(1) W.P. No. 1124 of 1963 comes before us on a reference made by one of us(srinivasan, J). It was a proceeding in prohibition by Messrs Raval and Co. (petitioners), seeking to restrain the respondents, including the Chief Rent Controller, Madras(4th respondent) from prosecuting or proceeding with a petition for the fixation of fair rent, under the Madras Rent Control Acts. Connected with this are two other proceedings, namely, C.R.P. 1816 of 1963 and Appn. No. 2443 of 1963 in C.S. 163 of 1962, in which certain clearly inter-linked question are involved. Our learned brother(Srinivasan, J.) felt the difficulty that the catena of decisions of this court as far as the Madras Rent Control Acts are concerned, has been only in the consistent directions that these Acts did purport to interfere with contractual tenancies both as regards the fixation of fair rents and as regards the respective rights of landlords and tenants, in the matter of eviction and the grounds for eviction; while certain recent decisions of the Supreme Court, no doubt not upon the Madras Acts but upon similar enactments if other States, appear to justify the interpretation that the contractual tenancies should first be terminated by a notice under S. 111(h) of the Transfer of Property Act, after which alone the procedure under the special Acts would become applicable, their object being to give this additional protection to what are termed "statutory tenancies".
(2) This explains the reference, and as the matter has been argued before us, the following questions emerge for our consideration:-
1. Do the Madras Acts including of the latest Amending Act XI of 1964, enact a self-contained Code Governing all relationships between landlords and tenants, during their subsistence, including contractual as well as statutory tenants within their ambit?
2. In particular, do they enable landlords and tenants to obtain the determination of fair rents for buildings, even during contractual tenancies, and notwithstanding the contract of rent, to which the tenancies relate?
3. Similarly do they enable the landlords and tenants to work out their respective rights in the matter of the liability of the tenants for eviction on the grounds specified in the Acts, even during a contractual tenancy, and with out that tenancy being first determined by the landlord in accordance with S. 111(h) of the Transfer of Property Act?
4. Can this Interpretation be sustained as a matter of legislative competence and legislative intendment, notwithstanding the absence of a non-obstante clause in the Acts?
(3) Apart from these questions, which are on the interpretation of the particular statute, two questions of their constitutional validity have also been raised before us. The first is that amending Act 11 of 1964, under which a ceiling in respect of non-residential tenements, namely Rs. 400 Specified in S. 30 of Madras Act 18 of 1960 was done away with and further section in the amending Act (S. 3) was introduced for the abatement of certain pending proceedings, is ultra vires, as offending Art 14 of the Constitution, the argument is that both as a matter of legislative history and in the substantial sense, the amending enactment embodies a hostile discrimination against the landlords of non-residential premises without a reasonable basis or objective.
On this aspect, even the bona fides of the amending enactment have been assailed and it is contended that the enactment was hostile rushed through the legislature without the salutary procedure of a reference t a Select Committee and in a matter of one or two days, because the concerned Minister had a personal motive to obtain the benefit of the legislation. An interpretation of S. 3 of Madras Act 11 of 1964 also arises particularly in connection with the facts in Appn No. 2443 of 1964 In C.S. 163 of 1962. The other constitutional point raised during the arguments relates to an alleged infringement of the protection afforded by Art. 19 in more than one respect. The learned Advocate General relied upon Art. 358 of the Constitution fir the victim that the provisions of Art 19 are themselves suspended during the operation of the present Proclamation of Emergency; the tenability of this view, in the context of the interpretation of Art. 358 in relation to enactments prior to the Emergency such as Madras Act 18 of 1960 is also a matter on which arguments have been addressed.
(4) I might immediately state that we have been concerned, during the arguments submitted to the Full Bench by learned counsel on both sides, with several enactments of various States, which do have a marked similarity, in respect of their broad objectives and the statutory structure, but which equally exhibit vital differences in several respects. This is of great importance, because we have to consider the ratio of certain decisions of the Supreme Court inter context of the catena of decisions of this Court about successive Madras Acts which decisions of the Supreme Court were rendered with reference to other special Acts and not the Madras Acts. For instance we have been occupied with the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act 1947 (Act LVII of 1947) the Bihar Buildings(Lease, Rent and Eviction) Control Act III of 1947, the Madhya Pradesh Act, the Delhi and Ajmer Merwara Rent Control Act, the Orissa Act, the Rajasthan Act, the West Bengal and Mysore Acts, in addition to our own. Actually, a detailed scrutiny appears to show that those Acts cannot merely be lumped together into one category of Urban legislation for the control of letting an the regulation of rents of buildings, and that such a generalization might be very misleading since significant differences are thereby obliterated.
