Welfare
Assocn. A.R.P., Maharashtra & Anr Vs. Ranjit P. Gohil & Ors [2003] Insc
101 (18 February 2003)
R.C.
Lahoti & Brijesh Kumar.
WITH C.A.
Nos.5169/98, 5170/98, 920/99, 2484/99, C.A. Nos. 1405- 1407/2003 (@ SLP(C)
359-361/99), C.A. Nos. 5692/98, 5681- 5691/98, 6145/01, 6146/01, 7879/01,
4091/02, C.A. Nos. 1408- 1409/2003(@ SLP(C) Nos. 15262-15263/02), C.A. 5334/02
R.C. Lahoti, J.
Leave
granted in all SLPs.
The Bombay Rents, Hotel and Lodging House
Rates Control, Bombay Land Requisition and Bombay Government Premises (Eviction) (Amendment) Act, 1996 (Act No. XVI of
1997) having been struck down as ultra vires of the Constitution and as being
beyond legislative competence of the State Legislature, the State of Maharashtra,
the Welfare Association of Allottees of Requisitioned Premises, Maharashtra and
several others have come up in appeal.
The
decision by the Division Bench of the High Court of Judicature at Bombay was delivered on 27th July 1998. The judgment posed the threat of
eviction against several allottees in occupation of premises requisitioned by
the State Government. Several Writ Petitions were filed which were all disposed
of by the impugned judgment of the Division Bench. The principal question which
arises for decision in the batch of appeals is the constitutional validity of
Amendment Act No. XVI of 1997 abovesaid. (hereinafter referred to as the
Amendment Act, for short).
Historical
background : Two decisions of this Court :- A brief statement of historical
background leading to the present controversy is apposite.
In the
year 1948, Bombay Land Requisition Act, 1948 (Act No. XXXIII of 1948) was
enacted to make provision for the requisition of land and for the continuance
of requisition of land and for certain other purposes. 'Land' was widely
defined so as to include therein building also and 'premises' were defined to
mean building or part of building intended to be let separately and other
things appurtenant (as defined). Land and vacant premises could be
requisitioned by the State Government for any public purpose. Provision was
also made for continuance of requisitions made under the Requisitioned Land (Continuance of Powers) Act, 1947 and the Defence of India
Act, 1962 and the rules made thereunder. Section 8 of the Act made provision for
payment of compensation to persons whose property was requisitioned or
continued to be subjected to requisition to be determined by an officer
authorized in this behalf by the State Government. The basis of compensation
can be spelt out from the following part of sub-Section (1) of Section 8 :-
"The
officer shall determine such amount of compensation as he deems just having
regard to all the circumstances of the case; and in particular he shall be
guided by the provisions of sub-Section (1) of Section 23 and Section 24 of the
Land Acquisition Act, 1894 (as in force in the Bombay area of the State of Maharashtra)
in so far as they can be made applicable." It appears that the shortage of
accommodation in Bombay and the difficulties likely to be
faced by the occupants to whom the requisitioned land and premises were
allotted by the State Government resulted in the requisitioned properties
continuing under requisition for endless periods of time. The constitutional
validity of such requisition was put in issue before the High Court in the
following factual background. On 2nd April, 1951 a flat was requisitioned by the State Government and
allotted to a person. The owner made a request in 1964 to the Competent
Authority for derequisitioning the flat, which was rejected. A purchaser of the
property in 1973 once again made a request to derequisition the flat, which too
was turned down. The owner filed a Writ Petition in the year 1980 under Article
226 of the Constitution, laying challenge to the validity of the requisition.
One of the grounds of challenge was that the requisition order could not
survive for such a long period of time and the Government was bound to
derequisition the flat. The Writ Petition was allowed. The occupant came in
appeal by special leave to this Court. Vide its judgment dated February 22, 1984 (H.D. Court held that the power of requisitioning is exercisable by the
Government only for a public purpose which is of a transitory character. If the
public purpose of requisition is of a perennial or permanent character from the
very inception, no order can be passed requisitioning the premises and in such
a case the order of requisition, if passed, would be a fraud upon the statute;
further Government would be requisitioning the premises when really speaking
they want the premises for acquisition as the objective of taking the premises
was not transitory but permanent in character. This Court upheld the decision
of the High Court allowing the Writ Petition and directing the State Government
to derequisition the flat and to take steps to evict the appellant and to
handover possession of the flat to the owner.
Following
the decision of the Bombay High Court in H.D. Vora's case (supra) the Bombay
High Court in numerous cases struck down the continuance of requisition orders
made in the late 1940s and early 1950s particularly of residential premises.
Two Writ Petitions, relating to premises requisitioned under Bombay Land
Requisition Act, 1948 __ one of which was requisitioned for purposes of
residential use and the other was requisitioned for commercial use of running
fair price ration shop by a co-operative society, came to be filed in this
Court which were heard and decided on April 27, 1994 by State of Maharashtra,
(1994) 4 SCC 192. The Writ Petitions in effect had sought reconsideration of
decision in H.D. Vora's case (supra), which was a two Judges Bench decision,
and therefore, were placed for consideration and hearing by a Constitution
Bench. The findings of the Constitution Bench may briefly be summed up as
under:-
i)
That the purpose of a requisition order may be permanent yet an order of
requisitioning cannot be continued indefinitely or for a period of time longer
than that which, in the facts and circumstances of the particular case, is
reasonable. The concept of requisitioning is temporary. The concepts of
acquisition and requisition are altogether different as are the consequences
that flow therefrom. A requisitioning which in effect and substance results in
acquisition and thereby depriving an owner of property of his rights and title
to property without being paid due compensation is bad;
ii)
That the decision in H.D. Vora's case does not require reconsideration.
However,
the Constitution Bench did not approve the two Judges Bench observation in H.D.
Vora's case that requisition orders under the said Act cannot be made for a
permanent purpose. The Constitution Bench also held that the period of 30 years
has not been laid down in H.D. Vora's case as the outer limit for which a
requisition order may continue. An order of requisition can continue for a
reasonable period of time; what period is reasonable would depend on the facts
and circumstances of each case; and in H.D. Vora's case the continuance of an
order of requisition for as long as 30 years was rightly held to be
unreasonable.
What
is of significant relevance is the operative part of the order of the
Constitution Bench. The same (paras 20 and 21 of SCC, at p.205) is extracted
and reproduced verbatim as under:- "The continuance of requisition orders
made in the late 1940s and early 1950s and thereabouts, particularly of
residential premises, have been struck down by the Bombay High Court in
numerous cases following the judgments in H.D. Vora case. There are no appeals thereagainst
(except one which was, by a separate order of this Bench, dismissed). The allottees
of these requisitioned premises (except retired government servants allotted
premises requisitioned for the purpose of housing government servants) and
their legal representatives have continued in occupation thereof by reason of
the interim orders of this Court passed from time to time in Writ Petition No.
404 of 1986. Having regard to the known difficulty of finding alternate
accommodation in Bombay and other large cities in Maharashtra, the protection
of these interim orders is hereby continued until 30-11-1994, on which date all
occupants of premises the continued requisition of which has been quashed as
aforesaid shall be bound to vacate and hand over vacant possession to the State
Government so that the State Government may, on or before 31-12-1994,
derequisition such premises and hand back vacant possession thereof to the
landlords.
The
writ petitions are, accordingly, dismissed.
There
shall be no order as to costs." [N.B. : The portion which we have
underlined to emphasise will be of significance in constructing the operative
part of our judgment.] The majority opinion endorsed by four out of five Judges
constituting the Constitution Bench was delivered by S.P. Bharucha, J. (as his
Lordship then was) which we have noticed and reproduced hereinabove. P.B. Sawant,
J. in his separate opinion agreed with the findings on the questions of law
recorded in the majority opinion but expressed dissent with the operative part
of the order. His Lordship observed:- "I am of the view that
notwithstanding the legal position, the following directions can be given to
mitigate the hardship of the allottees of the requisitioned premises. These
directions will in no way prejudice the interests of the landlords of the
premises. At present they are receiving the same rent from the allottees as
from the other tenants.
