TaxTMI 
TaxTMI 
2003 (2) TMI 482
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....hna Gupta, I.P. Singh, R.S. Lambat, Narain, Sandeep Narain, Gopal Jain, Nandini Gore, Shridhar Y. Chitale, Jayshree Navin Chandra, Uday Umesh Lalit, Gopal Balwant Sathe and Anitha Shenoy, Advs. for appearing parties JUDGMENT: R.C. Lahoti, J. 1. Leave granted in all SLPs. 2. The Bombay Rents, Hotel and Lodging House Rates Control, Bombay Land Requisition and Bombay Government Premises (Eviction) (Amendment) Act, 1996 (Act No. XVI of 1997) having been struck down as ultra vires of the Constitution and as being beyond legislative competence of the State Legislature, the State of Maharashtra, the Welfare Association of Allottees of Requisitioned Premises, Maharashtra and several others have come up in appeal. The decision by the Division Bench of the High Court of Judicature at Bombay was delivered on 27th July 1998. The judgment posed the threat of eviction against several allottees in occupation of premises requisitioned by the State Government. Several Writ Petitions were filed which were all disposed of by the impugned judgment of the Division Bench. The principal question which arises for decision in the batch of appeals is the constitutional validity of Amendment Act ....
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....h too was turned down. The owner filed a Writ Petition in the year 1980 under Article 226 of the Constitution, laying challenge to the validity of the requisition. One of the grounds of challenge was that the requisition order could not survive for such a long period of time and the Government was bound to derequisition the flat. The Writ Petition was allowed. The occupant came in appeal by special leave to this Court. Vide its judgment dated February 22, 1984 (H.D. Vora Vs. The State of Maharashtra and Ors. (1984) 2 SCC 337) this Court held that the power of requisitioning is exercisable by the Government only for a public purpose which is of a transitory character. If the public purpose of requisition is of a perennial or permanent character from the very inception, no order can be passed requisitioning the premises and in such a case the order of requisition, if passed, would be a fraud upon the statute; further Government would be requisitioning the premises when really speaking they want the premises for acquisition as the objective of taking the premises was not transitory but permanent in character. This Court upheld the decision of the High Court allowing the Writ Petition ....
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....the continuance of an order of requisition for as long as 30 years was rightly held to be unreasonable. 8. What is of significant relevance is the operative part of the order of the Constitution Bench. The same (paras 20 and 21 of SCC, at p.205) is extracted and reproduced verbatim as under:- "The continuance of requisition orders made in the late 1940s and early 1950s and thereabouts, particularly of residential premises, have been struck down by the Bombay High Court in numerous cases following the judgments in H.D. Vora case. There are no appeals thereagainst (except one which was, by a separate order of this Bench, dismissed). The allottees of these requisitioned premises (except retired government servants allotted premises requisitioned for the purpose of housing government servants) and their legal representatives have continued in occupation thereof by reason of the interim orders of this Court passed from time to time in Writ Petition No. 404 of 1986. Having regard to the known difficulty of finding alternate accommodation in Bombay and other large cities in Maharashtra, the protection of these interim orders is hereby continued until 30-11-1994, on which date ....
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....icient time to find out alternative employment and the State Government should also make alternative arrangements for housing ration shops and for that purpose the derequisition and eviction should not take place before 31-5-1996. As to category (ii), his Lordship opined that they should be given preference in allotment of plots and flats by making suitable arrangement with City and Industrial Development Corporation of Maharashtra Limited and Maharashtra State Housing Board. Alternative accommodation to such occupants should be made available by the State Government latest by 31-5-1996 and till then there should be no derequisition and eviction. The premises other than those covered by the said two categories may be derequisitioned as directed in the order proposed by the majority. 12. It is pertinent to note that the two writ petitions were directed to be dismissed by the Constitution Bench. To mitigate the hardship likely to be caused to the occupants - the allottees in requisitioned premises continuing in occupation by virtue of interim orders of the Court which stood vacated by dismissal of the writ petitions, this Court allowed time until 30-11-1994 for vacating the premis....