On the contrary, In think that a three-fold classification would be probably more valuable. At one extreme we have Acts like the Rajasthan Acts, which have been judicially interpreted by that Court with reference to Art 254(1) and (2) of the constitution as being merely supplementary to the Transfer of Property Act, and as not containing anything repugnant to the pre-existing law concerning landlords and tenants of buildings: certain further features are merely superimposed, so that there was no need to obtain the assent of the President under Art. 254(2) for the validity of the enactment. In the middle group would appear to fall the larger number of the Acts particularly an Act like Bombay Act LVII of 1947. Here, no doubt, an additional protection is given to statutory tenancies in several ways, but the ordinary machinery of the civil Courts is not disturbed. That machinery and the background of the provisions of the Transfer of Property Act, remain governing this class of relationships.
At the other end we have an Act like the Madras Buildings(Lease and Rent Control) Act 18 of 1960, which in Section 10 Practically enacts a self-contained codes, with a special machinery of Rent Control Tribunals for applications for eviction and orders for eviction. Actually, under S. 18 the execution of the orders of these Tribunals, like decrees of civil Courts is provided for and S. 23 provides a special machinery for appeal, while S. 25 vests powers of revision in this court and in the Districts Courts. On this ground alone, I think that great care has to be exercised before the dicta and conclusions of the highest Court of the land, interpreting the statute of some other state, are applied to the Madras Acts, without due regard to the distinct groups into which these seemingly allied enactments appear to fall and to vital differences, both of statutory structure and perhaps even of legislative intendment.
For this reason, I shall first deal with the Madras Act, and the catena of decisions of this court, available on the Madras Acts before proceedings to other Acts and the decision of the Supreme Court. As a prelude to the analysis of the provisions themselves, we may first take up the matter of legislative competence, of legislative intendment, and the absence of a non obstinate clause in the Madras Acts, with regard to its consequences.
(5) As far as legislative competence is concerned there is really no room for doubt. Entry 18 of List II (State List) of the VIIth Schedule, includes the relationship of landlord and tenant and rights in or over land, and under Art. 254(1) and (2) it is not disputed that the Madras Acts having received the assent of the President, will prevail over the Transfer of Property Act, to the degree of any inconsistency between the two laws, in Madras State, Legislative competence thus being conceded, legislative intendment has to be gathered from the preamble, and the structure of the enactment. We may here point out that the madras Buildings(Lease and Rent Control) Act XV of 1946 was succeeded by the Madras Buildings(Lease and Rent Control) Act XXV of 1949, which, in it turn, was succeeded by the similar Act 18 of 1960 which is in force, as amended by Madras Act II of 1964.
Sri, Thiruvenkatachari, for Messrs, Raval and Co., has emphasised that there are ad hoc pieces of legislation, enacted for a temporary duration which has been extended from time to time. Nevertheless, the intendment of the Legislature cannot be inferred with reference to such a characteristic alone; nor can the principle of interpretation of statutes, that I shall refer to in another context, that the Legislature does not ordinarily intend any revolutionary modification in the pre-existing corpus of law, such as the law of landlord and tenant in respect of buildings, necessarily lead to the inference that these Act were merely super-imposed safeguards to operate with regard exclusively to statutory tenancies. On the contrary, confining ourselves to Madras Act 18 of 1960 for the moment, the purpose of this Act is "to amend and consolidate the law relating to the regulation of the letting of residential and non-residential buildings, and the control of rents of such buildings, and the prevention of unreasonable eviction of tenants".
In other words in the context of spiraling inflation in respect of urban rents for buildings, conditions of scarce accommodation, and perhaps considerable hardship to tenants occasioned by evictions strictly under the law the legislature seems to have intended to regulate these matters by statute, for the benefit of citizens. But before proceeding further into the other sections of the Act which are clearly indicative of the degree of its encroachments on pre-existing law, I might usefully turn to two aspects; (i) the consequence of the absence if a non obstinate clause in the legislation, and (ii) the view that has been uniformly taken of the Madras Acts by decisions of this court.
(6) As regards the first point, it was dealt with by Govindarajachari, J. in Moses Pillai v. Govindan, 1948-1 Mad LJ 51: (AIR 1948 Mad 346) where the matter was apparently put in the same form. The learned Judge observed at page (of Mad LJ):
"Mr. J.S. Vedamanickam, counsel for the appellant, attempted to distinguish this case (Goldsmith v. Orr, (1920) 89 LJ KB 901) on the ground that the English statute(Increase of Rent and Mortgage Interest Restrictions Act 1919) contains the words "notwithstanding any agreement to the contrary" and that there are no similar words in C1.7 (a) of the Madras House Rent Control Order of 1941. This argument I am unable to accept Even without the use of those words, the legislature can indicate that its provisions shall apply, notwithstanding, that the parties contracted otherwise......"
