TaxTMI 
TaxTMI 
1990 (10) TMI 363
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....as rejected by the High Court of Jammu & Kashmir. The High Court, following its earlier decision in The J & K Bank Ltd. v. State of J & K & Another, AIR 1987 J & K 18, upheld the validity of the clause. The impugned provision, as it stood at the relevant time, reads: "1(3) Notwithstanding anything contained in sub-section (2), nothing in this Act shall apply to--- (ii) Omitted (iii) any tenancy in respect of any house. or shop where the income of the tenant, whether accruing within or outside the State, exceeds rupees 40,000 per annum; Explanation: the word 'income' means 'net income.'" The appellant, the Delhi Cloth & General Mills Limited is the tenant of the building in question. Its claim for the protection of the Ac....
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....ary from year to year, depending upon the nature of his business and other factors. This variation in income may expose him to eviction in a particular year when the business is prosperous but protects him from eviction when the business declines and income falls. Furthermore, counsel says. "income" is not a clear and precise concept. Limiting it to net income does not make it clearer. What are the permissible deductions to arrive at the "net", the Act does not say. The Section is invalid because it is too broad or vague. Any classification based on such vague differentia is unintelligible and, therefore, violative of Article 14. In any view, counsel submits, the classification sought to be made between per- sons falling on either side of t....
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....sonable classification. These decisions do not, in our view, support the contentions of the appellant. On the other hand, a classification with reference to economic realities was upheld by this Court in Kerala Hotel & Restaurant Association & Ors. v. State of Kerala & Ors., [1990] 1 JT SC 324. This Court stated "those who can afford the costlier cooked food, being more affluent, would find the burden lighter. This object cannot be faulted on principle and is, indeed, laudable". Though that principle was stated in a different context, significantly this Court accepted a classification based on financial capacity. The classic and oft-repeated test to be applied when the constitutionality of legislation is questioned with reference to Articl....
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....uld depend upon his net income. It is the tenant that the legislature intends to protect and not the landlord or his building. The test adopted by the legislature for this purpose is with reference to the tenant's net income, whether accruing inside or outside the State, as on the date of the land- lord's application for eviction as well as on the date of the decree for eviction. The legislative object is, there- fore, to protect tenants who are economically weaker in comparison to those affluent tenants falling outside the specified limit of income, and at the same time to encourage construction of new buildings which will result in better availability of accommodation, employment opportunity and economic prosperity. This is a reas....
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....k Ltd. v. State of J & K & Another, AIR 1987 J & K 18. In that case, speaking for the Division Bench, Anand, CJ. stated as follows: "In our opinion, the challenge to vires of S. 1(3)(iii) of the Act is not well founded. Undoubtedly, the Act is a piece of social and beneficial legislation. The Legislature knows and correctly appreciates the needs of its people. In its supreme wisdom it denied the protection of the Act to ten- ants whose annual income exceeds Rs.40,000. Social legislation of this type is designed to protect the interest of a class of society who, because of their economic conditions, deserves such protection against their arbitrary eviction. The legislation is intended to protect weaker and poorer classes of the tenants and ....