Rent-control exemption for new buildings upheld as rational, prospective, and consistent with housing-supply objectives.

The SC upheld the amended rent-control exemption for newly constructed buildings for ten years, holding that the classification between pre-commencement and post-commencement buildings had a rational basis and a direct nexus with the object of encouraging new construction and easing housing scarcity; the measure was therefore not arbitrary or violative of Article 14. The Court also held that the amendment was prospective in operation, did not create any vested right in tenants to insist on continuation of the earlier exemption, and could validly remove any defect in the prior provision within legislative competence. The constitutional challenge was rejected and the amended Section 1(3) was sustained.

---

---

Issues: (i) Whether the amended Section 1(3) of the Haryana Urban (Control of Rent and Eviction) Act, 1973, exempting newly constructed buildings for ten years, was arbitrary and violative of Article 14 of the Constitution of India. (ii) Whether the amended provision was invalid for operating retrospectively and for allegedly taking away vested rights of tenants.

Issue (i): Whether the amended Section 1(3) of the Haryana Urban (Control of Rent and Eviction) Act, 1973, exempting newly constructed buildings for ten years, was arbitrary and violative of Article 14 of the Constitution of India.

Analysis: The classification between buildings completed before the commencement of the Act and buildings completed on or after its commencement was held to have a rational basis. The legislative object was to encourage new construction so as to increase housing accommodation and thereby mitigate the hardship caused by scarcity of accommodation. The exemption was for a definite and limited period of ten years, and the Legislature was entitled to fix both the class of buildings and the period of exemption so long as the measure was not unreasonable or arbitrary. The provision was therefore found to rest on intelligible differentia having a direct nexus with the object of the enactment.

Conclusion: The amended Section 1(3) was not violative of Article 14 and was upheld.

Issue (ii): Whether the amended provision was invalid for operating retrospectively and for allegedly taking away vested rights of tenants.

Analysis: The amended provision was construed as prospective in operation, though it applied to buildings completed after the commencement date specified in the Act. The earlier provision did not create any vested right in tenants to insist that the pre-amendment exemption should continue unchanged. Even assuming any defect existed in the earlier provision, the Legislature was competent to remove that defect by amendment and validate the provision within its legislative competence.

Conclusion: The challenge based on retrospectivity and vested rights failed.

Final Conclusion: The constitutional challenge to the amended exemption provision was rejected and the validity of Section 1(3) as amended was sustained.

Ratio Decidendi: A rent-control exemption for newly constructed buildings is constitutionally valid where it is limited to a definite period, is designed to encourage new construction, and bears a rational nexus to the legislative object of relieving housing scarcity.

---