In Aswani Kumar v. Arabinda Bose, , the principle has been expressed in the following form at page 377:
"............for, even apart from such clause (non obstinate clause), a later law abrogates earlier laws clearly inconstant with it".
(7) The legislature had the competence to enact the provisions of a special statute, which do interfere with the contractual tenancies under the Transfer of Property Act, both relating to such matters as the fixation of fair rent during such tenancies, and such matters as protection against the eviction of a tenant whether during a contractual tenancy, or after its determination, so much is not in dispute. Such a special Act, having received the assent of the President, will prevail over the Transfer of Property Act in the concerned area. If that is the intendment to be gathered from the plain language of the preamble and the structure of the provisions, we cannot shirk this inference, merely because there is the absence of non obstinate clause.
It was, no doubt, easy for the legislature to have enacted words, such as "Notwithstanding anything in the Transfer of Property Act, or any other law to the contrary", but, in its wisdom, the legislature might have well intended that the provisions sufficiently and amply to indicate, by their very force, the degree of interference with contractual tenancies sought to enforced. We shall immediately turn to the available Madras cases upon the successive Madras Acts. As we shall show, they have been consistently in one direction, and that is that the Madras Acts do invade the domain of the pre-existing law of landlords and tenants, in respect of the letting and rents of buildings, and the evictions of tenants.
(8) In 1948-1 Mad LJ 51: AIR 1948 Mad 346 already to, Govindarajachari J. was concerned with an agreement in terms of which the tenant undertook to pay rent at the rate of Rs. 45 per month, failing to deliver possession of the house within a stipulated period. In the suit by the landlord to recover the higher rate of rent, the tenant relied on clause 7(a) of the Madras House Rent Control Order 1941, to contest the claim. The learned judge held that the clause applied, even though the parties had contracted otherwise. The language of clause 7(a) was peremptory, and had barred the increase in rent claimed.
In Parthasarathi v. Krishnamoorthi 1948-2 Mad LJ 391: AIR 1949 Mad 387, Subba Rao J. (as he then was) appears to have felt the force of the opposite view, which has been pressed before us by Sri Thiruvenkatachari. It was held that the object of Madras Act XV of 1946 was to prevent unreasonable eviction, and not to confer any new rights of eviction on the landlord. By enacting Section 7 of the Act, the legislature did not, expressly or by implication, repeal the provisions of the Transfer of Property Act. Hence, unless and until a tenancy was determined under Section III (h) of the Transfer of Property Act, a landlord could not obtain an order for eviction or possession. The learned Judge cited from Maxwell on the Interpretation of Statutes, 8th Edn, page 73, the passage expressing the principle to which I have made earlier reference, that the legislature "does not intend to make any substantial alteration in the law beyond what it explicitly declares, either in express terms or by clear implication, or in other words, beyond the immediate scope and object of the statute". The learned Judge pointed out that the legislature could have enacted a non obstinate clause with regard to the Transfer of Property Act 'in plain terms'.
But in Krishnamurthy v. Parthasarathy, 1949-1 Mad LJ 412: AIR 1949 Mad 780, this decision was reversed, and the Division Bench held that a notice to quit under S. 111(h) of the Transfer of Property Act was not necessary before filing an application under Section 7 of Madras Act XV of 1946. In D.P. Merchant v. Bank of Mysore Ltd. 1949-1 Mad LJ 417: AIR 1949 Mad 784. Satyanarayana Rao J. followed this decision and held that the Rent Controller had jurisdiction to order eviction, even in cases where the contractual tenancy had not been determined under S. 111 of the Transfer of Property Act, as Section 7 of the Rent Control Act applied both to contractual and statutory tenancies.
(9) In Ramaswami Naidu v. Bangaru Chetti and Sons, AIR 1949 Mad 139, a Division Bench of Rajamannar C.J. and Satyanarayana Rao J. pointed out, in the context of the facts of that case, that in construing Madras Act XV of 1948, it was not permissible to import conceptions which relate to the ordinary law of landlord and tenant, either under the Transfer of Property Act, or as obtaining in England.
