TaxTMI 
TaxTMI 
1994 (10) TMI 301
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....t Section 3(c) was a valid piece of legislation and did not contravene any of the provisions of the Constitution. Following its judgment in Civil Revision No. 470 of 1981 (Nirmaljit Arora v. Bharat Steel Tubes), it also held that Section 3(c) was prospective and did not affect the cases that were pending on the date it came into operation. 4. The present batch of appeals are directed against the judgment of the Delhi High Court dated 11-2-1991. 5. Section 3 of the Act lays down: "3. Act not to apply to certain premises.- Nothing in this Act shall apply; (a) to any premises belonging to the Government; (b) to any tenancy or other like relationship created by a grant from the Government in respect of the premises taken on lease, or requisitioned, by the Government: Provided that where any premises belonging to Government have been or are lawfully let by any person by virtue of an agreement with the Government or otherwise, then, notwithstanding any judgment, decree or order of any court or other authority, the provisions of this Act shall apply to such tenancy. (c) to any premises, whether residential or not, whose monthly rent exceeds three thousand and five ....
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....y of accommodation for hire; (e) encouraged various malpractices and abuses such as on-money (pugree), partial receipts for rent, capital consideration (in black money) for tenancy transfers, etc.; and (f) in general, tended to protect the haves against the have-nots, i.e., the tenant (even if affluent) as against the landlord (even if not so affluent) and the sitting tenant as against the prospective tenant who was looking for accommodation on rent. 9. The Commission in the background of the aforesaid findings made, inter alia, the following recommendations: "(i)There is a case for confining rent control to the relatively modest premises occupied by the less affluent though it is difficult to draw a suitable dividing line for the purpose. We would urge the State Governments to consider this possibility. (ii)Considering the urgent need for new housing, and as an incentive for the construction of houses, there should be an exemption from rent control on all the new construction for a period of five years from the date of completion." 10.The National Commission on Urbanisation also made a report in which the following points were made: "(i) Housing has been recognised ....
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....nd thereafter the decision was taken to amend the Delhi Rent Control Act. 13.In the Statement of Objects and Reasons, the purpose of the amendment by the Delhi Rent Control (Amendment) Act, 1988 was stated as under: "The Delhi Rent Control Act, 1958 (59 of 1958) which came into effect on 9th February, 1959, provides for control of rents and lodging houses and for the lease of vacant premises to the Government within the Union Territory of Delhi. 2. For quite some time, there have been demands from the associations of house-owners as well as tenants for amendment of Delhi Rent Control Act, 1958. The Committee on Petitions of Rajya Sabha, the Economic Administration Reforms Commission, Secretaries' Committee and National Commission on Urbanisation have also recommended amendment of certain provisions of the Act. Considering these demands/recommendations as also the fact that with the passage of time, the circumstances have also changed, necessitating a fresh look at the tenant-landlord relationship, the amendment of Delhi Rent Control Act, 1958 has been proposed with the following objects: (a) To rationalise the present rent control law by bringing about a balance ....
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....ctivity and the introduction of such a provision will have no nexus with the object of the Act. 19. Various other arguments were made to establish that the classification of premises on the rental basis of Rs. 3500 was wrong and unreasonable. It was argued that premises being used for commercial purposes could not be equated with premises being used for residential purposes only. It was argued that a businessman may initially start his business in a locality in a small way and thereafter develop the business step by step. The locality, accessibility of the business place to the customers, goodwill are important factors for commercial establishments. If a landlord is given a free hand to evict a commercial establishment from his premises then it will be very difficult for the tenant to set up another commercial establishment in a new part of the city. This may in the long run lead to closure of the business altogether. 20. Taking this argument one step further it has been contended on behalf of the State Bank of India, Union Bank of India, Indian Banks' Association and other banks that the Act has not made any distinction between public sector banks and other tenants. It was a....
