PETITIONER:
S. KANDASWAMY CHETTIAR
Vs.
RESPONDENT:
STATE OF TAMIL NADU AND ANR.
DATE OF JUDGMENT12/12/1984
BENCH:
TULZAPURKAR, V.D.
BENCH:
TULZAPURKAR, V.D.
PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION:
1985 AIR 257 1985 SCR (2) 398
1985 SCC (1) 291 1984 SCALE (2)933
CITATOR INFO :
F 1987 SC2117 (20)
ACT:
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
(Tamil Nadu Act 18 of 1960). Section 29-Notification issued
thereunder granting total exemption to all buildings own-d
by the Hindu, Christian and Muslim religious Public Trusts
and Public Charitable Trusts from all the provisions of the
Act- Whether suffers from the vice of excessive delegation
of legislature powers, and therefore, violative of, Article
14 of the Constitution-Whether the total exemption is
excessive unwarranted and unsupportable in as much as o
partial exemption would have sufficed.
HEADNOTE:
In exercise of the powers conferred by section 29 of
the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
the Government of Tamil Nadu issued a Notification G.O. Ms.
2000 (Homo Department) dated 16th August, 1976 exempting all
the buildings owned by the Hindu, Christian and Muslim
religious public trusts and public- charitable trusts from
all the provisions of the Act. The tenants challenged the
Notification granting total exemption through the said
Notification on three grounds namely; (a) that section 29 of
the Act suffers from the vice of excessive delegation of
legislative powers in as much as it vests in the State
Government unguided and uncontrolled discretion in the
matter of granting exemptions and is, therefore, violative
of Article 14 of the Constitution; (b) that the Notification
dated 16th August, 1976 deprives the tenants of all such
buildings (belonging to Hindu. Christian and Muslim
religious public trusts and public charitable trusts) of the
equal protection of the beneficial provisions of the Act
which is available to the tenants of other buildings and as
such the same is discriminatory offending against the equal
protection clause of Article 14; and (c) that in any event
the total exemption from all the provisions of the Act
granted to such buildings, where partial exemption would
have sufficed is excessive, unwarranted and unsupportable.
The State Government and the respondent landlords have
refuted all the grounds on which the exemption has been
challenged and further sought to justify the grant of total
exemption mainly on the basis that the freedom (right) to
recover the reasonable market rent would be ineffective
without the freedom to evict the tenant.
Dismissing the writ petitions and the civil appeals
the Court,
399
^
HELD: 1.1 In view of the decision of the Supreme
Court in P.J. Irani v. The State of Madras, [1962] 2 SCR 169
dealing with an identical provision contained in the earlier
Madras enactment the challenge to the Constitutional
validity of section 29 cannot be sustained. [405A-B]
P. J. Irani v. State of Madras, [1962] 2 SCR 169;
State of Madhya Pradesh v. Kanhaiyalal, 1970 (15) M.P.L.U SC
973 relied on.
1. 2. The rationale behind the conferal of such power
to grant exemptions or to make exceptions is that an
inflexible application of the provisions of the Act may
under some circumstances result in unnecessary hardship
entirely disproportionate to the good which will result from
a literal enforcement of the Act and also the practical
impossibility of anticipating in advance such hardship to
such exceptional cases. In the matter of beneficial
legislations also there are bound to be cases in which an
inflexible application of the provisions of the enactment
may result in unnecessary and undue hardship not
contemplated by the legislature. The power to grant
exemption under section 29 of the Act, therefore, has been
conferred not for making any discrimination between tenants
and tenants but to avoid undue hardship or abuse of the
beneficial provisions that may result from uniform
application of such provisions to cases which deserve
different treatment. Of course, the power to grant exemption
has to be exercised in accordance with the policy and object
of the enactment gatherable from the preamble as well as its
operative provisions without subverting the general purpose
of the enactment. [406G-H, 407A-B]
P. J. Irani v. State of Madras, [1962] 2 SCR 169
relied on.
Gorieb v. Fox, [1926] 71 Lawyers Edition at page 1230
quoted with approval .