On
account of the Rent Act, they will not receive more rent from the new tenants
whom they may induct after the premises are released from requisition. It is in
rare cases that the premises would be required by the landlords for bona fide
personal requirement. All that, therefore, they will be deprived of for some
time more, on account of these directions, is the right to induct new tenants
of their choice. It is a notorious fact that such choice is, more often than
not, exercised in favour of those who can offer competing illegal
consideration, commonly known as "pugree" which is escalating with
passage of time." His Lordship noticed that there were two sets of allottees
before the Court:
(i)
Consumer Cooperative Societies running fair price ration shops in the allotted
premises, and
(ii)
Individuals who are allotted residential premises.
As to
category (i) his Lordship opined that the Consumer Cooperative Societies were
running ration shops and shall have to be wound up. The employees of such
societies should be allowed sufficient time to find out alternative employment
and the State Government should also make alternative arrangements for housing
ration shops and for that purpose the derequisition and eviction should not
take place before 31-5-1996. As to category (ii), his Lordship
opined that they should be given preference in allotment of plots and flats by
making suitable arrangement with City and Industrial Development Corporation of
Maharashtra Limited and Maharashtra State Housing Board. Alternative
accommodation to such occupants should be made available by the State
Government latest by 31-5- 1996 and till then there should be no derequisition
and eviction. The premises other than those covered by the said two categories
may be derequisitioned as directed in the order proposed by the majority.
It is
pertinent to note that the two writ petitions were directed to be dismissed by
the Constitution Bench. To mitigate the hardship likely to be caused to the
occupants - the allottees in requisitioned premises continuing in occupation by
virtue of interim orders of the Court which stood vacated by dismissal of the
writ petitions, this Court allowed time until 30-11-1994 for vacating the
premises by the occupants and for restoring of possession of the premises by
the State Government to the owners.
Rent
Control Legislations leading upto the impugned amendment :- Now the relevant
Rent Control Legislations in their chronological order leading upto the
enactment of the impugned Amendment Act held ultra vires by the impugned
judgment of the High Court, may be noticed.
The
Bombay Land Requisition Act, 1948 as originally enacted was to remain in force upto
31-3-1950. The Act was amended from time to
time extending its life. Section 9 of the Act empowered the State Government to
release from requisition at any time the land requisitioned or continued to be
subject to requisition under the Act.
By
Section 2 of Maharashtra Act 51 of 1973, sub-Section (1A) was inserted below
sub-Section (1) of Section 9 which made it obligatory for the State Government
to release land from requisition on the expiry of the stated period. The said
period was extended from time to time by successive amendments. The period of
requisition was to expire on 31-12-1994 when the matter came up for
consideration and disposed of by the Constitution Bench in Grahak Sanstha Manch
case (supra).
The
paucity of accommodation and the impact of war on the population and habitation
conditions in Bombay led to the enactment of the Bombay Rent Restriction Act,
1939 followed by the Bombay Rents, Hotel Rates and Lodging Houses Rates
(Control) Act, 1944 to curb the sky rocketing greed of the landlords pitted
against the miseries of roofless. Both these Acts were repealed by a more
comprehensive legislation namely, the Bombay Rents, Hotel and Lodging House
Rates (Control) Act, 1947 which was enacted to amend and consolidate the law
relating to the control of rents and repairs of certain premises, of rates of
hotels and lodging houses and of evictions and also to control the charges for
licenses of premises etc. The Act protected tenants and licensees in occupation
of the premises. Section 13 made provision for the events and contingencies on
proof whereof the landlord could recover possession. Maharashtra Act 17 of 1973
conferred the status of tenant on certain licensees in occupation of any
premises or any part thereof, which is not less than a room since 1st February
1973 or before. Several other amendments and enactments were also passed by the
State Legislature beneficial in nature to the tenants, licensees and occupants
of the premises, the details whereof are being omitted as not necessary for our
purpose.
What
is relevant for our purpose is to note that the life of requisition or
continued requisition of any land which was coming to an end by virtue of
sub-section (1-A) as inserted in Section 9 of the Bombay Land Requisition Act,
1948 by Maharashtra Act 5 of 1973, further amended by Maharashtra Act 29 of
1990 was given an extension by issuing an ordinance, namely, the Bombay Land
Acquisition (Amendment) Ordinance, 1994 (Maharashtra Ordinance No. XX of 1994)
which extended the life of such requisitions for a period of 24 years from
27-12-1973 that is upto 27th December, 1997. The statement of objects and
reasons accompanying the said Ordinance referred to the two decisions of this
Court in H.D. Vora (supra) and the subsequent decision of this Court dated
27-4-1994 in Grahak Sanstha Manch and Ors. case (supra). The preamble noticed
the difficulty which was likely to be faced by several persons in occupation of
the accommodation requisitioned and allotted by the State Government and the
difficulties which the Government was facing on account of paucity of funds and
ever rising prices in constructing alternative accommodation to accommodate
Government employees in-service and others. The statement noticed the factum of
both Houses of the State Legislature being not in session and the Governor of Maharashtra
having felt satisfied of the existence of requisite circumstances for issuing
the Ordinance and concluded by stating :- "In the facts and circumstances
as aforesaid, it is considered expedient to extend the period of requisition
under the Act for a further period of three years beyond the 26th December,
1994, so as to enable the State Government to complete the process of
derequisitioning during the extended period of three years. It is, therefore,
proposed to suitably amend sub-Section (1A) of Section 9 of the principal Act
extending the total period of requisition from twenty-one years to twenty-four
years." The Ordinance was replaced by Maharashtra Act No. VII of 1995. The
assent of the President of India under Article 254(2) of the Constitution of
India was received.
Now
the crucial amendment. On 7-12-1996, the Governor of Maharashtra promulgated
the Bombay Rents, Hotel and Lodging Houses Rates Control, Bombay Land
Requisition and Bombay Government Premises (Eviction) (Amendment) Ordinance,
1996 (Maharashtra Ordinance XXIII of 1996) whereby certain amendments were
incorporated in the Bombay Rents, Hotel and Lodging House Rates Control Act,
1947 (hereinafter referred to as "the Principal Act, 1947") by
Section 2 of the Ordinance. It is not necessary to burden the judgment by
extracting and reproducing the entire text of the Ordinance (which is published
in Maharashtra Government Gazette Extraordinary - Part VIII - dated December 7,
1996). It would suffice for our purpose to note the following effect of the
Ordinance and consequences flowing therefrom (as crystalised and agreed to by
the learned counsel for all the parties, at the hearing):-
1)
Section 5 of the Principal Act, 1947 was amended so as to confer the status of
the tenant of the landlord on such person or his legal heir as was allotted by
the State Government for residential purpose any premises requisitioned or
continued under requisition. The status conferred on them by amending Section 5
of the Principal Act and by inserting Section 15B in the Principal Act was that
the allottee or his legal heir in occupation or possession of the allotted
premises for own residence "shall, notwithstanding anything contained in
this Act, or in the Bombay Land Requisition Act, 1948, or in any other law for
the time being in force, or in any contract, or in any judgment, decree or
order of any court passed on or after the 11th June, 1996, be deemed to have
become, for the purposes of this Act, the tenant of the landlord; and such
premises shall be deemed to have been let by the landlord to the State
Government or, as the case may be, to such Government allottee, on payment of
rent and permitted increases equal to the amount of compensation payable in respect
of the premises immediately before the said date."
2. All
the premises requisitioned or continued under requisition under the Bombay Land
Requisition Act, 1948 and allotted to Government allottees and allowed by the
State Government to continue or to remain in occupation or possession of such
premises were deemed to have been released from requisition.