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.... 248, para 12) "The strain of the last World War, Industrial Revolution, the large scale exodus of the working people to the urban areas and the social and political changes brought in their wake social problems of considerable magnitude and complexity and their concomitant evils. The country was faced with spiralling inflation, soaring cost of living, increasing urban population and scarcity of accommodation. Rack renting and large-scale eviction of tenants under the guise of the ordinary law, exacerbated those conditions making the economic life of the community unstable and insecure. To tackle these problems and curb these evils, the legislatures of the States in India enacted rent control legislations." 25.The rent control laws are now in force in Delhi for more than 50 years. New Delhi House Rent Control Order, 1939 was issued under Rule 21 of the Defence of India Rules. This was followed by a number of legislations like Punjab Urban Rent Restrictions Act, 1941 which was extended to Delhi, Delhi Control Ordinance, 1944, Delhi and Ajmer, Bhilwara Control Act, Delhi Tenants (Temporary Protection) Act, 1956. The present law i.e. Delhi Rent Control Act, 1958 was the last ....
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....ecessity must have a lot of latitude in this regard. It is well settled that the safeguard provided by Article 14 of the Constitution can only be invoked, if the classification is made on the grounds which are totally irrelevant to the object of the statute. But, if there is some nexus between the objects sought to be achieved and the classification, the legislature is presumed to have acted in proper exercise of its constitutional power. The classification in practice may result in some hardship. But, a statutory discrimination cannot be set aside, if there are facts on the basis of which this statutory discrimination can be justified. 30.In the case of Harman Singh v. Regional Transport Authority, Calcutta 1954 SCR 371 : AIR 1954 SC 190, a Bench consisting of five Judges of this Court upheld a notification issued by the Regional Transport Authority, Calcutta Region, fixing lower tariff for smaller taxis. The benefit of this lower fare was given to "small motor taxi cabs of not below 10 H.R and not above 19 H.P.". Mahajan, J., speaking for the Court observed: (SCR pp. 376-77) "The only point for consideration in the appeal is whether the issue of licences to small taxi cabs ....
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....hort, the judiciary may not sit as a super-legislature to judge the wisdom or undesirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines... ; in the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment." 32.We were referred to a number of cases in course of the arguments. In the case of Raval & Co. v. K.G. Ramachandran (1974) 1 SCC 424: (1974) 2 SCR 629 the landlords had purchased a tenanted property in 1962 and made an application under Section 4 of the Madras (now Tamil Nadu) Buildings (Lease and Rent Control) Act, 1960 for fixation of fair rent. The tenants filed a writ petition seeking to restrain the landlords from proceeding with this petition, on the ground that the application was misconceived. The points raised in the writ petition were ultimately referred to a Full Bench of the Madras High Court, which held that the Tamil Nadu Act controlled both contractual tenancies and statutory tenancies, it was a complete code in itself and enabled both landlords and tenants to seek the benefits of fixation....
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....efore this Court that all Rent Acts are intended for the protection of tenants and, therefore, this Act also should be held to be intended only for the protection of tenants breaks down when the provisions of the Act are examined in detail. The provision that both the tenant as well as the landlord can apply for fixation of a fair rent would become meaningless if the fixation of fair rent can only be downwards from the contracted rent and the contract rent was not to be increased. Of course, it has happened over the last few years that rents have increased enormously and that is why it is argued on behalf of the tenants that the contract rents should not be changed. If we could contemplate a situation where rents and prices are coming down this argument will break down. It is a realisation of the fact that prices and rents have enormously increased and therefore if the rents are pegged at 1940 rates there would be no new construction and the community as a whole would suffer that led the Madras Legislature to exempt new buildings from the scope of the Act. It realised apparently how dangerous was the feeling that only 'fools build houses for wise men to live in'." (emphasis supplie....
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.... the appellants: (SCC pp. 389-90, para 4) "It certainly cannot be pretended that the provision is intended to benefit the weaker sections of the people only. We must also observe here that whatever justification there may have been in 1973 when Section 30(ii) was amended by imposing a ceiling of Rs. 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country, particularly in urban areas. It Is common knowledge today that the accommodation which one could have possibly got for Rs. 400 per month in 1973 will today cost at least five times more. In these days of universal, day-to-day escalation of rentals any ceiling such as that imposed by Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today." 38. This observation has to be understood in the context of the facts of this case and also the provisions and the objects of the Tamil Nadu Act which were under consideration in that case. Reasonableness of taking away the protection of th....
