TaxTMI 
TaxTMI 
1989 (4) TMI 315
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.... conspectus of the facts involved. The respondent Board of Trustees of the Port of Bombay is a statutory authority. Vast areas of South Bombay which are completely tenanted, are owned by the respondent. Being a statutory authority, the respondent has been exempted from the operation of the relevant Rent Act. The respondent is a statutory corporation constituted under the Major Port Trust Act, 1963 as amended by the Major Port Trust (Amendment) Act, 1974. Between about 1906 and 1932, one Jhunjhunwala was the lessee of plot No. 6 (which adjoins plot 5B which is the suit plot) and a building was existing on plot No. 6 which was tenanted to M/s Bombay Bharat & Swadeshi Rice Mills, and the said Mills were desirous of operating a rice mill on plot No. 6 but could not get the licence from the Municipality for the operation of the said rice mill unless satisfactory arrangement was made for the removal and storage of rice husk in a separate chamber/structure. Since about 1932, the appellant had been the lessee of the respondent in respect of part of the original plot No. 4 (now plot 5B) which adjoins plot No. 6 of the suit plot measuring 113.4 sq. rots. In or about 1933-34, with a ....
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....in 1972-76. The appellant, however, asserted that it had offered to pay the revised rent that might be fixed by the respondent. The appellant objected to the offer made to Dhanji Mavji exclusively and pointed out that the established practice of the respondent was to continue the existing tenants/ occupants on the final plots. The respondent, however, asserted that as Dhanji Mavji had been in possession of the major portion of plot No. 5B (390 sq. mts. vis-a-vis 113.4 sq. mts.), they agreed to let the entire plot to Dhanji Mavji and, therefore, could not entertain the appellant's request. In the premises, by notices issued in 197 1-73, the respondent purported to terminate the tenancy of the appellant. In1973-74, the Municipal Corporation auctioned the right, title and interest of Jhunjhunwala and the respondent in plot No. 6 for nonpayment of property taxes. An associate firm of the appellant M/s. Natwar Parekh & Sons purchased plot No. 6 and became the owner thereof. The case of the appellant was that the respondent got the Corporation to wrongfully exclude the respondent's interest from the conveyance. The said Natwar Parekh challenged such exclusion by filing writ petition N....
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.... High Court dismissed the said writ petition by the judgment under appeal and upheld the order of eviction. The High Court accepted the finding of the appellate court that the notice of ejectment was valid notice and there was no waiver of notice. In our opinion, the High Court was right on this aspect and in any event under Article 227 of the Constitution the High Court could not have gone into this question. We, in an appeal under Article 136 of the Constitution cannot re-appraise that question. The question that survived after the finding of the appellate court and which was urged mainly before the High Court and also in this appeal, was whether the action of the respondent in evicting the appellant and granting the premises in question to M/s Dhanji Mavji was proper and right. It was contended on behalf of the appellant that the action of the respondent in terminating the appellant's contractual tenancy had a public law character attached to it and was accordingly subject to judicial review. It was asserted that every action of the respondent which was 'State' within Article 12 of the Constitution, whether it be in the field of contract, or any other field, was subject to Ar....
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.... offering/allotting a new plot jointly to the existing occupants/tenants, the respondent arbitrarily, it was contended, and discriminatingly did not offer the new plot 5B to M/s Dhanji Mavji and the appellant (both of whom were existing tenants/occupants of the plot) as joint tenants, but instead wrongfully decided to give the entire plot to M/s Dhanji Mavji to the exclusion of the appellant. "Our attention was drawn to Section 4 of the Bombay Rents, Hotel & Lodging House Rates (Control) Act, 1947, which enjoins that the Act would not apply to the premises belonging to the Govt. or to the local authorities. By the provisions of the said Section 4, the Port Authorities were exempted from the operation of the Rent Act. This privilege was given to the Port Trust Authorities, it was submitted, on the assumption that it would act in public interest, and would not behave like ordinary landlords. The special privileges, powers and benefits were statutorily conferred on the Bombay Port Trust by Section (4) of the aforesaid Act. It had those rights due to its statutory or public character, as a local authority. Our attention was also drawn to the decision in Rampratap Jaidayal v. Domi....
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....erest but for a collateral purpose or mala fide or that it had acted in a manner contrary to the provisions of Art. 14 of the Constitution. He is right so contending. It was further urged by Mr Ramaswamy that public law duties are owed to society at large and the nature of the body performing the functions is not determinative of public law or private law character of the action taken. He contended that since the provisions of the Bombay-Rent Act did not apply to the premises of the Bombay Port Trust in the notice of termination no reason was required to be given either in the notice itself terminating the tenancy or in the plaint for evicting the appellant. He further contended that originally the Bombay Port Trust was constituted as a body corporate under the provisions of the Bombay Port Trust Act, 1889 and is now constituted under the provisions of the Major Port Trusts Acts, 1988. In both these Statutes the object for constituting the Bombay Port Trust was not to provide accommodation to persons and, therefore, the object was totally different from the object for which the Bombay Rent Act and similar enactments have been enacted. It was, therefore, urged that since there wa....
