Rent-control exemption powers cannot override statutory policy or create arbitrary permanent exclusions from tenant protection.

A rent-control exemption notification fixing a monthly rent ceiling for exclusion from the East Punjab Urban Rent Restriction Act was held to exceed delegated power because it departed from the Act's protective policy and operated as a permanent, substantial withdrawal of tenant protection. The Court treated the notification as delegated legislation, not conditional legislation, and held that a delegate cannot alter the statute's essential features or effect a partial repeal. It also found the classification arbitrary, since the ceiling was adopted mechanically without adequate data or consideration of local conditions, inflation, or actual impact. The exemption was therefore invalid and could not be sustained under Article 14.

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Issues: Whether the exemption notification issued under Section 3 of the East Punjab Urban Rent Restriction Act, 1949, fixing a monthly rent ceiling of Rs. 1,500 for exclusion from rent control, was within the Administrator's power and consistent with the legislative policy of the Act; and whether the notification, having a permanent effect, was arbitrary, amounted to virtual repeal, or offended Article 14 of the Constitution of India.

Analysis: Section 3 empowered exemption by notification, but that power had to be exercised within the four corners of the parent statute and in conformity with its policy, which had to be gathered from the preamble and core provisions of the Act. The Act was a beneficent rent-control law intended to regulate rent and prevent unreasonable eviction, while also providing limited protection to tenants. The Court distinguished delegated legislation from conditional legislation and held that the impugned notification was an exercise of delegated legislative power, not a mere condition for commencement. Such power could not be used to alter the essential features of the statute or to effect a partial repeal, which lay only within the legislative domain. The Court also held that the National Housing Policy could not substitute for the legislative policy of the Act, and that the Administrator had to apply independent mind to relevant factors, including local conditions, inflation, and the actual impact of the rent threshold. The fixed ceiling of Rs. 1,500 was adopted mechanically, without adequate data or study, and the notification would withdraw protection from a very large section of tenancies in Chandigarh. The permanent nature of the exemption further showed that it was not a limited, regulatory exemption of the kind earlier upheld in short-term or class-specific notifications.

Conclusion: The notification was beyond the Administrator's delegated power, was inconsistent with the legislative policy of the Act, and could not be sustained as a valid classification under Article 14.

Final Conclusion: The appeals succeeded and the impugned judgments were set aside because the exemption notification was invalid in law.

Ratio Decidendi: A delegate empowered to grant exemption under a rent-control statute cannot, by notification, alter the statute's essential policy or effect a permanent or substantial repeal under the guise of exemption; such action must conform to the Act's legislative purpose and withstand judicial review for relevance and non-arbitrariness.

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