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....l in nature to the tenants, licensees and occupants of the premises, the details whereof are being omitted as not necessary for our purpose. What is relevant for our purpose is to note that the life of requisition or continued requisition of any land which was coming to an end by virtue of sub-section (1-A) as inserted in Section 9 of the Bombay Land Requisition Act, 1948 by Maharashtra Act 5 of 1973, further amended by Maharashtra Act 29 of 1990 was given an extension by issuing an ordinance, namely, the Bombay Land Acquisition (Amendment) Ordinance, 1994 (Maharashtra Ordinance No. XX of 1994) which extended the life of such requisitions for a period of 24 years from 27-12-1973 that is upto 27th December, 1997. The statement of objects and reasons accompanying the said Ordinance referred to the two decisions of this Court in H.D. Vora (supra) and the subsequent decision of this Court dated 27-4-1994 in Grahak Sanstha Manch and Ors. case (supra). The preamble noticed the difficulty which was likely to be faced by several persons in occupation of the accommodation requisitioned and allotted by the State Government and the difficulties which the Government was facing on account of pa....
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....occupation or possession of the allotted premises for own residence "shall, notwithstanding anything contained in this Act, or in the Bombay Land Requisition Act, 1948, or in any other law for the time being in force, or in any contract, or in any judgment, decree or order of any court passed on or after the 11th June, 1996, be deemed to have become, for the purposes of this Act, the tenant of the landlord; and such premises shall be deemed to have been let by the landlord to the State Government or, as the case may be, to such Government allottee, on payment of rent and permitted increases equal to the amount of compensation payable in respect of the premises immediately before the said date." 2. All the premises requisitioned or continued under requisition under the Bombay Land Requisition Act, 1948 and allotted to Government allottees and allowed by the State Government to continue or to remain in occupation or possession of such premises were deemed to have been released from requisition. 3. The premises requisitioned and continued under requisition and allotted by the State Government for any non-residential purpose to any department or office of the State Go....
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....vernment or Central Government or public sector undertakings, corporations owned or controlled fully or partly by the State Government or co-operative societies or foreign consulates and for residential purpose to different categories of persons such as employees of the State or Central Government, public sector undertakings, corporations, or homeless persons, etc. Many of these premises have since been derequisitioned by the Government, as per Court orders or having regard to certain other circumstances. But still there are quite a large number of allottees in occupation of such premises, for a number of years, on payment of compensation as determined under the said Act. The allottees of such premises include Government servants who are still in Government service and others. 2. Under the existing provisions of Section 9 of the Bombay Land Requisition Act, 1948, as last amended by Mah. Act No. VII of 1995, the premises which have been requisitioned on or before 27th December, 1973 will have to be released from the requisition on or before 26th December, 1997 and those which have been requisitioned after 27th December, 1973, within twenty-four years from the date on which ....
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....eases, Government considers it expedient, in greater public interest, to make suitable provisions for providing the protection of statutory tenancy under the Rent Act to the State Government and to such Government allottees; and consequently to provide for the release of such premises from requisition. 5. As many landlords have already approached the High Court seeking eviction orders of the allottees of the requisitioned premises and the possibility of others also approaching the Court for such eviction orders cannot be ruled out, thereby frustrating the very object of this legislation, it is also considered expedient to provide in the proposed section 3 of this Ordinance that, such conferral of statutory tenancy rights on the allottees shall not be affected by any eviction orders passed by the Court on or after 11th June, 1996 (being the date of the Government decision to undertake such legislation). 6. As both Houses of the State Legislature are not in session and the Governor of Maharashtra is satisfied that circumstances exist which render it necessary for him to take immediate action further to amend the Bombay Rents, Hotel and Lodging House Rates Control Ac....
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....ist 6. Transfer of property other than agricultural land; registration of deeds and documents. 7. Contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land. 13. Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration. List - II (sic) State List 18. Land, that is to say, right in or over land, land tenures including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land; land improvement and agricultural loans; colonization." 25. So far as entry 18 of List-II is concerned, we may repel the defence summarily by referring to three decisions of this Court, namely, Accountant & Secretarial Services (P) Ltd. & Another Vs. Union of India & Others, (1988) 4 SCC 324, Dhanapal Chettiar Vs. Yesodai Ammal, (1979) 4 SCC 214 and Indu Bhusan Bose Vs. Rama Sundari Debi & Another, 1970 (1) SCR 443, wherein it has been categorically held that tenancy of buildings or of house accommodation or leases in respect of....