3. The
premises requisitioned and continued under requisition and allotted by the
State Government for any non-residential purpose to any department or office of
the State Government or Central Government or any public sector undertaking or
Corporation owned or controlled fully or partly by the State Government or any
registered co-operative society or any foreign consulate and allowed by the
State Government to remain in their occupation or possession were included in
the definition of 'Government Premises' within the meaning of Section 2 clause
(b) of the Bombay Government Premises Eviction Act, 1955.
(4) In
spite of such status of tenant having been conferred on the person in
occupation or possession and the owner of the property having been declared to
be landlord, the Ordinance took care to clarify (by sub-section (2) of Section
3) :- "Save as otherwise provided in this section or any other provisions
of this Act, nothing in this Section shall affect:-
(a) the
rights of the landlord including his right to recover possession of the
premises from such tenant on any of the grounds mentioned in Section 13 or in
any other Section;
(b)
the right of the landlord or such tenant to apply to the court for the fixation
of standard rent and permitted increases under this Act, by reason only of the
fact that the amount of the rent and permitted increases, if any, to be paid by
such tenant to the landlord is determined under sub-Section (1);
(c) the
operation and the application of the other relevant provisions of this Act in
respect of such tenancy." Certain consequential amendments were also
effected in the Bombay Land Requisition Act, 1948 and the Bombay Government
Premises (Eviction) Act, 1955, which it is not necessary to notice and
reproduce.
The
statement of objects and reasons accompanying the Ordinance is very relevant
and shall have to be referred to while dealing with the contentions raised by
the contending parties before this Court and therefore the same is reproduced
hereunder :- STATEMENT "The Bombay Land Requisition Act, 1948 is enacted
to provide for requisition of land for relieving the pressure of accommodation,
especially in urban areas, by regulating distribution of vacant premises for
public purposes, and for certain other purposes incidental thereto. Certain
premises which have been requisitioned or continued under requisition under the
said Act have been allotted for non-residential purpose to many departments or
offices of the State Government or Central Government or public sector
undertakings, corporations owned or controlled fully or partly by the State
Government or co-operative societies or foreign consulates and for residential
purpose to different categories of persons such as employees of the State or
Central Government, public sector undertakings, corporations, or homeless
persons, etc. Many of these premises have since been derequisitioned by the
Government, as per Court orders or having regard to certain other
circumstances. But still there are quite a large number of allottees in
occupation of such premises, for a number of years, on payment of compensation
as determined under the said Act. The allottees of such premises include
Government servants who are still in Government service and others.
2.
Under the existing provisions of Section 9 of the Bombay Land Requisition Act,
1948, as last amended by Mah. Act No. VII of 1995, the premises which have been
requisitioned on or before 27th December, 1973 will have to be released from
the requisition on or before 26th December, 1997 and those which have been
requisitioned after 27th December, 1973, within twenty-four years from the date
on which possession of such land was surrendered or delivered to, or taken by,
the State Government.
Further
the Supreme Court in Writ Petition No. 404 of1986 filed by the Association of Allottees
of the Requisitioned Premises and Writ Petitions No. 53 of 1993 and 27 of 1994
filed by the Grahak Sanstha Versus State of Maharashtra, has given a final
decision on the 27th April, 1994 in the matter of requisitioned premises (AIR
1994, S.C., 2319), upholding the decision in the H.D. Vora's case [(1984) 2
S.C.C. 337] and has directed that the occupants of the requisitioned premises,
the continued requisition of which was quashed, were bound to vacate and hand
over vacant possession of such premises to the State Government on or before
30th November, 1994 so that the Government could derequisition such premises
and hand over the vacant possession thereof to the landlords. Accordingly,
derequisitioning process, in respect of all such premises and applying the
ratio of the said Supreme Court Judgment, in several other premises, has
already been completed by the State Government. There are however as aforesaid,
nearly 604 residential premises and about 90 non-residential premises which are
still under requisition in Brihan Mumbai and 138 in other districts which
include requisitioned premises allotted to Government servants who are still in
Government service and others.
3. As
a matter of policy, the State Government has stopped requisitioning of new
premises except in some special cases. As a result of this policy and also due
to continued acute shortage of accommodation with Government and astronomical
rise in the cost of properties in Mumbai, it would not be possible for
Government to give suitable alternative accommodation to all such allottees if,
applying the ratio of the said Supreme Court Judgment the Government has to
vacate all the requisitioned premises. The situation is, therefore, likely to
result in the Government allottees presently in occupation of the requisitioned
premises being rendered without any office accommodation or homeless. It is
imperative to find a solution to this grave situation and to give some kind of
statutory protection to these allottees of the requisitioned premises.
4. As
the landlords are generally unwilling to accept such Government allottee, as
contractual tenants, on payment of the standard rent and permitted increases,
Government considers it expedient, in greater public interest, to make suitable
provisions for providing the protection of statutory tenancy under the Rent Act
to the State Government and to such Government allottees; and consequently to
provide for the release of such premises from requisition.
5. As
many landlords have already approached the High Court seeking eviction orders
of the allottees of the requisitioned premises and the possibility of others
also approaching the Court for such eviction orders cannot be ruled out,
thereby frustrating the very object of this legislation, it is also considered
expedient to provide in the proposed section 3 of this Ordinance that, such
conferral of statutory tenancy rights on the allottees shall not be affected by
any eviction orders passed by the Court on or after 11th June, 1996 (being the
date of the Government decision to undertake such legislation).
6. As
both Houses of the State Legislature are not in session and the Governor of Maharashtra
is satisfied that circumstances exist which render it necessary for him to take
immediate action further to amend the Bombay Rents, Hotel and Lodging House
Rates Control Act, 1947, the Bombay Land Requisition Act, 1948 and the Bombay
Government Premises (Eviction) Act, 1955, suitably for the purposes aforesaid,
this Ordinance is promulgated.
Mumbai:
P.C. ALEXANDER Dated the
7th December 1996. Governor
of Maharashtra By order and in the name of the Governor of Maharashtra, JAYANT DESHPANDE, Secretary to
Government." In due course of time, the Ordinance was replaced by the
Bombay Rents, Hotel, Lodging House Rates Control, Bombay Land Requisition and
Bombay Government Premises (Eviction) (Amendment) Act, 1996 (Maharashtra Act
XVI of 1997).
The vires
of this Amendment Act XVI of 1997 is under challenge and arises for
consideration by this Court in these appeals, in view of the High Court having
upheld the challenge. The vires of the Ordinance need not be gone into as the
same has lapsed with the passage of time and its provisions merged into the
provisions of the Amendment Act above-said.
Though
the challenge before the High Court was laid on very many grounds, in view of
the findings arrived at by the High Court all the learned counsel for the
parties agreed that only the following three issues survive and are relevant
for decision in these appeals, namely,
i) whether
the State Government has requisite legislative competence to enact the impugned
amendments?
ii) whether
the impugned legislation is a colourable one and is an interference with the
judicial mandate of Supreme Court contained in H.D. Vora's case and Grahak Sanstha
Mancha and Ors. case or has the effect of overruling the decisions of this
Court and hence violative of doctrine of separation of powers? And
iii) whether
the impugned enactment is violative of Article 14 of the Constitution as being
arbitrary and unreasonable? We proceed to deal with each of the three issues seriatem.
(i)
Legislative competence ?
While
the writ petitioners challenged the legislative competence of the State
Legislature to enact the impugned Amendment Act, the State of Maharasthra and
the beneficiaries of legislation have defended the impugned legislation by
attributing legislative competence to State Legislature by reference to entries
6, 7 and 13 of List-III and entry 18 of List-II of Seventh Schedule which are
reproduced hereunder for ready reference:- "List - III ? Concurrent List
6.
Transfer of property other than agricultural land; registration of deeds and
documents.
7.
Contracts, including partnership, agency, contracts of carriage, and other
special forms of contracts, but not including contracts relating to
agricultural land.
13.
Civil procedure, including all matters included in the Code of Civil Procedure
at the commencement of this Constitution, limitation and arbitration.
List -
II ? State List
18.