2. That Tamil Nadu Act is a piece of beneficial
legislation intended to remedy the two evils of rackrenting
(exaction of exhorbitant rents) and unreasonable eviction
generated by a large scale of influx of population to big
cities and urban areas in the post Second World War period
creating acute shortage of accommodation in such areas and
the enactment avowedly protects the rights of tenants in
occupation of buildings in such areas from being charged
unreasonable rents and from being unreasonably evicted
therefrom. The Legislature itself has made a rational
classification of buildings belonging to government and
buildings belonging to religious, charitable, educational
and other public institutions and the different treatment
accorded to such buildings under section 10(3) (b) of the
Act, which obviously proceeds on the well-founded assumption
that the government as well as the landlords of such
buildings are not expected to and would not indulge in rack-
renting or unreasonable eviction. This and similar other
provisions crystalize the policy and the purposes of the Act
and furnish the requisite guidance which can legitimately
govern the exercise of power conferred on the State
Government under section 29 of the Act The power to grant
exemptions or make exceptions could be legitimately
exercised by the State Government in areas or cases where
the mischief sought to be remedied by
400
the Act is neither prevalent nor apprehended as also in
cases (individual or class of cases) where a uniform or
inflexible application of the law is likely to result in
unnecessary or undue hardship (here the landlords) or in
cases where the beneficial provision is likely to be or is
being abused by persons for whom it is intended there the
tenants) [407D-E, 408F-H, 409A]
3.1. Public religious and charitable endowments or
trusts constitute a well recognised distinct group in as
much as they not only serve public purposes but the
disbursement of their income is governed by the objects with
which they are created and buildings belonging to such
public religious and charitable endowments or trusts clearly
fall into a distinct class different from buildings owned by
private landlords. Therefore, their classification into one
group done by the State Government while issuing the
impugned notification must be regarded as having been based
on an intelligible differentia. [409F-G]
3.2. In view of the counter affidavit filed by the
State Government dated 10-2-1981 and the supplementary
counter affidavit dated 24th September, 1983 to the effect
that the government was satisfied that "in all these cases,
the rent paid by the tenants was very low, meagre and that
the provisions of fixation of fair rent under the Act would
not meet the ends of justice and the situation will still
continue in which the tenant will be exploiting the
situation and the helplessness of the public religious
trusts and charitable institutions and hence they decided to
withdraw the protection given under the Act to the tenants
of such buildings", not having been challenged by way of
rejoinder affidavits by the petitioners/appellants, it is
clear that buildings belonging to such public religious and
charitable endowments or trusts clearly fell into a class
where undue hardship and injustice relating to them from the
uniform application of the beneficial provisions of the Act
needed to be relieved and the exemption granted will have to
be regarded as being germane to the policy and purposes of
the Act. In other words, the classification made has a clear
nexus with the object with which the power to grant
exemption has been conferred upon the State Government under
section 29 of the Act. [411C, 412B-G]
State of Rajasthan v. Mukanchand and Others, [1964] 6
SCR 903; held inapplicable.
3.3. Granting total exemption cannot be regarded as
excessive or unwarranted. The two objectives of the
enactment, namely, to control rents and to prevent
unreasonable eviction are interrelated and the provisions
which subserve these objectives supplement each other It is
obvious that if the trustees of the public religious trusts
and public charities are to be given freedom to charge the
normal market rent then to make that freedom effective it
will be necessary to arm the trustees with the right to
evict the tenants for non-payment of such market rent. The
State Government on materials before it came to the
conclusion that the 'fair rent' filled under the Act was
unjust in case of such buildings and it was necessary to
permit the trustees of such buildings to recover from their
tenants reasonable market rent and if that be so non-
eviction when reasonable market rent is not paid would be
unreasonable and if the market rent is paid by the
401
tenants no trustee is going to evict them. Further, it
is conceivable that trustees of buildings belonging to such
public religious institutions or public charities may desire
eviction of their tenants for the purpose of carrying out
major or substantial repairs or for the purpose of
demolition and reconstruction and the State Government may
have felt that the trustees of such buildings should be able
to effect evictions without being required to fulfil other
onerous conditions which must be complied with by private
landlord when they seek evictions for such purpose. [413D-E,
414C-G]
3.4. The manner in which exemption from rent control
provisions should be granted, whether it could be partial or
total and if so on what terms and conditions would be
matters for each State Government to decide in the light of
the scheme and provisions of the concerned enactment and the
facts and circumstances touching the classification made.
And if the State of Madras has thought fit to grant the
exemption in a particular manner by the impugned
notification is cannot be faulted. if to exemption so
granted is not illegal or unconstitutional. [415A-B]
JUDGMENT:
ORIGINAL JURISDICTION: W.P. Nos 4433,4642-57/78, 337-
339, 757-58, 943, 291 and 1351 of 79,4103 and 6271/80,731
and 1943/81, 8274 and 9879/83 and C.A. NOS. 3108-3109/81
with W.P. NOS. 7941 and 7883/81.
N. Natesan, A. T. M Sampath and P. N. Ramalingam for
the petitioners in W.P. NOS. 4642-57 and 4433 of 1978
Dr. Y S. Chitale, A T.M. Sampath, S.A. Rajan and P.N.
Ramalingam for the petitioners in W.P. NOS. 337-339 of 1979.
M. Natesan, and Raghuraman for the petitioner in W.P.
No. 1943 of 1981.
A.T.M. Sampath and P.N. Ramalingam for the petitioner
in W.P. NOS. 757-58 of 1979.