Raja Chetti v. Jagannathadas, is interesting for the reason that it included certain dicta which appear to have subsequently given rise to some difficulty, though it was substainable on the main finding that the provisions of Madras Act XV of 1948 would not apply to a lease of furniture, fittings and projector equipment. The Bench went further, and observed that the parties must have known of the provisions of Madras Act XV of 1946, and, on the facts of the agreement, the landlord must be deemed to have waived the right to evict conferred by the Act. In Kupuswamy v. Mahadeva, , a Division Bench held that Section 116 of the
Transfer of Property Act had no application to matters arising under the Rent Control Act. The decision of the Federal Court in Kai Khushroo v. Bai Jerbai, AIR 1949 F.C. 124, was referred to, and it was stressed that the tenant, may, under the special Act, enjoy a statutory immunity from eviction, even after the lease had expired.
(10) In George Oakes Ltd. v. Chief Judge, Small Causes Court, Madras, , one of the decisions noticed by our learned
brother(Srinivisan J.) in the reference, a Division Bench held that Section 4 of Madras Act XV of 1946, which deals with the fixation of fair rent, expressly included the landlord as a person entitled to apply to have the fair rent fixed. There was nothing in the section to confine its application to contractual rents payable under the subsisting lease. But the landlord could not claim the difference between the fair rent which has been fixed in excess of the contractual rent, and, the contractual rent, anterior to the date of his application. The learned Chief Justice(Rajamannar C.J.) expressly referred to his own decision in Raja Chetti's case, and pointed out that the decision did not imply that a tenant could validly contract himself out of the benefits conferred on him by the Act.
Certain observations of Viswanatha Sastri J. in the same judgment, powerfully indicate that the argument of encroachment on the preexisting law of contractual tenancies, or the need for preserving the sanctity of contracts, were felt by the Bench to be of no avail whatever, in the face of the plain intentions of the Legislature. In Venkataratnam v. Lalluram, 1950-2 Mad LJ 489 Rajamannar C.J. and Balakrishna Iyer J. again held, that even during the continuance of the contractual tenancy, a tenant may be evicted under S. 7(1) of Madras Act XV of 1946.
(11) In Venkateswara Rao v. Mohamed Hobibullah Saheb, Govinda Menon J. held that the provisions of Sections 5 and 6 of the Act were rather peremptory, and will apply even though the parties contract to the contrary. Moses Pillai v. Govindan, 1948-1 Mad LJ 51: AIR 1948 Mad 346 was followed. In Ramalingam v. Gurumurthi Reddi, 1954-2 Mad LJ 752 a Division Bench held that the tenant could take advantage of the provisions of the Act, notwithstanding the contractual tenancy for a specified period.
In State of Madras v. Natwarlal Devay, 1960-2 Mad LJ 384 Rajamannar C.J. held with reference to Section 3 (5) of the 1948 Act, that even though the landlord might have agreed to a certain rent, he was not prevented from having recourse to an application for the fixation of fair rent; this is in line with the decisions of this Court that the right of both the landlord and the tenant to apply for fixation of fair rent under the said Act, was unaffected by the subsistence of a contractual tenancy or the super-imposition of a statutory tenancy after the contractual tenancy had been determined.
In conclusion, we might notice two comparatively recent decisions of this court, namely, Venkataswami v. Abdul Rahim and Bros, 1962-1 Mad LJ 406 and Md. Burhanuddin v. Official Trustee of Madras 1961-2 Mad LJ 29 the former decision squarely held, under Madras Act XIV of 1949, that a tenant could apply for the fixation of fair rent, notwithstanding an agreement to pay rent under a contractual tenancy, apparently, in the light of case-law that I have set forth, the proposition was almost taken for granted since the case-law is not discussed. Ramakrishnan J. in the latter decision pointed out that so long as the contractual rent does not exceed the fair rent, determinable by statute, which under the Act of 1949, was a specified maximum the contract rent could well be enforced. But in cases where the contract rent exceeded the maximum, then the principle applied that the tenant cannot contract himself out of the statute.
(12) This may be the convenient context for notice of the line of argument, as it was developed by Sri Thiruvenkatachari, Learned counsel contended that the Rent Control Act did not deal with, or interfere with, contractual tenancies at all; they continued to be governed by the Transfer of Property Act. The Rent Control Act dealt only with what are termed "statutory tenancies"; under it, a statutory tenant had merely a right not to be evicted, while conforming to the conditions laid down in the Act. There was a corresponding remedy for fair rent, for both the landlord and the statutory tenant, but this, again was inapplicable to contractual tenancies. A statutory tenancy is essentially a continuation of what was originally a contractual tenancy; for that reason, every contractual tenancy must be terminated by a notice under Section 111(h) of the Transfer of Property Act, before the Rent Control Act could at all apply, while there was a contractual tenancy in force, the tenant did not require the protection of the Rent Control Act. The Rent Control Acts are ad hoc Acts, temporary in their duration. They cannot supersede the law of Contract, or effect the sanctity of contracts.