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....bovesaid. It was submitted that the owners have not transferred any property in the premises to the occupants nor does any contractual relationship exist between the owners and the occupants on the date of coming into force of the Amending Act and, therefore, the Amending Act cannot be said to be a law governing transfer of property or contract and hence does not fall within the purview of these entries 6 & 7. To test the validity of such submission forcefully advanced it will be useful to have a recap of certain well-established principles. 29. The fountain source of legislative power exercised by the Parliament or the State Legislatures is not Schedule __ 7; the fountain source is Article 246 and other provisions of the Constitution. The function of the three Lists in Seventh Schedule is merely to demarcate legislative fields between Parliament and States and not to confer any legislative power. The several entries mentioned in the three Lists are fields of legislation. The Constitution makers purposely used general and comprehensive words having a wide import without trying to particularize. Such construction should be placed on the entries in the Lists as makes them effectiv....
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....ng the limits. 32. A note of caution was sounded by Constitution Bench in Synthetics & Chemicals Ltd. etc. Vs. State of U.P. & Others, (1990) 1 SCC 109. The Constitution must not be construed in any narrow or pedantic sense and that construction which is most beneficial to the widest possible amplitude of its power must be adopted. An exclusionary clause in any of the entries should be strictly and, therefore, narrowly construed. No entry should be so read as to rob it of its entire content. A broad and liberal spirit should inspire those whose duty it is to interpret the Constitution. The Constitution is a living and organic thing and must adapt itself to the changing situations and pattern in which it has to be interpreted. To bring any particular enactment within the purview of any legislative power, it is the pith and substance of the legislation in question that has to be looked into by giving widest amplitude to the language of the entries. The Constitution must be interpreted in the light of the experience gathered. It has to be flexible and dynamic so that it adapts itself to the changing conditions in a pragmatic way. The undisputed constitutional goals should be permit....
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....uring the course of its judgment, the Constitution Bench held that the entry has to be liberally and widely interpreted. Regulation of houses in private occupation would fall within the entry. The word 'regulation' includes power to direct or control all housing accommodation in cantonment areas, which in its turn, will include within it all aspects as to who is to make the construction, under what conditions the constructions can be altered, who is to occupy the accommodation and for how long, on what terms it is to be occupied, when and under what circumstances the occupant is to cease to occupy it, and the manner in which the accommodation is to be utilized. All these are ingredients of regulation of house accommodation in its wide sense. The Parliament could legislate in respect of house accommodations in cantonment areas in all its aspects, including regulation of grant of leases, ejectment of lessees and ensuring that the accommodation is available on proper terms as to rents. The power of the State Legislature to legislate in respect of landlord and tenant of buildings is to be found in entries 6, 7 & 13 of List-III of the Seventh Schedule to the Constitution and not....
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....said expression and term as would make the entries meaningful and effective. The entries must certainly take colour from the Directive Principles of State Policy specially those contained in Articles 38 and 39 of the Constitution. True that there was no voluntary transfer of property by the owners of property in favour of the occupant allottees of the premises. The State Government in exercise of its power of eminent domain, recognized statutorily, had requisitioned the properties in public interest and allotted it to the occupants. The Government paid compensation for requisitioning to the owners. Out of the requisitioned premises some were occupied by State itself. As to the premises which were allotted, the allottees in occupation were liable to pay compensation in lieu of their occupation of the premises. There was no privity of contract between the owners and the occupants, yet a privity of estate was brought into being by acts of State supported by law. Possession is nine points in law and to that extent a transfer of property had resulted and brought into being. Such privity of estate was compulsorily converted into privity of contract by operation of law as a consequence of....