S. Srinivasan for the petitioner in W.P. NO. 943 of
1979.
P.R. Ramasesh for the petitioner in W.P. NO. 731 of
1982.
A.T.M. Sampath and P.N. Ramalingam for the petitioner
in W.P. NO. 7941 and 7883 of 82.
A.T.M. Sampath and P.N. Ramalingam for the petitioner
in W.P. NOS. 1357-58 of 79.
P. Sinha for the petitioner in W.P. NO. 8274 of 83.
P.N. Ramalingam for appellants in C. NOS. 3108-09 Of
81,
402
R.S. Ramamurthy, P. Govindan Nair, M.K.D.
Namboodry, S. Balakrishnan and E.C. Agarwala for the
respondents in W.P. Nos. 6271/80 and 4642-57 and 4433 of 78.
T.S. Krishnamoorthy, Mrs. S. Gopalakrishnan and Gopal
Subramanian for the respondents is W.P. No. 4103180.
Shanker Ghosh, and D.N. Gupta for the respondents in
W.P. No. 943/79.
S.T. Desai, T.S. Krishnamurthy, A.V. Rangam, K.
Ramamurthy and S.Balakrishnan for the respondents in W.P.
No. 731182.
Mohan Pandey and Ali Ahmed for the interveners in W.P.
Nos. 4642-57 of 78. K. Ram Kumar for the respondent in C.A.
Nos. 3108-3109/81 and W.P. Nos. 7941 and 7883/82.
The Judgment of the Court was delivered by
TULZAPURKAR, J. In these writ petitions and civil
appeals by special leave the petitioners and appellants, who
are tenants of several buildings belonging to the Hindu,
Christian and Muslim religious public trusts as also to
public charitable trusts in the State
of Tamil Nadu, have challenged the legality and or validity
of the total exemption granted to all such buildings from
all the provisions of the Tamil Nadu Buildings (Lease and
Rent Control) Act, 1960 (Tamil Act 18 of 1960) (for short
‘the Act’) in exercise of the powers conferred upon the
State Govt. under s. 29 of the Act.
Section 29 of the Act runs thus:
“22. Exemptions-Notwithstanding anything
contained in this Act, the Government may, subject to
such condition as they deem fit, by notification,
exempt any buildings or class of buildings from all or
any of the provisions of this Act”
It appears that initially by G. O. Ms. No. 1998 (Home)
dated 12th August, 1974, the State Government had, in
exercise of its powers under s. 29 exempted all the
buildings owned by the Hindu Christian and Muslim religious
trusts and charitable institutions from all the provisions
of the Act; in other words the exemption was available to
buildings of private religious trusts as also private
charitable trusts. But later on by a fresh G. O. Ms. No.
2000
403
(Home) dated 16th August, 1976, the State
Government, in super- A session of the earlier Notification
dated 12th August, 1974, confined the exemption to all
buildings owned by the Hindu, Christian and Muslim religious
public trusts and public charitable trusts. ‘the relevant
Notification which is being impugned herein runs thus:
“G O. Ms . No. 2000, Home, 16th August, 1976) No. II
(2)/HO/4520/76.-In exercise of the powers conferred by
section 29 of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960 (Tamil Nadu Act 18 of 1960), and in
supersession of the Home Department Notification No. II
(2)/HO/3811/74, dated the 12th August, 1974, published at
page 444 of Part ll-section 2 of the Tamil Nadu Government
Gazette, dated the 12th August, 1974, the Governor of Tamil
Nadu hereby exempts all the buildings owned by the Hindu,
Christian and Muslim religious public trusts and public
charitable trusts from all the provisions of the said Act.”
The tenants have challenged the aforesaid Notification
granting total exemption to all buildings belonging to the
Hindu, Christian and Muslim religious public trusts and
public charitable trusts from all the provisions of the Act
on three grounds-(a) that s. 29 of the Act suffers from the
vice of excessive delegation of legislative powers in as
much as it vests in the State Government unguided and
uncontrolled discretion in the matter of granting exemptions
and is, therefore, violative of Art. 14 of the Constitution,
(b) that the Notification dated 16th August, 1976 deprives
the tenants of all such buildings (buildingsr belonging to
Hindu, Christian and Muslim religious public trusts and
public charitable trusts) of the equal protection of the
beneficial provisions of the Act which is available to the
tenants of other buildings and as such the same is
discriminatory offending against the equal protection clause
of Art. 14 and (c) that in any event the total exemption
from all the provisions of the Act granted to such
buildings, where partial exemption would have sufficed, is
excessive, unwarranted and unsupportable.