(13) The term "statutory tenant" is a neologism, which has come into existence because of protective legislation in favour of persons whose contractual tenancies had been determined and who, nevertheless, continued in occupation without further attornment; as the Supreme Court had occasion to point out, such a person was not really a "tenant" at all. Sri Thiruvenkatachari concedes that this interpretation might be opposed to the definitions of "landlord" and "tenant" in the 1960 Act, as indeed it is. We might go further and emphasise that it is against the structure of the enactment itself, in several vital respects.
As a matter of interpretation of the statute, based not merely on the preamble but the entire complex of the provisions, we do not see how it is possible to contend that Madras Act 18 of 1960 does not make quite substantial inroads into the pre-existing law of "landlord and tenant", as relating to contractual tenancies. An opposite view would render nugatory several significant provisions of the Act, the self-contained machinery of Section 10 and thus frustrate the objectives of the legislature. This can be immediately shown, even apart from the intendment of the preamble that I have earlier set forth.
(14) Section 2(6) of the Act defines "landlord' and Section 2(8) defines 'tenant". They are symmetrical and complementary definitions. Sri Thiruvenkatachari concedes that the definition would include both a tenant during the subsistence of a contractual tenancy, and a tenant "continuing in possession after the termination of the tenancy". In other words, this Madras Act plainly purports to deal with all tenancies in respect of residential and non-residential buildings, which had been let out, both contractual and statutory. We may next turn to Section 4, which enables any tenant or landlord, to which the Act applies, to apply for the fixation of fair rent. An elaborate machinery is provided for the determination of fair rent, and the construction that this relates only to tenancies that had been determined under the Transfer of Property Act, will be meaningless. For, if we turn to the significant provisions of Section 7, sub-secs. (1)(2) and (3), we find them to be explicitly to the following effect:
"(1) Where the Controller has fixed the fair rent of a building--
(a) the landlord shall not claim, receive or stipulate for the payment of (a) any premium or other like sum in addition to such fair rent, or (ii) save as provided in Section 5 or Section 6, anything in excess of such fair rent:
Provided that the landlord may receive, or stipulate for the payment of, an amount not exceeding one month's rent, by way of advance;
(b) save as provided in clause (a), any premium or other like sum or any rent paid in addition to or in excess of, such fair rent, whether before or after the date of the commencement of this Act, in consideration of the grant, continuance or renewal of the tenancy of the building after the date of such commencement, shall be refunded by the landlord to the person by whom it was paid or at the option of such person, shall be otherwise adjusted by the landlord:
Provided that where before the fixation of the fair rent, rent has been paid in excess thereof, the refund or adjustment shall be limited to the amount paid in excess for the period commencing on the date of application by the tenant or landlord under sub-sec. (1) of S. 4 and ending with the date of such fixation.
(2) Where the fair rent of a building has not been so fixed--
(a) the landlord shall not claim, receive or stipulate for the payment of, any premium or other like sum in addition to the agreed rent:
Provided that the landlord may receive, or stipulate for the payment of, an amount not exceeding one month's rent, by way of advance:
(b) save as provided in clause (a), any sum paid in excess of the agreed rent, whether before or after the date of the commencement of this Act, in consideration of the grant, continuance or renewal of the tenancy of the building after the date of such commencement, shall be refunded by the landlord to the person by whom it was paid or at the option of such person, shall be otherwise adjusted by the landlord.
(3) Any stipulation in contravention of sub-sec, (1) or sub-sec, (2) shall be null and void"
(15) Thus even, where there is a contract of tenancy and the fair rent had not been determined at all, any premium, otherwise that an advance of one month's rental, and any sum in consideration of the grant, continuance or renewal of the tenancy are refundable; stipulations to the contrary are void. There cannot be a plainer expression of an intent to make incursions into the pre-existing law of tenancies of buildings under the Transfer of Property Act.
(16) As we pointed out earlier, Section 10 is a complete code for the eviction of tenant on certain grounds, with a special machinery provided for the decision. It is important to note that under Section 10 (2)(I) one ground of eviction is that "the tenant has not paid or tendered the rent due by him in respect of the building, within 15 days after the expiry of the time fixed in the agreement of tenancy with his landlord". Here again, the landlord obtains a right to evict, which is prima facie, unrelated to the determination of the tenancy by a notice conforming to Section 106 of the Transfer of Property Act Under Section 10(2)(ii)(a), the transfer of a lease and subletting without the specific written authority of the landlord are grounds for eviction; admittedly, these are variations from the law of contractual tenancies under the Transfer of Property Act, whereunder transfer or sub-letting would be perfectly lawful, unless prohibited.