Land, that is to say, right in or over land, land tenures including the
relation of landlord and tenant, and the collection of rents; transfer and
alienation of agricultural land; land improvement and agricultural loans;
colonization." So far as entry 18 of List-II is concerned, we may repel
the defence summarily by referring to three decisions of this Court, Rama Sundari
Debi & Another, 1970 (1) SCR 443, wherein it has been categorically held
that tenancy of buildings or of house accommodation or leases in respect of
non-agricultural property are not included in Entry 18 of List-II and that they
more appropriately fall within the field of entries 6, 7 and 13 of List-III.
What
should be the approach of the Court dealing with a challenge to the
constitutionality of a legislation has been succinctly set out in Principles of
Statutory Interpretation by Justice G.P. Singh (Eighth Edition, 2001 at pp
453-454 and 36). A statute is construed so as to make it effective and
operative on the principle expressed in the maxim "ut res megis valeat quam
pereat". (It is better to validate a thing than to invalidate it). There
is a presumption that the Legislature does not exceed its jurisdiction. The
burden of establishing that the Act is not within the competence of the
Legislature, or that it has transgressed other constitutional mandates, such as
those relating to fundamental rights, is always on the person who challenges
its vires. If a case of violation of a constitutional provision is made out
then the State must justify that the law can still be protected under a saving
provision. The courts strongly lean against reducing a statute to a futility.
As far as possible, the courts shall act to make a legislation effective and
operative.
SCR
869, the Constitution Bench held that the presumption is always in favour of
the constitutionality of an enactment, and the burden is upon him who attacks
it to show that there has been a clear transgression of the constitutional
principles.
It
must be mentioned in all fairness to the writ petitioners and their learned
counsel that the challenge to the constitutional validity of impugned Amendment
Act was pursued and pressed by resting submissions not on the ground of
violation of any property rights of the owner-landlords but mainly on the
ground of the lack of legislative competence in State Legislature by reference
to the relevant entries in Seventh Schedule. The submission of the learned
counsel for the writ petitioners - respondents has been that within the meaning
of entries 6 & 7 of List-III what can be enacted is a law dealing with any
existing transfer of property or an existing contract;
the
legislation cannot by itself create a transfer of property or bring a
contractual relationship in existence which if done would fall outside the
scope of entries 6 & 7 abovesaid. It was submitted that the owners have not
transferred any property in the premises to the occupants nor does any
contractual relationship exist between the owners and the occupants on the date
of coming into force of the Amending Act and, therefore, the Amending Act
cannot be said to be a law governing transfer of property or contract and hence
does not fall within the purview of these entries 6 & 7. To test the
validity of such submission forcefully advanced it will be useful to have a
recap of certain well-established principles.
The
fountain source of legislative power exercised by the Parliament or the State
Legislatures is not Schedule __ 7; the fountain source is Article 246 and other
provisions of the Constitution. The function of the three Lists in Seventh
Schedule is merely to demarcate legislative fields between Parliament and
States and not to confer any legislative power. The several entries mentioned
in the three Lists are fields of legislation. The Constitution makers purposely
used general and comprehensive words having a wide import without trying to
particularize. Such construction should be placed on the entries in the Lists
as makes them effective; any construction which will result in any of the
entries being rendered futile or otiose must be avoided.
That
interpretation has invariably been countenanced by the constitutional jurists,
which gives the words used in every entry the widest possible amplitude. Each
general word employed in the entries has been held to carry an extended meaning
so as to comprehend all ancillary and subsidiary matters within the meaning of
the entry so long as it can be fairly accommodated subject to an overall
limitation that the courts cannot extend the field of an entry to such an
extent as to result in inclusion of such matters as the framers of the
Constitution never intended to be included within the scope of the entry or so
as to transgress into the field of another entry placed in another List.
In
every case where the legislative competence of a Legislature in regard to a
particular enactment is challenged with reference to the entries in the various
Lists, it is necessary to examine the pith and substance of the Act and to find
out if the matter comes substantially within an item in the List. The express
words employed in an entry would necessarily include incidental and ancillary
matters so as to make the legislation effective. The scheme of the Act under
scrutiny, its object and purpose, its true nature and character and the pith
and substance of the legislation are to be focused at. It is a fundamental
principle of Constitutional Law that everything necessary to the exercise of a
power is included in the grant of the power (See the India & Ors., 1960 (2)
SCR 362).
Pradesh
& Another, 1961 (3) SCR 242, the Constitution Bench defined the two bounds
between which the stream of interpretative process dealing with entries in
Seventh Schedule must confine itself and flow. One bank is the salutary rule
that the words conferring the right of the legislation should be interpreted
liberally and the powers conferred should be given the widest amplitude; the other
bank is guarding against extending the meaning of the words beyond their
reasonable connotation in an anxiety to preserve the power to legislate. The
working rule of the game is to resolve, as far as possible, in favour of the
legislative body any difficulty or doubt in ascertaining the limits.
A note
of caution was sounded by Constitution Bench in 1 SCC 109. The Constitution
must not be construed in any narrow or pedantic sense and that construction
which is most beneficial to the widest possible amplitude of its power must be
adopted. An exclusionary clause in any of the entries should be strictly and,
therefore, narrowly construed. No entry should be so read as to rob it of its
entire content. A broad and liberal spirit should inspire those whose duty it
is to interpret the Constitution. The Constitution is a living and organic
thing and must adapt itself to the changing situations and pattern in which it
has to be interpreted. To bring any particular enactment within the purview of
any legislative power, it is the pith and substance of the legislation in
question that has to be looked into by giving widest amplitude to the language
of the entries.
The
Constitution must be interpreted in the light of the experience gathered. It
has to be flexible and dynamic so that it adapts itself to the changing
conditions in a pragmatic way. The undisputed constitutional goals should be
permitted to be achieved by placing an appropriate interpretation on the
entries. The Constitution has the greatest claim to live. The claim ought not
to be throttled. Directive Principles of State Policy can serve as potent and
useful guide for resolving the doubts and upholding constitutional validity of
any legislation if doubted.
1941
FC 16, their Lordships upheld the principle that the question whether any
impugned Act is within any of the three Lists, or in none at all, is to be
answered by considering the Act as a whole and deciding whether in pith and
substance the Act is with respect to particular categories or not and held that
in doing so the relevant factors are: (i) the design and the purport of the
act, both as disclosed by its language, and (iii) the effect which it would
have in its actual operation.
Article
37 provides that the Directive Principles of State Policy though not
enforceable by any court, yet the principles laid down therein are fundamental
in the governance of the country and the State is obliged to apply these
principles in making laws. Article 38 inspires the State to strive to promote
the welfare of the people by securing and protecting as effectively as it may,
a social order in which justice, social, economic and political prevails and
citizens, men and women are treated equally and so share the material resources
of community as to result in equitable judicious and balanced distribution of
means of livelihood - food, cloth and shelter - the bare essentials for living
as human being. Inequalities in status, facilities, opportunities and income
are to be eliminated and minimized. The systems in a democratic society ought
not to operate to the detriment of individuals or groups of people.
The
Constitution Bench decision of this Court in Indu 289 needs a special mention.
A Rent Control Legislation enacted by State Legislature was sought to be
extended to cantonment area. The High Court held that the same was not
permissible inasmuch as so far as the cantonment area is concerned, legislation
touching regulation of house accommodation is governed by Entry 3 of List-I
which reads, inter alia, "the regulation of house accommodation (including
the control of rents) in such areas" i.e. cantonment areas. During the
course of its judgment, the Constitution Bench held that the entry has to be
liberally and widely interpreted. Regulation of houses in private occupation
would fall within the entry. The word 'regulation' includes power to direct or
control all housing accommodation in cantonment areas, which in its turn, will
include within it all aspects as to who is to make the construction, under what
conditions the constructions can be altered, who is to occupy the accommodation
and for how long, on what terms it is to be occupied, when and under what
circumstances the occupant is to cease to occupy it, and the manner in which
the accommodation is to be utilized. All these are ingredients of regulation of
house accommodation in its wide sense. The Parliament could legislate in
respect of house accommodations in cantonment areas in all its aspects,
including regulation of grant of leases, ejectment of lessees and ensuring that
the accommodation is available on proper terms as to rents. The power of the
State Legislature to legislate in respect of landlord and tenant of buildings
is to be found in entries 6, 7 & 13 of List-III of the Seventh Schedule to
the Constitution and not in entry 18 of List-II, and that power was
circumscribed by the exclusive power of Parliament to legislate on the same
subject under entry 3 of List-I.