On the other hand, the State Govt. and the respondent
landlords have refuted all the grounds on which the
exemption has been challenged. It is denied that unguided
and uncontrolled discretion has been conferred upon the
State Govt. by s. 29 of the Act and it is contended that
enough guidance is afforded by the Preamble and the
operative provisions of the Act for the exercise of the
404
discretionary power vested in the State Govt. It is pointed
out that in P. J. Irani v. The State of Madras(‘) an
identical provision contained in the earlier enactment,
namely, the Madras Buildings (Lease and Rent Control) Act,
1949 was upheld in the context of Art. 14 of the
Constitution by this Court on the basis that the Preamble
and the operative provisions of that Act gave sufficient
guidance for the exercise of the discretionary power vested
in the State Govt., namely, that the said power was to be
exercised in cases where the protection given by the Act
caused great hardship to the landlord or was the subject of
abuse by the tenant; and it is urged that similar guidance
is afforded by the Preamble and the operative provisions of
the instant Act and s. 29 cannot be said to be violative of
Art. 14. The respondents have further contended that even
the point regarding the constitutional validity of granting
exemption to buildings belonging to charities, religious or
secular in the context of the equal protection clause of
Art. 14 could be said to have been concluded against the
tenants of such buildings by the observations of this Court
in P.J. Irani’s case (supra), it is pointed out that though
in that case this Court was dealing with a Notification
granting exemption in favour of a particular individual
building, the Court has made observations which clearly
indicate that where it is a case of granting exemption in
favour of a class of buildings all that is required is that
the classification must be based on rational grounds i.e.
grounds germane to carry out the policy or the purpose of
the Act and by way of illustration the Court has in terms
stated that if such exemption were to be granted in favour
of all buildings belonging to charities, religious or
secular, such classification would be reasonable and proper,
being based on intelligible differential having nexus to the
object sought to be achieved by the exercise of power of
exemption. Even otherwise, the State Govt. in their counter-
affidavit dated 10th February, 1981 and supplementary
counter-affidavit dated 24th September, 1983 have furnished
material on the basis of which it has sought to justify the
said exemption and it has been urged that the same conforms
to and falls within the guidelines indicated in that
decision governing the exercise of the power. The
respondents have further sought to justify the grant of
total exemption mainly on the basis that the freedom (right)
to recover the reasonable market rent would be ineffective
without the freedom to evict the tenant.
As regards the attack directed against s.29 of the Act
itself we would like to observe at the outset that though
the challenge to the
(1) [1962] 2 SCR 269.
405
section under Art. 14 has been made in the petitions and the
appeals A Counsel appearing for the petitioners and the
appellants fairly stated before us, and in our view rightly,
that in view of the decision of the Constitution Bench of
this Court in P. J. Irani’s case (supra) dealing with an
identical provision contained in the earlier Madras
enactment (Madras Act XXV of 1949) the challenge cannot be
sustained. Section 13 of the Madras Act XXV of 1949 with
which this Court was concerned in that case ran thus:
“Notwithstanding anything contained in this Act
the State Government may by a notification in the Fort
St. George Gazette exempt any building or class of
buildings from all or any of the provisions of this
Act.”
This Court upheld the constitutional validity of that
provision in the context of the challenge thereto under
Art. 14 on the basis that sufficient guidance was afforded
by the Preamble and the operative provisions of the Act for
the exercise of the discretionary power vested in the
Government in the matter of granting exemptions to a
building or class of buildings from all or any of the
provisions of the Act. It may be stated that following the
said decision this Court in the case of State of Madhya
Pradesh v. Kanhaiyalal(l) did not find any infirmity in s.
3(2) of the Madhya Pradesh Accommodation Control Act, 1961
(Act 41 of 1961) which ran thus:
“The Government may, by notification exempt from
all or any of the provisions of this Act any
accommodation which is owned by any educational,
religions or charitable institution or by any nursing
or maternity home, the whole of the income derived from
which is utilised for that institution or nursing home
or maternity home.”
‘the challenge to s. 29 of the instant Act, which was
not pressed, has therefore to be rejected.