Again, Section 10(3)(d) is very significant. This enacts that where the tenancy is for a specified period agreed upon, the landlord shall not be entitled in the duration to apply for possession of the building for his own bona fide additional accommodation under Section 10(3)(c); the enactment here exhibits an awareness of mutual rights and obligations under contractual tenancies and the need for preserving them against the inroad of a special Act, in certain contingencies. There are other special features of the Act, such as a bona fide requirement of the building for immediate demolition and reconstruction (Section 14(b)); the requirement for carrying out repairs, restraint of the landlord from interference with certain amenities, restraints upon conversion of a residential building into a non-residential building(Section 21), all of which are, in very plain terms, expressive of the intention to modify the prior law.
Indeed, if this Act could be held to apply only to statutory tenancies, after the contractual tenancy had first been determined under the Transfer of Property Act, landlords would be helpless to obtain possession of buildings while tenants may go on "wilfully defaulting" to pay rents, and the tenants would be equally helpless to obtain the benefits of a determination of fair rent, where the contract for rent, which may be far in excess of the fair rent might have been arrived at between the parties, owing to economic pressures, and to subject for considerable periods.
(17) We think that we have shown sufficiently that the interpretation upon the Madras Acts, that Sri Thiruvenkatachari attempts to persuade us to accept, is totally opposed, not merely to the catena of decisions of this court on the Madras Acts, but to the expressed intentions of the legislature to the very structure of the enactments, and to the manifest inroads into the pre-existing law, which these enactments have made. We may now turn to the decisions of the Supreme Court and other High Courts upon other Acts, in order to see how far those decisions compel any contrary interpretation. In that analysis, we also propose to refer, though very briefly, to the very different provisions of certain of those special Acts, which in our view, are significantly different from the Madras Act, which is a complete Code both for determination of fair rent and for eviction of tenants, with a special machinery for both purposes.
(18) In Brijraj Krishna v. S.K. Shaw and Bros, their Lordships of the Supreme Court were concerned with the interpretation of the Bihar Buildings(Lease Rent and Eviction) Control Act III of 1947 and the bar of jurisdiction of a civil court, with regard to the finding by the Controller, of alleged non-payment of rent as justifying the eviction of a tenant, Section 11 (1)(a) of the Act contained a non obstante clause in clear terms. The Supreme Court held that the Controller had jurisdiction to determine whether there was non-payment of rent or not, and that, even if he decided erroneously, his order could not be questioned in a civil court.
In Karnani Properties Ltd. v. Miss Augustine, the
Supreme Court was concerned with the West Bengal Premises Rent Control(Temporary Provisions) Act 17 of 1950 and the interpretation of the word "rent" as occurring in the statute; the term was held comprehensive enough to be paid to his landlord, for the use and occupation in respect of both the building and its installations.
In Dr. K.A. Dhairyawan v. J.R. Thakur, , the Bombay Act LVII of 1947 was the subject of interpretation, with regard to Section 13 of that Act, in the context of the right of the lessee embodied in Section 108(h) of the Transfer of Property Act. the court held that, notwithstanding Section 108, the lessees could contract to hand over the building to the lessors, without the right to receive compensation at the end of the lease; but such a contract did not transfer the ownership in the building to the lessors while the lease subsisted. the provisions of the Bombay Act gave to the person who continued to remain in possession of the land, although the period of the lease might have come to an end, the status of a statutory tenant. In this context, it is important to stress certain features of the Bombay Act LVII of 1947. Section 11 of the Act relates to the fixation of standard rents, by a certain procedure. Section 12 gives a right to a tenant not to be ejected, so long as he pays the standard rent and permitted increases. Under Section 12 (2), there is a further protection against a suit for possession by the landlord on ground of non-payment of these rents, until the expiration of a month after a notice of demand. Section 13 enacts the grounds upon which the landlord is entitled to recover possession of the premises, subject to Section 15 which is a bar of the tenant's right to sub-letting or transfer.
H.S. Rikhy v. New Delhi Municipality, is a decision on the Delhi and Ajmer Rent Control Act 38 of 1952. The definitions of "letting", "landlord", "premises' and "tenant" in the Act are referred to and discussed, and the court held that licencees were not included within the ambit of the Act in R.M. Paranjpye v. A.M. Mali,. , the court held that where tenancies were terminated under the Bombay Tenancy and Agricultural Lands Act 67 of 1948, since the termination was under a statutory provision, the landlord acquired a statutory right to possession: equity did not operate to annual statute.