Before
the Constitution Bench in Indu Bhushan Bose's case Angale & Anr., (1948) 2
All England Reports 189 were cited with held to have been passed by the
Parliament with the twofold object –
(i) of
preventing the rent from being raised above the pre-war standard, and
(ii) of
preventing tenants from being turned out of their houses even if the term for
which they had originally taken them had of policy underlying rent restriction
legislations were stated to be
(i) to
protect the tenant from eviction from the house where he is living, except for
defined reasons and on defined conditions;
(ii) to
protect him from having to pay more than a fair rent.
The
latter object is achieved by the provisions for standard rent with
(a) only
permitted increases,
(b) the
provisions about furniture and attendance, and
(c) the
provisions about transfers of burdens and liabilities from the landlord to the
tenant which would undermine or nullify the standard rent provisions.
Such
acts operate in rem upon the house and confer on the house itself the quality
of ensuring to the tenant a status of irremovability. Tenants security of
tenure is one of the distinguishing Angelo and Another (supra), Lord Greene,
M.R., dealing with Rent Restrictions Act, held that the overriding purpose and
intention of such acts are to protect the person residing in a dwelling house
from being turned out of his home. In the opinion of Constitution Bench these
cases are a pointer to the principle that Rent Control Legislations can be
effective and purposeful only if they also regulate eviction of tenants.
Regulation of house accommodation, therefore, includes within its sweep the
power to regulate eviction of tenants.
The
expression 'transfer of property' in entry 6 and the term 'contracts' in entry
7 of List-III are to be widely interpreted. Such wide meaning has to be
assigned to the said expression and term as would make the entries meaningful
and effective. The entries must certainly take colour from the Directive
Principles of State Policy specially those contained in Articles 38 and 39 of
the Constitution.
True
that there was no voluntary transfer of property by the owners of property in favour
of the occupant allottees of the premises. The State Government in exercise of
its power of eminent domain, recognized statutorily, had requisitioned the
properties in public interest and allotted it to the occupants. The Government
paid compensation for requisitioning to the owners. Out of the requisitioned
premises some were occupied by State itself. As to the premises which were
allotted, the allottees in occupation were liable to pay compensation in lieu
of their occupation of the premises. There was no privity of contract between
the owners and the occupants, yet a privity of estate was brought into being by
acts of State supported by law. Possession is nine points in law and to that
extent a transfer of property had resulted and brought into being. Such privity
of estate was compulsorily converted into privity of contract by operation of
law as a consequence of the impugned Amending Act. The Act also provided civil
procedure by which the landlords were entitled to snap the relationship of
landlord and tenant deemingly created by the statute and seek eviction subject
to making out a ground therefor under the pre-existing Rent Control
Legislation. Such legislation would clearly fall within the purview of entries
6, 7 & 13 of List-III.
There
is yet another angle of looking at the issue. In Lingappa SCC 479, the
provisions of Maharashtra Restoration of Lands to Scheduled Tribes Act, 1975
came up for consideration which Act related to transfers and alienation of
agricultural lands by members of Scheduled Tribes in the State to persons not
belonging to Scheduled Tribes. The legislation fell in entry 18 in List-II.
Certain provisions of the Act trenched upon the existing law, namely, the
Transfer of Property Act and the Specific Relief Act, both made by Parliament.
It was held that the power of the State Legislature to make a law with respect
to transfer and alienation of agricultural land carries with it not only a
power to make a law placing restrictions on transfers and alienations of such
lands including a prohibition thereof, but also the power to make a law to
reopen such transfers and alienations. The legislative competence was spelt out
from entry 18 in List-II of Schedule 7. The Court observed :- "Moreover,
the legislation is a typical illustration of the concept of distributive
justice, as modern jurisprudents know it. Legislators, Judges and
administrators are now familiar with the concept of distributive justice. Our
Constitution permits and even directs the State to administer what may be
termed "distributive justice". The concept of distributive justice in
the sphere of law-making connotes, inter alia, the removal of economic
inequalities and rectifying the injustice resulting from dealings or
transactions between unequals in society.
Law
should be used as an instrument of distributive justice to achieve a fair
division of wealth among the members of society based upon the principle :
"From each according to his capacity, to each according to his
needs".
Distributive
justice comprehends more than achieving lessening of inequalities by
differential taxation, giving debt relief of distribution of property owned by
one to many who have none by imposing ceiling on holdings, both agricultural
and urban, or by direct regulation of contractual transactions by forbidding
certain transactions and, perhaps, by requiring others. It also means that
those who have been deprived of their properties by unconscionable bargaining
should be restored their property. All such laws may take the form of forced
redistribution of wealth as a means of achieving a fair division of material
resources among the members of society or there may be legislative control of
unfair agreements." (emphasis supplied) 1967 (3) SCR 65, the
constitutional validity of Bombay Town Planning Act, 1954 as amended by Gujarat
Act 52 of 1963 was put in issue. The legislation fell within entry No. 18 of
List-II. The Court also held after elaborately referring to the various
provisions contained in the Act that it was passed with a view to regulate the
development of certain areas with the general object of framing proper schemes
for the healthy orderly development of the area in question and it is with a
view to achieve this purpose that a very elaborate procedure and machinery have
been prescribed under the Act. For this reason it was held that the competency
of the State Legislation aimed at equitable distribution of landed property
resulting in partial deprivation of proprietary rights can also be rested under
entry No. 20 of List-III which is "economic and social planning".
A grim
and emergent situation was created on account of threat posed before the likely
evictees who were in occupation of requisitioned premises. The impugned
Amending Act also seeks to bring into effect a scheme of equitable
redistribution of wealth and shelter so as to protect the licensee __ occupants
by giving them the status of tenant and regulating the right to eviction
exercisable by the landlords by making it conditional upon availability of
grounds under a pre-existing rent control law already governing similar
properties in the State of Bombay. The salutary goal of 'from each according to
his capacity, to each according to his needs' was sought to be achieved. The
essential need of shelter for other segments of society such as the State
Administration, Semi-Government bodies, PSUs and the likes was also protected
in public interest as otherwise their activities would have been jeopardized,
which in turn would have had an adverse effect on the society. Thus, if any
grey area of impugned Amending Act is left out uncovered by entries 6, 7 &
13 of List-III, it is covered by entry 18 of List-II, i.e. 'economic and social
planning'.
For
all the foregoing reasons, we are of the opinion that the impugned Amending Act
is intra vires and within the legislative competence of the State Legislature.
(ii) whether
the impugned legislation is in conflict with the judicial mandate of Supreme
Court or a colourable exercise of power? It was submitted on behalf of the writ
petitioner-respondents that the impugned judgment has the effect of nullifying
or overriding the mandate of this Court issued in H.D. Vora and Grahak Sanstha Mancha
and Ors. cases (supra). It was submitted that the Legislature could not have
directly overruled the decisions or mandate of this Court but the same thing is
sought to be achieved indirectly by resorting to device of an amendment in the
legislation which is nothing but colourable exercise of legislative power which
ought not to be countenanced by this Court.