Even so, since the Notification dated 16th August 1976
issued under s. 29 has been challenged the guidance afforded
by the Preamble and the operative provisions of the Act will
have a bearing on the question Whether this particular
exercise of the power conforms to such guidance or not and,
therefore, it will be useful to advert briefly to the
guidance so afforded. At the outset we would like to point
out that the rationable behind the conferal of such power to
(1) [1970] IS M.P.L.J. 973
406
grant exemptions or to make exceptions has been very
succinetly elucidated by the American Supreme Court in the
leading case of Gorieb v. Fox. (1) In that case the Court
was concerned with an Ordinance which related to the
establishment of a building line on public streets but it
contained a reservation of power in the City Council to make
exceptions and permit the erection of buildings closer to
the street. It was contended that this reservation rendered
the Ordinance invalid as denying the equal protection of the
laws, Negativing the contention Sutherland J. speaking for
the court, observed thus:
“The proviso under which the Council acted also
is attacked as violating the equal protection clause on
the ground that such proviso enables the Council
unfairly to discriminate between lot-owners by fixing
unequal distances from the street for the erection of
buildings of the same character under like
circumstances.. The proviso evidently proceeds upon the
consideration that an inflexible application of the
Ordinance may under some circumstances result in
unnecessary hardship In laying down a general rule,
such as the one with which we are here concerned, the
practical impossibility of anticipating in advance and
provi-
ding in specific terms for every exceptional case which may
arise, is apparent. And yet the inclusion of such cases may
well result in great and needless hardship, entirely
disproportionate to the good which will result from a
literal enforcement of the general rule. Hence the wisdom
and necessity here of reserving the authority to determine
whether, in specific cases of need, exceptions may be made
without subverting the general purposes of the ordinance. We
think it entirely plain that the reservation of authority in
the present ordinance to deal in a special manner with such
exceptional cases is unassailable on constitutional
grounds.”
In our view the same rationale must apply to the
conferal of such power on the State Government to grant
exemptions or to make exceptions even in cases of beneficial
legislations like the present enactment. In the matter of
beneficial legislations also there are bound to be cases in
which an inflexible application of the provisions of the
enactment may result in unnecessary and undue hard-
(1) [1926] 71 Las Ed. 1228 at 1230.
407
ship not contemplated by the legislature. Obviously the
power to grant exemptions under s. 29 of the Act has been
conferred not for making any discrimination between tenants
and tenants but to avoid undue hardship or abuse of the
beneficial provisions that may real it from uniform
application of such provisions to cases which deserve
different treatment. Of course, as observed by this Court in
P. J. Irani’s case (supra) the power has to be exercised in
accordance with the policy and object Or the enactment
gatherable from the preamble as well as its operative
provisions or as said in the American decision without
subverting the general purposes of the enactment.
As the preamble of the instant Act shows the three
purposes, to achieve which it has been enacted are the same
as those under the earlier enactment, the Madras Act XXV of
1949, namely, (1) the regulation of letting of residential
and non-residential buildings, (2) the control of rents of
such buildings, and (3) the prevention of unreasonable
eviction of tenants from such buildings, except that the
enactment is of a comprehensive nature by way of amending
and consolidating the rent-control law obtaining in the
State till then Unquestionably it is a piece of beneficial
legislation intended to remedy the two evils of rack-renting
(exaction of exhorbitant rents) and unreasonable eviction
generated by large scale of influx of population to big
cities and urban areas in the post Second World War period
creating acute shortage of accommodation in such areas and
the enactment avowedly protects the rights of tenants in
occupation of buildings in such areas from being charged
unreasonable rents and from being unreasonably evicted
therefore; it further protects their possession even after
the determination of their contractual tenancies by
enlarging the definition of a ‘tenant’ so as to include
persons who have held over after such determination.
Sections 3 and 3-A deal with the regulation of letting while
ss.4 to 8 effectuate the objective of controlling the rents
and ss.l0 and 14 to 16 confine eviction of a tenant to
stated grounds subject to certain terms, qualifications
and/or reservations thereby preventing unreasonable eviction
In other words a landlord’s freedom of contract to charge
even the market rent (if it is in excess of ‘fair rent’ as
defined) and his freedom to evict a tenant on several
grounds available to him either nuder his lease-deed or the
Transfer of Property Act have been curtailed to a large and
substantial extent. At the same time the enactment contains
other significant provisions which indicate that the
legislature itself felt that there might be areas and cases
where the two evils were neither prevalent nor apprehended
and as such the landlord’s
408
freedom need not be curtailed at all, as also cases where
attenuated freedom could be allowed to the landlord and
limited protection be extended to the tenant. not instance,
under s.1 (2) (a) (i) of the Act itself does not apply to
the entire State but only to the city of Madras, the city of
Madurai and to all Municipalities (i.e Municipal areas)
which shows that non-urban areas or rural areas are excluded
from the operation of the Act, presumably because in such
areas the evils of rack-renting and unreasonable eviction do
not obtain; and under the proviso there to power has been
reserved to the Government to withdraw the application of
the Act to any municipal areas or to the city of Madras or
to the city of Madurai from such date as may be mentioned
in the notification as also to reintroduce the Act in such
areas where it has ceased to apply by reason of the
notification issued under the proviso; similarly, s.1 (2)
(c) confers powers on the Government to apply all or any of
the provisions of the Act by notification to any other area
in the state to which it has not already been made
applicable by the Act itself and to cancel or modify any
such notification. Again by the proviso to s.10 (1) the
restrictions imposed by ss.10 and 14 to 16 (which enumerate
the grounds and the circumstances under which alone eviction
can be sought under the Act) have been made inapplicable to
tenants in buildings of which the landlord is the
Government. Similarly, under s.10 (3) (b) a much wider
latitude to evict a tenant is afforded to landlords of
religious, charitable, educational or other public
institutions if possession is required for the purposes of
such institutions, inasmuch as, unlike in the cases falling
under s. 10 (3)(a) (i) (ii) and (iii), there is no
insistence that such landlords should not be occupying any
other building of his own in the city, town or village
concerned. In other words the legislature itself has made a
rational classification of buildings belonging to Government
and buildings belonging to religious, charitable,
educational and other public institutions and the different
treatment accorded to such buildings obviously proceeds on
the well-founded assumption that the Government as well as
the landlords of such buildings are not expected to and
would not indulge in rack-renting or unreasonable eviction.