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....e none by imposing ceiling on holdings, both agricultural and urban, or by direct regulation of contractual transactions by forbidding certain transactions and, perhaps, by requiring others. It also means that those who have been deprived of their properties by unconscionable bargaining should be restored their property. All such laws may take the form of forced redistribution of wealth as a means of achieving a fair division of material resources among the members of society or there may be legislative control of unfair agreements." (emphasis supplied) 39. In Maneklal Chhotalal & Ors. Vs. M.G. Makwana & Ors., 1967 (3) SCR 65, the constitutional validity of Bombay Town Planning Act, 1954 as amended by Gujarat Act 52 of 1963 was put in issue. The legislation fell within entry No. 18 of List-II. The Court also held after elaborately referring to the various provisions contained in the Act that it was passed with a view to regulate the development of certain areas with the general object of framing proper schemes for the healthy orderly development of the area in question and it is with a view to achieve this purpose that a very elaborate procedure and machinery have been prescr....
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....to be examined by a Constitution Bench of this Court in K.C. Gajapati Narayan Deo & Ors. Vs. State of Orissa, 1954 SCR 1. It was held that the doctrine of colourable legislation does not involve any question of 'bona fides' or 'mala fides' on the part of the Legislature. The whole doctrine resolves itself into the question of competency of a particular Legislature to enact a particular law. If the Legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the Legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power (Vide Cooley's Constitutional Limitations, Vol. 1, p. 379). The crucial question to be asked is whether there has been a transgression of legislative authority as conferred by the Constitution which is the source of all powers as also the separation of powers. A legislative transgression may be patent, manifest or direct or may also be disguised, covert and indirect. It is to this latter class of cases that the expression 'colourable legislation' has been applied in certain j....
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....t possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. The Constitution Bench held :- "Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the Legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already....
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....e declared to be unconstitutional. The Legislature cannot assume power of adjudicating a case by virtue of its enactment of the law without leaving it to the judiciary to decide it with reference to the law in force. The Legislature also is incompetent to overrule the decision of a court without properly removing the base on which the judgment is founded. The court on a review of judicial opinion, proceeded to lay down the following principles among others so as to maintain the delicate balance in the exercise of the sovereign powers by the Legislature, Executive and Judiciary :- "(i) in order that rule of law permeates to fulfil constitutional objectives of establishing an egalitarian social order, the respective sovereign functionaries need free play in their joints so that the march of social progress and order remains unimpeded; (ii) in its anxiety to safeguard judicial power, it is unnecessary to be overzealous and conjure up incursion into the judicial preserve invalidating the valid law competently made; (iii) the court, therefore, needs to carefully scan the law to find out: (a) whether the vice pointed out by the court and invalidity suffered by ....
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.... as well as alteration or substitution of provisions of the enactment on which such judgment is based, with retrospective effect." 50. Recently a Constitution Bench in Naga People's Movement of Human Rights Vs. Union of India, (1998) 2 SCC 109, held that 'colourable legislation' is enacting by the Legislature of a legislation seeking to do indirectly what it cannot do directly. But ultimately, the crucial question would be - Whether the Legislature had the competence to enact the legislation ? If the impugned legislation falls within the competence of the Legislature, the question of doing something indirectly which cannot be done directly becomes irrelevant. 51. Here we may, with advantage, quote certain observations of the larger Bench (7 Judges) of this Court in Dhanapal Chettiar Vs. Yesodai Ammal (supra). In all social legislations meant for the protection of the needy, not necessarily the so-called weaker section of the society as is commonly and popularly called, there is appreciable inroad on the freedom of contract and a person becomes a tenant of a landlord even against his wishes on the allotment of a particular premises to him by the Authority concerned....
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.... proper and due consideration of all its ramifications. 53. We have already seen that the impugned Amending Act is within the legislative competence of the State Legislature. The impugned Amending Act does not either directly or indirectly overrule the judgments of this Court. The law enunciated by this Court in the two decisions was that the Executive was exercising power of requisitioning the premises in such a manner that the premises were in fact acquired under the guise or pretext of requisitioning. It was a colourable and hence a mala fide exercise of its executive power by the State. Such tainted requisition was struck down by this Court as ultra vires of the Constitution. The consequence of invalidating and striking down the requisitioning continuing for unreasonable length of time was that such invalid requisitioning came to an end. It followed as a natural corollary that the premises in occupation of the allottees became liable to be restored to the possession of the owners. By virtue of interim orders passed by the Court, the possession of the occupants was protected and that protection was continuously enjoyed by the occupants upto the date of decision. To relieve th....