The
doctrine of Colourable Legislation came to be examined by a Constitution Bench
of this Court in K.C. Gajapati Narayan Deo & colourable legislation does
not involve any question of 'bona fides' or 'mala fides' on the part of the
Legislature. The whole doctrine resolves itself into the question of competency
of a particular Legislature to enact a particular law. If the Legislature is
competent to pass a particular law, the motives which impelled it to act are
really irrelevant. On the other hand, if the Legislature lacks competency, the
question of motive does not arise at all. Whether a statute is constitutional
or not is thus always a question of power (Vide Cooley's Constitutional
Limitations, Vol. 1, p. 379). The crucial question to be asked is whether there
has been a transgression of legislative authority as conferred by the
Constitution which is the source of all powers as also the separation of
powers. A legislative transgression may be patent, manifest or direct or may
also be disguised, covert and indirect. It is to this latter class of cases
that the expression 'colourable legislation' has been applied in certain
judicial pronouncements. The expression means that although apparently a
Legislature in passing a statute which purports to act within the limits of its
powers, yet in substance and in reality it transgresses those powers, the
transgression being veiled by what appears, on proper examination, to be a mere
pretence or disguise. The discerning test is to find out the substance of the
Act and not merely the form or outward appearance. If the subject matter in
substance is something which is beyond the legislative power, the form in which
the law is clothed would not save it from condemnation. The constitutional
prohibitions cannot be allowed to be violated by employing indirect methods. To
test the true nature and character of the challenged legislation, the
investigation by the Court should be directed towards examining (i) the effect
of the legislation and (ii) its object, purpose or design. While doing so, the
Court cannot enter into investigating the motives, which induced the
Legislature to exercise its power.
The abovesaid
view was reiterated by Larger Bench (Seven 108 and by Constitution Bench in Naga
People's Movement of In K.C. Gajapati Narayan Deo & Others case (supra),
the Constitution Bench quoted with approval the statement by Lefroy in his work
on Canadian Constitution that even if the Legislature avowed on the face of an
Act that it intends thereby to legislate in reference to a subject over which
it has no jurisdiction, yet if the enacting clauses of the Act bring the
legislation within its powers, the Act cannot be considered ultra vires.
Municipality
& Ors., (1969) 2 SCC 283, a legislation by way of Validation Act was passed
because of a decision of the Court declaring a certain imposition of tax as
invalid. The question arising before the Court was, when a Legislature sets out
to validate a tax declared by a Court to be illegally collected under an
ineffective or an invalid law, then how is the validity of such Validation Act
to be tested? It was held that the cause for ineffectiveness or invalidity must
be removed before validation can be said to take place effectively. The most
important condition, of course, is that the Legislature must possess the power
to impose the tax, for, if it does not, the action must ever remain ineffective
and illegal. The Constitution Bench held :- "Granted legislative
competence, it is not sufficient to declare merely that the decision of the
Court shall not bind for that is tantamount to reversing the decision in
exercise of judicial power which the Legislature does not possess or exercise.
A court's decision must always bind unless the conditions on which it is based
are so fundamentally altered that the decision could not have been given in the
altered circumstances.
Ordinarily,
a court holds a tax to be invalidly imposed because the power to tax is wanting
or the statute or the rules or both are invalid or do not sufficiently create
the jurisdiction. Validation of a tax so declared illegal may be done only if
the grounds of illegality or invalidity are capable of being removed and are in
fact removed and the tax thus made legal. Sometimes this is done by providing
for jurisdiction where jurisdiction had not been properly invested before.
Sometimes this is done by re-enacting retrospectively a valid and legal taxing
provision and then by fiction making the tax already collected to stand under the
re-enacted law. Sometimes the Legislature gives its own meaning and
interpretation of the law under which tax was collected and by legislative fiat
makes the new meaning binding upon courts. The Legislature may follow any one
method or all of them and while it does so it may neutralise the effect of the
earlier decision of the court which becomes ineffective after the change of the
law. Whichever method is adopted it must be within the competence of the
Legislature and legal and adequate to attain the object of validation. If the
Legislature has the power over the subject-matter and competence to make a
valid law, it can at any time make such a valid law and make it retrospectively
so as to bind even past transactions. The validity of a Validating Law, therefore,
depends upon whether the Legislature possesses the competence which it claims
over the subject-matter and whether in making the validation it removes the
defect which the courts had found in the existing law and makes adequate
provisions in the Validating Law for a valid imposition of the tax." (emphasis
supplied) Thus, it is permissible for the Legislature, subject to its
legislative competence otherwise, to enact a law which will withdraw or
fundamentally alter the very basis on which a judicial pronouncement has
proceeded and create a situation which if it had existed earlier, the Court
would not have made the pronouncement.
Others,
(1996) 7 SCC 637, the Government of Kerala issued a statutory order levying
surcharge on electricity. The order was declared by the court to be ultra vires
followed by a direction to refund the amount collected thereunder. The State
Legislature introduced a Validating Act, which was impugned unsuccessfully
before the High Court as also this Court. This Court laid down the following
tests for judging the validity of the Validating Act:
(i) whether
the Legislature enacting the Validating Act has competence over the
subject-matter;
(ii)
whether by validation, the Legislature has removed the defect which the court
had found in the previous law;
(iii) whether
the validating law is inconsistent (sic consistent) with the provisions of Part
III of the Constitution.
If
these tests are satisfied, the Act can with retrospective effect validate the
past transactions which were declared to be unconstitutional. The Legislature
cannot assume power of adjudicating a case by virtue of its enactment of the
law without leaving it to the judiciary to decide it with reference to the law
in force. The Legislature also is incompetent to overrule the decision of a
court without properly removing the base on which the judgment is founded. The
court on a review of judicial opinion, proceeded to lay down the following
principles among others so as to maintain the delicate balance in the exercise
of the sovereign powers by the Legislature, Executive and Judiciary :-
"(i)
in order that rule of law permeates to fulfil constitutional objectives of
establishing an egalitarian social order, the respective sovereign
functionaries need free play in their joints so that the march of social
progress and order remains unimpeded;
(ii) in
its anxiety to safeguard judicial power, it is unnecessary to be overzealous
and conjure up incursion into the judicial preserve invalidating the valid law
competently made;
(iii) the
court, therefore, needs to carefully scan the law to find out:
(a) whether
the vice pointed out by the court and invalidity suffered by previous law is
cured complying with the legal and constitutional requirements;
(b) whether
the Legislature has competence to validate the law;
(c) whether
such validation is consistent with the rights guaranteed in Part III of the
Constitution;
(iv) the
court does not have the power to validate an invalid law or to legalise impost
of tax illegally made and collected or to remove the norm of invalidation or
provide a remedy. These are not judicial functions but the exclusive province
of the Legislature.
Therefore,
they are not encroachment on judicial power;
(v) in
exercising legislative power, the Legislature by mere declaration, without
anything more, cannot directly overrule, revise or override a judicial
decision. It can render judicial decision ineffective by enacting valid law on
the topic within its legislative field fundamentally altering or changing its
character retrospectively. The changed or altered conditions are such that the
previous decision would not have been rendered by the court, if those
conditions had existed at the time of declaring the law as invalid.............
It is competent for the Legislature to enact the law with retrospective effect;
(vi)
the consistent thread that runs through all the decisions of this Court is that
the Legislature cannot directly overrule the decision or make a direction as
not binding on it but has power to make the decision ineffective by removing
the base on which the decision was rendered, consistent with the law of the
Constitution and the Legislature must have competence to do the same." (emphasis
supplied) SCC 326, the Constitution Bench made an exhaustive review of all the
available decisions on the point and summed up the law by holding:- "It is
open to the Legislature to remove the defect pointed out by the court or to
amend the definition or any other provision of the Act in question
retrospectively. In this process it cannot be said that there has been an
encroachment by the Legislature over the power of the judiciary. A court's
directive must always bind unless the conditions on which it is based are so
fundamentally altered that under altered circumstances such decisions could not
have been given. This will include removal of the defect in a statute pointed
out in the judgment in question, as well as alteration or substitution of
provisions of the enactment on which such judgment is based, with retrospective
effect." Recently a Constitution Bench in Naga People's Movement of 'colourable
legislation' is enacting by the Legislature of a legislation seeking to do
indirectly what it cannot do directly. But ultimately, the crucial question
would be - Whether the Legislature had the competence to enact the legislation
? If the impugned legislation falls within the competence of the Legislature,
the question of doing something indirectly which cannot be done directly
becomes irrelevant.