In Punjalal v. Bhagwatprasad, , we have the
interpretation of Section 12 of the Bombay Act LVII of 1947, in relation to Section III of the Transfer of Property Act. It is here that their Lordships held that sub-sec, (1) of Section 12 of this Act merely provided that the landlord will not be entitled to the recovery of possession of any premises, so long as the tenant was willing to pay the standard rent and permitted increases. The provisions will therefore, operate against the landlord after the determination of the tenancy by any of the modes referred to in Section III of the Transfer of Property Act. Indisputably, after such a determination, the landlord has a right to recover possession because of the statutory protection afforded to the tenant, as an additional feature, by the Act. It was further observed at page 123:
"The landlord is restricted from evicting the tenant till the tenant does not do what he is required to do for peaceful possession under sub-sec, (1) of Section 12. We are therefore of opinion that where a tenant is in possession under a lease from the landlord, he is not to be evicted for a cause which would give rise to a suit for recovery of possession under S. 12 if his tenancy has not been determined already. It follows that whenever a tenant acts in a way which would remove the bar on the landlord's right to evict him, it is necessary for the landlord to serve him with a notice determining his tenancy and also serve him with a notice under sub-sec, (2) of Section 12 of the Act".
(19) It is, to some extent, on these dicta that the contention has been put forward by Sri Thiruvenkatachari, and Sri K. Rajah Aiyar in C.R.P. 1816 of 1963, that, under the Madras Act also, the contractual tenancy, even if the tenancy is from month to month must first be determined by a notice under Section III of the Transfer of Property Act, before the liability of the tenant to be evicted would arise. But, as we have earlier hinted, the Bombay Act and the Madras Act are vitally different in respective structure on this point. Actually, the Bombay Act, significantly enough, does not provide that a landlord is entitled to eject a tenant for non-payment of rent, unlike the Madras Act, nor does it provide a special machinery for such eviction. The combined effect of Section 11 and Section 12 of the Bombay Act is that so long as the tenant pays the standard rent and permitted increases, even after the determination of the tenancy, the landlord does not get any right to recovery of possession Under Section 12 (3)(a), the landlord can get a decree for eviction in a suit for recovery of possession, only if the tenant does not pay rent for a period of six months, in the case of monthly rentals. The grounds for recovery of possession in Section 13 are quite distinct.
Under the Madras Act, such an interpretation cannot prevail, for "wilful default" in the payment of rent is a ground upon which the landlord can take advantage of the special machinery for eviction. If the contractual tenancy is first to be determined, this will simply imply that, were there is a lease for a long period, the Act is powerless to compel the tenants to pay rent on pain of eviction. Here, the legislature was probably influenced by a balancing of considerations. A powerful mantle of protection has been thrown on tenants, contractual or even after the clear determination of their contracts, against eviction by the landlord, however greatly the pre-existing property law might sustain the landlord's claim to possession. It stood to reason that the tenant should strictly fulfil their obligations, both during the contractual tenancies and thereafter.
(20) Mangilal v. Suganchand, is a decision on the
Madhya Pradesh Accommodation Control Act 23 of 1955. The provisions of Section 4 of this Act were held to be in addition to those of the Transfer of Property Act, and the court held that before a tenant can be evicted by a landlord, he must comply with the provisions of Section 106 of the Transfer of Property Act and those of Section 4. Notice under Section 106 was essential to bring to an end the relationship of landlord and tenant, and unless that relationship was determined, the Act did not come into force, and the landlord did not get a right of eviction. The effect of clause (a) of Section 4 of the Act did not convert a periodic tenancy into one of fixed or indefinite duration, nor insert therein a clause of re-entry on the ground of non-payment of rent. The character of the tenancy as one from month to month remained. A condition was added by this Act that the unfettered right to terminate the tenancy conferred by Section 106 will be exercisable only if one of the grounds set out in Section 4 of the Madhya Pradesh Act is shown to exist.
(21) This perspective of interpretation is not available with regard to Madras Act 18 of 1960, because of its quite different structure and provisions. In the Madras Act, the grounds upon which a landlord was entitled to evict a tenant, in Section 10 apply to all landlords and tenants by definition, whether the tenancies be under subsisting contracts, or after determination. These grounds include "wilful default" in payment of rent, and there will be great difficulty in sustaining the interpretation that eviction is possible only after the determination of the tenancy under the Transfer of Property Act, namely Section 106 read with Section III. How can there be such a determination, if the contractual tenancy has still a further period to expire, and is not a tenancy from month to month? Can we read the grounds specified in Section 10 as additional grounds for eviction, also available to the landlord as grounds for determination of the tenancy itself under the Transfer of Property Act?