These and similar other provisons crystalize the policy and
purposes of the Act and furnish the requisite guidance which
can legitimately govern the exercise of power confered on
the State Government under s 29 of the Act. The guidance
thus afforded may illustratively be indicated by stating
that the power to grant exemptions or make exceptions could
be legitimately exercised by the State Government in areas
or cases where the mischief sought to be remedied by the Act
is neither
409
prevalent nor apprehended as also in cases (individual or
class of A cases) where a uniform or inflexible application
of law is likely to result in unnecessary or undue hardship
(here to landlords) or in cases where the beneficial
provison is likely to be or is being abused by persons for
whom it is intended (here the tenants). The question is
whether in issuing the Notification dated 16th August 1976
the State Government has exercised the power in conformity
with such guidance and the same is valid as not offending
Art. 14 of the Constitution.
We have already stated that the respondents have
contended that the question of constitutional validity of
granting exemption to buildings belonging to charities,
religious or secular from rent control legislation as
offending the equal protection clause of Art. 14 has been
concluded by the observations made by this Court in P J.
Irani’s case (supra) while Counsel for the petitioners and
the appellants on the other hand have urged that it is not;
according to Counsel for the petitioners and the appellants
all that the observations made by this Court in that case
decide is that the classification of buildings belonging to
Hindu, Christian and Muslim religious public trusts as also
to public charitable trusts could be regarded as a
reasonable classification based on intelligible differentia
but that test of nexus which is also required to be
satisfied for purposes of Art. 14 has not been pronounced
upon by this Court and this aspect is still open to
argument- We shall proceed on the basis that the question is
res integra and consider whether the respondents,
particularly the State Government have furnished proper
material on the basis of which the exemption granted can be
justified.
lt cannot be disputed that public religious and
charitable endowments or trusts constitute a well recognised
distnict group inasmuch as they not only serve public
purposes but the disbursement of their income is governed by
the object with which they are created and buildings
belonging to such public religious and charitable endowments
or trusts clearly fall into a distinct class different from
buildings owned by private landlords and as such their
classification into one group done by the State Government
while issuing the impugned notification must be regarded as
having been based on an intelligible differentia. Counsel
for the petitioners and the appellants also fairly conceded
that such classification would be a rational one, more so in
view of the observations made by this Court in that behalf
in P.J. Irani’s case (supra). The question is whether the
said classification has any nexus with the object with which
the powers to H
410
grant exemptions has been conferred upon the State
Government under s. 29 of the Act. On this aspect of the
matter before we go to the material furnished by the State
Government on the basis of which such nexus is sought to be
established it will be useful to refer to certain
observations made by this Court in the case of State of
Madhya Pradesh v. Kanhaiya Lal (supra) which afford a clear
indication as to what kind of material would go to establish
such nexus, The facts of that case were these. Respondent
No. 4 in that case was a public trust registered under the
Madhya Pradesh Public Trusts Act and it owned a house
property, one portion whereof was occupied by girls school,
the rest being let out to tenants. Since the rents issuing
from the property were wholly utilised for the pure poses of
the schools respondent No. 4 became entitled to get
exemption from the provisions of the M. P. Accommodation
Control Act under s. 3(2) thereof for that house-property.