Here
we may, with advantage, quote certain observations of the Yesodai Ammal
(supra). In all social legislations meant for the protection of the needy, not
necessarily the so-called weaker section of the society as is commonly and
popularly called, there is appreciable inroad on the freedom of contract and a
person becomes a tenant of a landlord even against his wishes on the allotment
of a particular premises to him by the Authority concerned. When the State Rent
Act provides under what circumstances and on what grounds a tenant can be
evicted, it does provide that a tenant forfeits his rights to continue in
occupation of the property and makes himself liable to be evicted on
fulfillment of those conditions. Once the liability to be evicted is incurred
by the tenant under the State Rent Legislation, he cannot turn around and say
that the contractual lease has not been determined under the provisions of the
Transfer of Property Act and, therefore, he is not liable to be evicted.
Various State Rent Control Acts make a serious encroachment in the field of
freedom of contract. The landlord is not permitted to snap his relationship
with the tenant merely by his act of serving a notice to quit on the tenant. In
spite of the notice, the Rent Control Law says that the tenant continues to be
tenant enjoying all the rights of a lessee but at the same time deemed to be
under all the liabilities such as payment of rent etc. in accordance with the
law. Various Rent Acts confer immunity on tenants from eviction whether in
execution of a decree or otherwise except in accordance with the provisions of
the Act and/or liability for eviction being incurred on one of the grounds
provided for by the Act. Some Rent Control Acts provide that no landlord can
treat the building to have become vacant by merely terminating the contractual
tenancy as the tenant still lawfully continues in possession of the premises.
The tenancy actually terminates on the passing of the order or decree for
eviction and the building falls vacant by his actual eviction. All such
provisions have been held to be constitutionally valid.
The
Constitution Bench in Dhanapal Chettiar's Case (supra) continues to observe
that Rent Acts do encroach upon to a very large extent on the field of freedom
of contract but the encroachment is not entirely and wholly one-sided. Some
encroachments are envisaged in the interest of the landlord also and equity and
justice demand a fair play on the part of the Legislature not to completely
ignore the helpless situation of many landlords who are also compared to some
big tenants, sometimes weaker section of the society. Finding fault with the
Rent Acts and doubting their constitutional validity is at times founded on
stretching too far the theory of double protection or additional protection and
without a proper and due consideration of all its ramifications.
We
have already seen that the impugned Amending Act is within the legislative
competence of the State Legislature. The impugned Amending Act does not either
directly or indirectly overrule the judgments of this Court. The law enunciated
by this Court in the two decisions was that the Executive was exercising power
of requisitioning the premises in such a manner that the premises were in fact
acquired under the guise or pretext of requisitioning. It was a colourable and
hence a mala fide exercise of its executive power by the State. Such tainted
requisition was struck down by this Court as ultra vires of the Constitution.
The consequence of invalidating and striking down the requisitioning continuing
for unreasonable length of time was that such invalid requisitioning came to an
end. It followed as a natural corollary that the premises in occupation of the allottees
became liable to be restored to the possession of the owners. By virtue of
interim orders passed by the Court, the possession of the occupants was
protected and that protection was continuously enjoyed by the occupants upto
the date of decision. To relieve the occupants from the hardship of sudden
eviction caused by its judicial pronouncement, the Court allowed some more time
to the occupants by directing the protection under the interim orders of the
Court to remain in operation for some more period of time in spite of the cases
having been disposed of.
Allowing
time to vacate the premises under the protection of the interim orders is not
the same thing as issuing mandamus to vacate the premises by certain date. What
the impugned Amending Act has done is to fundamentally alter the very basis of
occupation of the premises by the occupants. Instead of their remaining in
occupation by virtue of orders of allotment of requisitioned premises, the
Amending Act declared that the requisitioning shall come to an end and the
occupants shall become tenants under the owners who would become the landlords
and the amount of compensation shall become rent.
The privity
of estate was converted into privity of contract.
The
foundation for pre-existing transfer of property underwent a fundamental
change. The separate concurring opinion recorded by P.B. Sawant, J. in Grahak Sanstha
Manch and Ors. case (supra) records that the landlords were receiving the same
rent from the allottees as from the other tenants (i.e. non-allottees). The
effect of allowing more time to vacate the premises in spite of the requisitioning
having been struck down was, as stated by P.B. Sawant, J., that what the
landlords will be deprived of for some time more on account of the directions
made by the Court, is the right to induct new tenants of their choice and
consequentially also deprived of the illegal consideration commonly known as 'pugri'.
Such time to vacate the premises as was allowed by the Court stood extended on
account of the Amending Act. The compensation which the landlords were
receiving earlier stood converted into rent payable by the occupants, whosoever
they might be, to the landlords. The right of landlords to seek revision of
rent was not taken away but became subject to the provisions governing the
standard rent or controlled rent determinable by the competent authority under
the Rent Control Legislation by which the relationship of the owners and the
occupants was to be governed henceforth as one of landlord and tenant. The
right of the owners to seek eviction of occupants and have the premises
restored to their possession was also not taken away but was made subject to
the pre-existing law governing eviction of tenants. The larger Bench in Dhanapal
Chettiar's case (supra) has opined, as already stated, that there is nothing
objectionable, much less unconstitutional, in the right to recover possession
which accrued under the general law from being made dormant and made subject to
a special law so as to become conditional and dependant on availability of
certain statutory grounds to eviction as provided for by the State Rent Act.
The object, purpose and design of the Amending Act is to extend protection of
existing Rent Act to such occupants who, on account of declaration of law made
by this court, ran the risk of being rendered suddenly shelterless.
We
have already pointed out while dealing question No. 1 that the impugned
legislation is squarely covered by entries 6, 7 & 13 of List- III and hence
within the legislative competence of the State Legislature. So long as the
legislative competence is available, the motive behind enactment cannot be
enquired into. Though the Statement of Objects and Reasons makes a reference to
the two decisions delivered by this Court but that is only by way of narration
of facts. The judgments of this Court are nowhere referred to in the body of
the provisions introduced by the Amendment Act so as to spell out any motive of
overruling the judgment. The writ petitioners cannot make any capital out of
the fact that two decisions have been referred to in the Statement of Objects
and Reasons. On the contrary, what is relevant in the State of Objects and Reasons is the factual
statement to the following effect
(i)
that the State Government has honoured the decisions of this Court and
commenced derequisitioning process and taken a policy decision not to continue
with such requisitionings for future, except in some special cases;
(ii)
that in spite of the said process having been commenced there were 604
residential premises, above 90 non-residential premises still under requisition
in Greater Bombay and 138 in other districts of the State of Bombay, most of
them occupied by Government servants and departments, the eviction whereof
would have imperatively resulted into creation of a grave situation much to the
detriment of public interest;
(iii) that
the landlords were rushing to the High Court seeking mass evictions from the
premises under requisition;
(iv)
that the likely evictees need to be protected from imminent eviction solely on
ground of requisitioning coming to an end, unless and until liability for
eviction was incurred under a pre-existing Rent Control Act;
(v) that
there existed a continuing acute shortage of accommodation and astronomical
rise in the cost of properties in Mumbai, and unless the State intervened
through an Ordinance followed by an Act, a grim and emergent situation was
likely to emerge; and
(vi) that
such premises as were specifically covered by any specific order of eviction of
the Court of a date prior to 11th June 1996
(being the date of Government decision to undertake such legislation) were left
untouched and unaffected by the impugned Amendment.
We are
definitely of the opinion that the impugned Amending Act is neither in conflict
with the judgments of this Court nor can it be said to be a piece of colourable
legislation.
