
a result of the original provision being declared invalid, provided however the
Validating Act sought to be passed is within the competence of the Legislature.
In the result, these writ petitions are all dismissed.
There shall, however, be no order as to
costs.
M.L.A. Petitions dismissed.
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