On an application made in that behalf by respondent No. 4
the State Government granted the exemption by issuing a
notification under that provision. The notification was
challenged on two grounds, (i) that s. 3 (2) was void on the
ground of the excessive delegation of Legislative powers to
the State Government; (ii) that the notification itself was
discriminatory as the grant of exemption was not germane to
the policy of the Act. The High Court upheld the validity of
s. 3 (2) but struck down the notification as being
discriminatory. This Court confirmed the High Court’s view
eon both the points. While holding the notification bad on
the ground that the exemption granted was not germane to the
policy of the Act this Court observed thus:
“In this case there is no affidavit by any
officer who had anything to do with the order granting
exemption. The returns filed on behalf of the State
Government do not throw any light on this question. It
would appear that in granting the exemption the State
applied merely a rule of thumb and issued the
notification on the basis of the assertion by the trust
that the entire rental income from the property was
being applied to meet the expenses of the trust. Such a
statement on allows an institution to apply for
exemption. It was not the case of the trust that they
wanted to evict the tenants because they wanted the
whole of the accommodation itself nor was it their plea
that the income according to them was very low compared
to prevailing rates of rent and that it was wholly
inadequate for meeting the expenses of the trust. If
grounds like these or other relevant grounds had
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been alleged it would have been open to the State
Government to consider the same and pass an order
thereon. In our view the State Government did not apply
its mind which it was required to do under the Act
before issuing a notification and the return does not
disclose any ground which was germane to the purposes
of the Act to support the claim for exemption .”
(Emphasis supplied)
The above observations clearly indicate what kind of
material the State Government is required to take into
consideration which would justify the grant of an exemption
in favour of a particular ill building or class of
buildings. C
Coming to the material furnished by the State
Government on the basis of which the impugned exemption is
sought to be justified it may be stated that in paragraph 4
of its Counter Affidavit dated 10.2.1981 Shri J.
Ramachandran, Joint Secretary, Home Department, has stated:
D
“The prime object behind the grant of exemption to
the buildings belonging to religious institutions is to
enable J the institutions to get enhanced income by
increasing their rents. The buildings were endowed to
the public religious and charitable trusts for carrying
out certain religious or charitable purposes. With the
escalation of prices, the religious and charitable
trusts are not in a position to carry out the
endowment, if the income of the property is not –
increased suitably and this nullifies the specific
purpose of endowment.”
In para 13 the deponent has further stated:
“As stated already, numerous representations were
made to the Government about the plight of the temples
and the public charities like poor feeding, etc. and
the ridiculous position which is prevailing, and the
Government on a consideration of all the aspects of the
matter was fully satisfied that the tenants are fully
exploiting the situation and the fixation of a fair
rent under the Rent Control Act is no criterion at all
and that it would cause immense in justice and would be
highly oppressive so far as temples and religious
endowments and public charities are concerned. lt is
only in the context of such a serious predicament and
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critical situation that the Government intervened and
issued the notification under s. 29 of the Act to
relieve the hard ship and injustice.”
It has also been pointed out that the procedure and
machinery indicated in s. 4 of the Act and the concerned
Rules for fixing fair rent only yields on the total cost of
the building together with the market value of the site, a
gross return of 9 per cent for residential buildings and 12
per cent for non-residential buildings which is very low as
compared to the bank rate of interest and grossly inadequate
when compared to the reasonable rents at the market rate
obtaining in the locality or the neighbourhood (i.e., rent
which a willing land lord will charge to a willing tenant)
and it was a case of the tenants of all such buildings
exploiting the situation arising from the beneficial
provisions of the Act. In the supplementary counter
affidavit dated the 24th September 1983, Shri N. Srinivasan,
Deputy Secretary. Home Department, has categorically
asserted that “in all these cases the Government was
satisfied that the rent paid by the tenants was very low,
meager and that the previsions of fixation of fair rent
under the Act would not meet the ends of justice and the
situation will still continue in which the tenant will be
exploiting the situation and the helplessness of the public
religious trusts and charitable institutions” and that,
therefore, the Government felt that it was
necessary to withdraw the protection given under the Act to
the tenants of such buildings.
It may be stated that no rejoinder affidavit has been
filed on behalf of the writ petitioners or the appellants
and as such the before said material furnished by the two
counter affidavits and the averments made therein have gone
unchallenged. In our view, the aforesaid material clearly
shows that buildings belonging to such public religious and
charitable endowments or trusts clearly fell into a class
where undue hardship and injustice resulting to them from
the uniform application of the beneficial provisions of the
Act needed to be relieved and the exemption granted will
have to be regarded as being germane to the policy and
purpose of the Act. In other words the classification made
has a clear nexus with the object with which the power to
grant exemption has been conferred upon the State Government
under s. 29 of the Act.
It may be stated that counsel for the petitioners and
the apple lands during the course of the hearing placed
reliance upon a decision of this Court in State of Rajasthan
v. Mukanchand and Others(l)
(1) [1964] 6 S.C.R. 903.
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where the impugned part of s. 2(c) of the Jagirdar’s Debt
Reduction A Act (Rajasthan Act 9 of 1937) was held to be
violative of Article 14 on the ground that the test of nexus
between the classification made and the object sought to be
achieved by the statute in question had not been satisfied.
The ratio of the decision was that Jagirs having been
deprived of their lands were entitled to the benefits of the
Act providing for reduction of debts and it made no
difference whether the debts were owed to the Government or
local authority or other bodies mentioned in the impugned
part of s. 2(e) of the Act and such debts due to the
Government, local authority and other bodies could not be
excluded while granting the benefit of reduction of debts.