The
Amending Act has altered the basis of occupation of the occupants over the
premises. So long as the legislation is within the legislative competence of
the State Legislature, which it is, as we have already held, merely because the
indirect effect of the amendment would be to place additional restrictions on
the right of the owners to seek eviction of the premises consequent upon the
judgment of the Supreme Court, it cannot be held that the Legislature has
overruled the judgment of this Court or made an inroad on the doctrine of
separation of powers. If the Amendment Act had been enacted on the dates of
decision in H.D. Vora's case or Grahak Sanstha Mancha and Ors. case, the Court
would not have been called upon to adjudicate upon and invalidate the
unreasonably stretched requisitioning providing cloak for acquisition without
adequate compensation and the occupants would have been held protected as
tenants under the Rent Act. The situation is squarely covered by the law laid
down by three Constitution Benches of this Court and other decisions of this
Court referred to hereinabove. We do not think that the impugned Amendment Act
is "colourable legislation" or is in conflict with the decisions of
this Court.
(iii)
The impugned legislation if arbitrary and unreasonable ?
Tenancy
laws and rent restriction legislations in the country, whenever enacted, have
almost invariably been challenged either as violative of the fundamental right
guaranteed by Article 19(1)(f) of the Constitution (so long as the Clause
existed in the body of Article 19) or as arbitrary and unreasonable on the
touchstone of Article 14 of the Constitution. However, the history of
precedents shows that, by and large, such challenges have failed as often as
laid. It is the angle with which the issue is approached that makes the
difference. The Legislatures showing pro-activeness in the field have been
motivated not with the idea of destroying or jeopardizing the property rights
of the landlords but rather with the benevolent desire of extending the
protective umbrella of legislation to the tenants so as to save them from
unscrupulous evictions and rack-renting mentality of greed which clings to the
owning of the property, and, for achieving the avowed object of striking a
judicious balance of equity between two sections of the society, i.e. the
landlords, generally called haves, and tenants, generally called have nots, so
far as the urban property is concerned. The courts while upholding the
constitutionality of such legislations have referred to the statements of
objects and reasons and the preambles for the purpose of finding out the
conditions prevailing at the time when the bills were sponsored and the evils
which were prevailing and which were sought to be remedied. Whenever the courts
have felt doubt about the constitutionality of certain provisions in Rent
Control Legislations, they have been read down so as to save them from the vice
of unconstitutionality.
(supra),
Fazl Ali, J. opined that Article 14 lays down an important fundamental right,
which should be closely and vigilantly guarded but in construing it, the Court
should not adopt a doctrinaire approach which might choke all beneficial
legislation.
(2)
SCR 531, the Constitution Bench held that a legislation whose object is to fix
fair and equitable rent and which regulates the relation of landlord with his
tenant cannot be said to be a legislation interfering with the fundamental
right of a citizen to hold and enjoy property even though the legislation has
the effect of reducing or diminishing the rights hitherto exercised by the
landlord.
In Maneklal
Chhotalal & Ors.'s case (supra), the Constitution Bench thus summed up the
principles to be borne in mind when applying Articles 14 and 19 of the
Constitution - "A fundamental right to acquire, hold and dispose of
property, can be controlled by the State only by making a law imposing, in the
interest of the general public, reasonable restrictions on the exercise of the
said right. Such restrictions on the exercise of a fundamental right shall not
be arbitrary, or excessive, or beyond what is required in the interest of the
general public. The reasonableness of a restriction shall be tested both from
substantive shall be tested both from substantive and procedural aspects. If
any uncontrolled or unguided power is conferred, without any reasonable and
proper standards or limits being laid down in the enactment, the statute may be
challenged as discriminatory".
Article
14 of the Constitution permits reasonable classification for the purpose of
legislation and prohibits class legislation. A legislation intended to apply or
benefit a "well defined class" is not open to challenge by reference
to Article 14 of the Constitution on the ground that the same does not extend a
similar benefit or protection to other persons. Permissible classification must
satisfy the twin tests, namely,
(i) the
classification must be founded on an intelligible differential, which
distinguishes persons or things grouped together from others left out of the
class, and
(ii) such
differential must have a rational relation with the object sought to be
achieved by the legislation. It is difficult to expect the Legislature carving
out a classification which may be scientifically perfect or logically complete
or which may satisfy the expectations of all concerned, still the court would
respect the classification dictated by the wisdom of Legislature and shall
interfere only on being convinced that the classification would result in
pronounced inequality or palpable arbitrariness on the touchstone of Article
14.
Bombay as a State and also as a
cosmopolitan city__ unofficially crowned as commercial capital of the country,
has its own peculiar problems. People from all over the country rush to Bombay in search of employment and
opportunities. Not all are blessed enough to find shelter much less of their
own. A huge administrative set up in the governance is needed involving a large
number of personnel to manage the huge population accompanied by evergrowing
influx of people. Accommodation is needed to house the people and activities
including official ones catering to the needs of people. The premises were
liberally requisitioned to satisfy the needs of the needy. The requisitioning
did not solve the problem which continued to persist resulting in endless
renewals of requisitioning which was held by this Court to be vitiated on
account of virtual acquisitioning without payment of compensation resulting
from recurring and non- intermittent cycles of requisitioning. It was struck
down. Consequent upon constitutional interpretation and adjudication by this
Court thousands, if not lakhs of persons and substantial activity of
government, semi-government bodies and PSU's ran the risk of being rendered
roofless and out of gear. They all needed to be protected by State intervention
and constituted a class by themselves. All such premises whose occupants were
under the threat of eviction also constituted property capable of
identification by a well defined classification. The Legislature chose to step
in and enact a legislation, which would protect the threatened evictees from
likely eviction. The persons and premises - both constitute a well defined
class by themselves and the classification cannot be said to be arbitrary; it
is capable of being distinguished from others not included in that class.
Such
classification has an apparent and clear nexus with the object sought to be
achieved. The impugned legislation does not, therefore, suffer from either
arbitrariness or invidious discrimination. The challenge that the impugned
Amendment Act falls foul of Article 14 of the Constitution must therefore fail.
The
contention that the impugned Amending Act cannot withstand the test of Article
14 of the Constitution was raised in the High Court but was not dealt with for
the reason that even otherwise, in the opinion of the High Court, the impugned
legislation was unconstitutional. However, in view of the submissions made, we
have dealt with the issue and disposed of the same.
Conclusion
Thus the challenge to the constitutional validity of the impugned Amending Act
fails on all the counts. The decision of the High Court wherein view to the
contrary has been taken is held unsustainable and liable to be reversed.
However, this is subject to a clarification.
We
have in the earlier part of this judgment extracted and reproduced para 20 of
the Constitution Bench decision in Grahak Sanstha Manch's case containing some
categorical and definite directions given by the Supreme Court to the occupants
of requisitioned premises and the State Government, which protected the
occupants in Bombay and other large cities in Maharashtra until 30.11.1994, and
with effect from that date directed that "all occupants of premises the
continued requisition of which has been quashed" shall be bound to vacate
and hand over vacant possession to the State Government so that the State
Government may on or before 31.12.1994 derequisition such premises and hand
back vacant possession thereof to the landlords. The reversal of the impugned
judgment of the High Court and upholding the validity of the impugned
legislation shall not have the effect of undoing or overruling the abovesaid
mandate of the Supreme Court contained in the decision of Grahak Sanstha Manch's
case.
Accordingly,
all the appeals are allowed and the impugned judgment of the High Court is set
aside subject to the clarification made hereinabove.
It was
stated at the Bar, during the course of hearing that the impugned judgment
decided only the question of vires of the impugned Amending Act. Some of the
writ petitions filed in the High Court raised the question of vires of the
impugned Act as the sole issue for decision which writ petitions shall stand
dismissed in view of this judgment. Some of the writ petitions filed in the
High Court raised other issues as well which in the event of the impugned
judgment being set aside shall have to be remanded to the High Court for
hearing on issues other than the issue as to vires of the impugned Amendment
Act. All the appeals shall therefore now be listed for appropriate
consequential directions before the Court.
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