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....ption while acting by virtue of such privileges. Judicial review to oversee if such bodies are so acting is permissible. The field of letting and eviction of tenants is normally governed by the Rent Act. The Port Trust is statutorily exempted from the operation of Rent Act on the basis of its public/Government character. The legislative assumption or expectation as noted in the observations of Chagla C.J. in Rampratap Jaidayal's case (supra) cannot make such conduct a matter of contract pure and simple. These corporations must act in accordance with certain constitutional conscience and whether they have so acted, must be discernible from the conduct of such corporations. In this connection, reference may be made on the observations of this Court in S.P. Rekhi v. Union of India, [1981] 2 SCR 111, reiterated in M.C. Mehta & Anr. v. Union of India & Ors., [1987] 1 SCC 395, wherein at p. 148, this Court observed: "It is dangerous to exonerate corporations from the need to have constitutional conscience; and so, that interpretation, language permitting, which makes governmental agencies, whatever their mien amenable to constitutional limitations must be adopted by the court as again....
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....nt case, must have been only in public interest. Reliance was placed on several decisions referred to hereinbefore. We are inclined to accept the submission that every activity of a public authority especially in the background of the assumption on which such authority enjoys immunity from the rigours of the Rent Act, must be informed by reason and guided by the public interest. All exercise of discretion or power by public authorities as the respondent, in respect of dealing with tenants in respect of which they have been treated separately and distinctly from other landlords on the assumption that they would not act as private landlords must be judged by that standard. If a governmental policy or action even in contractual matters fails to satisfy the test of reasonableness, it would be unconstitutional. See the observations of this Court in Kasturi Lal Lakshrni Reddy, (supra) and R.D. Shettv v. The International Airport Authority of India & Ors., [1979] 3 SCR 1014 at 1034. Learned Additional Solicitor General reiterated on behalf of the respondent that no question of mala fide had been alleged or proved in these proceedings. Factually, he is right. But it has to be borne in m....
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....e alleged policy of the Port Trust of giving plots on joint tenancy to all occupants. According to him, in the letters addressed by the Port Trust at pp. 82, 123, 128 of Vol. 1 and in the letters by and on behalf of the appellant and/or their alleged associate concerns at pp. 14 1 to 147 they have specifically admitted that there was a policy of the Port Trust to allot plots to the occupants of the major portions thereof and in fact a grievance has been made by them that in accordance with the said policy of the Bombay Port Trust, Plot No. 5A was not being allotted to the associates of the appellant. In that view of the matter even under the scope of judicial review, it was contended, whether it should have been given on joint-tenancies or not, is not a matter which could be gone into by the Court. Reliance was placed on the observations of Lord Justice Diplock in Council of Civil Service Unions v. Minister for the Civil Service, [1984] 2 AER 935 at 950, where the learned Lord Justice classified 8 grounds subject to control of judicial review, namely, illegality, irrationality and procedural impropriety. Learned Addl. Solicitor General is right, in our opinion, in that we cannot re....
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.... the knowledge of the present appellant that they had also put up constructions thereon at substantial cost. He urged that, though it is true that the lease in favour of the petitioner was terminated and the suit filed only in 1977, the fact is that the appellant took no step earlier to have the allotment in favour of his clients cancelled. This, he has urged, is also a ground for non-interference at this stage. We are inclined to agree. Our attention was drawn to the fact that Dhanji Mavji had held 80% of the re-constituted plot. The plot 5B had been developed inasmuch as a building of ground plus 5 upper storeys had been erected as was the maximum possible notwithstanding the fact that the appellant had not yet surrendered their portion. As against this, on plot 5A where the Bombay Port Trust offered a joint tenancy to the three occupants, since there was no occupant holding a major portion thereof, there had been no development whatsoever and in fact there has been litigation going on to remove all the 3 occupants. In that view of the matter the Bombay Port Trust, perhaps, was justified in coming to the conclusion that the only possible way to develop the properties of the Bo....
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....orceable under the Private Law and, therefore, justiciable. As we look upon the facts of this case, there was an implied obligation in respect of dealings with the tenants/occupants of the Port Trust authority to act in public interest/purpose- That requirement is fulfilled if it is demonstrated that the Port Trust Authorities have acted in pursuance of a policy which is referable to public purpose. Once that norm is established whether that policy is the best policy or whether another policy was possible, is not relevant for consideration. It is, therefore, not necessary for our present purposes to dwell on the question whether the obligation of the Port Trust Authorities to act in pursuance of a public purpose was of public law purpose or a private law purpose. Under the Constitutional scheme of this country the Port Trust Authorities were required by relevant law to act in pursuance of public purpose. We are satisfied that they have proceeded to so act. We must record that learned Addl. Solicitor General made a statement that irrespective of the result of this appeal, the Port Trust Authorities of Bombay, will consider reasonably granting of an alternative site to the a....