The ratio, in our view, is clearly inapplicable to the facts
of the instant case inasmuch as we have come to the
conclusion that the classification of buildings made in the
impugned notification has a clear nexus with the object with
which the power to grant exemption has been conferred upon
the State Government.
It was next contended that If the main object of
granting exemption to buildings belonging to public
religious institutions or public charities was to enable
these institutions to augment their income by increasing
rentals of their buildings such object could have been
achieved by granting exemption from these provisions of the
Act which deal with the controlling of rents (ss 4 to 8 and
the Rules made in that behalf) but a total exemption granted
to them from all the provisions of the Act particularly
those which prevent unreasonable eviction of tenants must be
regarded as excessive and unwarranted. And in this behalf
counsel for the petitioners and the appellants referred to a
Saurashtra Notification No. AB/15(17)/54-55 dated the 27th
December, 1954 issued by the State Government under s.4(3)
of the Saurashtra Rent Control Act, 1954 where under partial
exemptions p from changing only the standard rent subject to
certain conditions was granted to buildings belonging to
public trusts for religious and charitable purpose. It was
pointed out that the Notification provided that the
provisions of the Act except provisions in ss 23, 24 and 25
shall not, subject to conditions and terms specified in the
schedule thereto apply to such buildings and term No. l in
schedule A stated that no tenant of such premises to whom
the same has been leased on or before 30th December, 1948
shall be evicted provided such tenant agrees to increase the
monthly rent paid by him immediately before the said date by
50 per cent and does not allow, except for valid reasons,
the rent amount due at any time to run in arrears for more
than two consecutive months.” In other words the Saurashtra
Notification was relied upon as an illustration where
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partial exemption from the provisions of the Rent Control
enactment subject to terms and conditions could be granted.
Thus counsel urged that similarly in the instant case the
State Government of Tamil Nadu could have given partial
exemption to buildings belonging to public religious
institutions and public charities only in the matter of
‘fair rent’ and need not have taken away the protection
available to the tenants under the provisions which
prevented unreasonable eviction.
In our view there is no substance in the contention.
It cannot be disputed that the two objectives of the
enactment, namely, to control rents and to prevent
unreasonable eviction are interrelated and the provisions
which subserve these objectives supplement each other. Tn P.
J. Irani’s case (supra), Sarkar, J, has also observed at
page 193 of the Report that “the purpose of the Act, quite
clearly, is to prevent unreasonable eviction and also to
control rent. These two purpose are intertwined.” it is
obvious that if the trustees of the public religious trusts
and public charities are to be given freedom to charge the
normal market rent then to make that freedom effective it
will be necessary to arm the trustees with the right to
evict the tenants for non-payment of such market rent. The
State Government on material before it came to the
conclusion that the ‘fair ‘rent’ fixed under the Act was
unjust in case of such buildings and it was
necessary to permit the trustees of such buildings to
recover from their tenants reasonable market rent and if
that be so non-eviction when reasonable market rent is not
paid would be unreasonable and if the market rent is paid by
the tenants no trustee is going to evict them. It is,
therefore, clear that granting total exemption cannot be
regarded as excessive or unwarranted.
Apart from this aspect of the matter it is conceivable
that trustees of buildings belonging to such public
religious institutions or public charities may desire
eviction of their tenants for the purpose of carrying out
major or substantial repairs or for the purpose of
demolition and reconstruction and the State Government may
have felt that the trustees of such buildings should be able
to effect evictions without being required to fulfil other
onerous conditions which must be complied with by private
landlords when they seek evictions for such purpose. In our
view, therefore, the total exemption granted to such
buildings under the impugned notification is perfectly
justified.
The reliance on Saurashtra Notification, in our view,
would be of no avail to the petitioners or the appellants.
The manner in
415
which exemption from rent control provisions should be
granted, whether it could be partial or total and if so on
what terms and conditions would be matters for each State
Government to decide in the light of the scheme and
provisions of the concerned enactment and the facts and
circumstances touching the classification made. And if the
State of Madras has thought fit to grant the exemption in a
particular manner by the impugned notification it will be
difficult to find fault with it if the exemption so granted
is not illegal or unconstitutional. It will be interesting
to note that even under the Saurashtra Notification the term
or condition contained in Schedule ‘A’ thereto also makes
the position clear that eviction may follow if the permitted
enhanced rent is not paid or allowed to fall in arrears for
two consecutive months by the tenant of such buildings
belonging to public religious or charitable trusts.
In the result the challenge to impugned notification fails
and the writ petitions and the civil appeals are dismissed.
All interim orders, if any, are vacated. where will be no
order as to costs.
S. R. Petition and Appeals dismissed
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