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....ion was also not taken away but was made subject to the pre-existing law governing eviction of tenants. The larger Bench in Dhanapal Chettiar's case (supra) has opined, as already stated, that there is nothing objectionable, much less unconstitutional, in the right to recover possession which accrued under the general law from being made dormant and made subject to a special law so as to become conditional and dependant on availability of certain statutory grounds to eviction as provided for by the State Rent Act. The object, purpose and design of the Amending Act is to extend protection of existing Rent Act to such occupants who, on account of declaration of law made by this court, ran the risk of being rendered suddenly shelterless. We have already pointed out while dealing question No. 1 that the impugned legislation is squarely covered by entries 6, 7 & 13 of List- III and hence within the legislative competence of the State Legislature. So long as the legislative competence is available, the motive behind enactment cannot be enquired into. Though the Statement of Objects and Reasons makes a reference to the two decisions delivered by this Court but that is only by way of n....
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....he amendment would be to place additional restrictions on the right of the owners to seek eviction of the premises consequent upon the judgment of the Supreme Court, it cannot be held that the Legislature has overruled the judgment of this Court or made an inroad on the doctrine of separation of powers. If the Amendment Act had been enacted on the dates of decision in H.D. Vora's case or Grahak Sanstha Mancha and Ors. case, the Court would not have been called upon to adjudicate upon and invalidate the unreasonably stretched requisitioning providing cloak for acquisition without adequate compensation and the occupants would have been held protected as tenants under the Rent Act. The situation is squarely covered by the law laid down by three Constitution Benches of this Court and other decisions of this Court referred to hereinabove. We do not think that the impugned Amendment Act is "colourable legislation" or is in conflict with the decisions of this Court. (iii) The impugned legislation if arbitrary and unreasonable ? 57. Tenancy laws and rent restriction legislations in the country, whenever enacted, have almost invariably been challenged either as violative of ....
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....ion Bench thus summed up the principles to be borne in mind when applying Articles 14 and 19 of the Constitution - "A fundamental right to acquire, hold and dispose of property, can be controlled by the State only by making a law imposing, in the interest of the general public, reasonable restrictions on the exercise of the said right. Such restrictions on the exercise of a fundamental right shall not be arbitrary, or excessive, or beyond what is required in the interest of the general public. The reasonableness of a restriction shall be tested both from substantive shall be tested both from substantive and procedural aspects. If any uncontrolled or unguided power is conferred, without any reasonable and proper standards or limits being laid down in the enactment, the statute may be challenged as discriminatory". 61. Article 14 of the Constitution permits reasonable classification for the purpose of legislation and prohibits class legislation. A legislation intended to apply or benefit a "well defined class" is not open to challenge by reference to Article 14 of the Constitution on the ground that the same does not extend a similar benefit or protection to other persons. Permiss....
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....premises - both constitute a well defined class by themselves and the classification cannot be said to be arbitrary; it is capable of being distinguished from others not included in that class. Such classification has an apparent and clear nexus with the object sought to be achieved. The impugned legislation does not, therefore, suffer from either arbitrariness or invidious discrimination. The challenge that the impugned Amendment Act falls foul of Article 14 of the Constitution must therefore fail. 63. The contention that the impugned Amending Act cannot withstand the test of Article 14 of the Constitution was raised in the High Court but was not dealt with for the reason that even otherwise, in the opinion of the High Court, the impugned legislation was unconstitutional. However, in view of the submissions made, we have dealt with the issue and disposed of the same. Conclusion 64. Thus the challenge to the constitutional validity of the impugned Amending Act fails on all the counts. The decision of the High Court wherein view to the contrary has been taken is held unsustainable and liable to be reversed. However, this is subject to a clarification. 65. We have in the ....