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....old when the Act came into force, in order to provide incentive to builders to build buildings. But there could not be any justification for continuing with this exemption indefinitely. A long period had elapsed after passing of the Act and this was a crucial factor in deciding the question whether the impugned law had become discriminatory or not. This case was decided on 26-10-1983. It was pointed out that the exemption had continued to remain in force for more than 25 years. 42. In the case of Delhi Cloth & General Mills Ltd. v. S. Paramjit Singh (1990) 4 SCC 723, the writ petitioners questioned the validity of Section 1(3) of Jammu & Kashmir Houses and Shops Rent Control Act, 1966 which at the material time stood as under: (SCC p. 725, para 2) "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'." 43. It was argued in that case that this clause was discriminatory and arbitrary because: (SCC....
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....e of A.p6 declaring Section 32(b) of the A.P Buildings (Lease, Rent and Eviction Control Act, 1960 as unconstitutional." 44.This argument was repelled by a Bench of three Judges of this Court. It was held: (SCC p. 726, paras 6 and 7) "In Rattan Aryal this Court stated that a distinction between residential buildings leased on rent not exceeding Rs. 400 per month and all other buildings whether residential or non-residential was an unreasonable classification. There was no reason why nonresidential buildings leased on rent of Rs. 400 per month or less should be treated differently from residential buildings of like rent or why in the case of residential buildings the limit should have been limited to Rs. 400 per month. To so restrict the protection of the Act was an unreasonable classification. In the Motor General TraderS7, this Court stated that to arbitrarily prescribe a cut-off date, i.e., 26-8-1957, for denying the protection of the Act, without regard to the age of the building or to the extent of realisation of the investment by the owner was an unreasonable classification. These decisions do not, in our view, support the contentions of the appellant. On the other ha....
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.... the weaker section of the community. The argument that the rent payable for any building in Delhi is very high and, therefore, Rs. 3500 per month is comparatively a low figure of rent, overlooks the fact that the Rent Act was passed initially to save the weaker section of the people from arbitrary and sudden enhancement of rent and also from eviction. If the argument advanced on behalf of the appellants is to be upheld, then it will have to be held that the people, who can afford to pay rent at the rate of more than Rs. 3500 per month, belong to the economically weaker section of the community and must also be protected. It was argued on behalf of the respondents that if a man is paying more than Rs. 42,000 per year by way of rent, then his annual income should be at least Rs. 1,50,000 per annum. Having regard to the average income of the people in India, such a person cannot be treated as an economically handicapped person. There is considerable force in this argument advanced on behalf of the respondents. 48.However, we need not go too deeply into this aspect of the controversy, as in our opinion, it is for the legislature to decide whether or not any section of the people sh....
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.... of the Rent Act. Some of the tenants who could afford to build did not build houses of their own because of the protection provided by the provisions of the Rent Act. Had these provisions not been there, these tenants or lessees might have built houses of their own or purchased properties elsewhere. These vested rights could not be disturbed unless the Amendment Act contained specific provisions to that effect. 52. We are unable to uphold this contention for a number of reasons. Prior to the enactment of the Rent Control Act by the various State Legislatures, the legal relationship between the landlord and tenant was governed by the provisions of the Transfer of Property Act. Delhi Rent Control Act provided protection to the tenants from drastic enhancement of rent by the landlord as well as eviction, except on certain specific grounds. The legislature by the Amendment Act No. 57 of 1988 has partially repealed the Delhi Rent Control Act. This is a case of express repeal. By Amending Act the legislature has withdrawn the protection hitherto enjoyed by the tenants who were paying Rs. 3500 or above as monthly rent. If the tenants were sought to be evicted prior to the amendment....
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....Act so long as that law remained in force. 56. In the case of Mohinder Kumar v. State of Haryana (1985) 4 SCC 221 the validity of the Amending Act of 1978 by which Haryana Urban (Control of Rent and Eviction) Act, 1973, was amended was challenged. The Amending Act by which a category of newly constructed buildings were exempted from the provisions of the Act for a period of ten years, was challenged, inter alia, on the ground that the provisions operated retrospectively and sought to take away the vested rights of the tenants under the Act. This contention was repelled by this Court in the following words: (SCC p. 231, para 17) "The argument that the tenants have acquired a vested right under the Act prior to its amendment is without any substance. Prior to the amendment of Section 1(3) by the Amending Act of 1978, the provision as it originally stood cannot be said to have conferred any vested right on the tenants. The provision, as it originally stood prior to its amendment, might not have been constitutionally valid as the exemption sought to be granted was for an indefinite period. That does not necessarily imply that any vested right in any tenant was thereby created. Th....