The rational interpretation, which we are constrained to make, in the light of the provisions and their plain purport, as far as the Madras Act is concerned, is, whether the tenancy be contractual or statutory, that these grounds are available to the landlord for eviction, irrespective of the provisions of the Transfer of Property Act. With even greater force, the grounds will be available in favour of the tenants, as protection from eviction, along with the right to have the fair rent determined under the Act.
(22) In Anand Nivas Private Ltd., v. Anandji Kalyanji's Pedhi, , we have the latest decision on Bombay Act 57 of
1947, with reference to the juxtaposition of Sections 13, 14 and 15 of several of which I have earlier referred to. It is here we find that the Supreme Court commented upon the neologism of "statutory tenant" and its implication, at page 422:
"Such a person is not a tenant at all; he has no estate or interest in the premises occupied by him. He has merely the protection of the statute in that he cannot be turned out so long as he pays the standard rent and the permitted
increases................................. His right to remain in possession after the determination of the contractual tenancy is personal; it is not capable of being transferred or assigned............"
On the contrary, Section 14 of the Bombay Act, unlike Section 12 (1), related to contractual tenancies alone, upon the language used. The decision was upon the right of a statutory tenant to sub-let.
(23) On a careful perusal of these decisions of the Supreme Court, including Punjalal's case, we are unable to discover any ratio in these decisions, which were not rendered with reference to the intendment, or structure of the Madras Act, which would necessarily imply that the Madras Act should be held applicable only to statutory tenancies, and as not affecting contractual tenancies at all during their subsistence. On the contrary such a view is opposed (i) to the preamble and the intendment expressed therein (ii) to the definitions of "landlord" and "tenant" in the Act (iii) to the self-sufficient Code enacted in Section 10 including a special machinery for eviction (iv) to the provisions of Section 7 which enacts specific inroads upon the rental agreements of contractual tenancies and (v) to the provisions of Section 4 as to the fixation of fair rent, as available to all landlords and all tenants, as defined in the Act.
Thus, the Madras Act has to be interpreted as a special Act which does abrogate the Transfer of Property Act, with reference to several of its provisions; of course, it goes further and applies, in its terms, not merely contractual tenancies, during their subsistence, but also to statutory tenancies, after the determination of a contractual tenancy. Under the terms of this Act, therefore, a landlord can evict a tenant on the special grounds available notwithstanding the subsistence of a contractual tenancy, and even though it has not been determined. But, equally, the tenant has the protection of the Act, even after the determination of the contractual tenancy, so long as he does not do anything which removes the bar of eviction and provides no ground for eviction in terms of the Act. Both during the subsistence of the contractual tenancy, and thereafter, the parties have the right to get the fair rent determined. This seems to be the only interpretation which does justice to the specific provisions of this statute, the legislative competence for such an enactment not being in question.
(24) We may here notice certain decisions cited at the Bar, particularly by Sri Thiruvenkatachari, upon the relationship between a contractual tenancy and a statutory tenancy and the principle that the jural relationship of landlord and tenant does not arise from mere nomenclature or any accidental features. Thus, in Shyamacharan v. Sheojee Bhai, , a Bench of that court held that a
settlement pendent lite in a suit for eviction, by which the tenant undertook certain obligations of payment, did not create a fresh tenancy or leasehold right. In Sampath Mudaliar v. Sukunthala Ammal, 1964-2 Mad LJ 563, Jagadisan J. held that the terms of a joint endorsement made in a suit, did not constitute the jural relationship of landlord and tenant.
In American Economic Laundry v. Little, 1950-2 All E. R. 1186 the court held, with reference to Section 12 (1)(g) of the Increase of Rent and Mortgage Interest(Restrictions) Act, 1920, that the daughter, who remained in possession after the death of the tenant, did not succeed to the tenancy, and her deceased father had suffered an order for possession. In Mills v. Allen, 1953-2 Q. B. 341, the court held that, after a warrant for possession had ceased to be effective the subsequent death of the tenant and succession by the first defendant, gave rise to a statuary tenancy in favour of the first defendant. This line of cases had more relevance to the arguments based on the specific facts in Appln. No. 2443 of 1963 in O. S. 163 of 1962, one of the proceedings before us.
(25) We may proceed to briefly notice the decision of other High Court, several of which are in point, in the sense that they have also noted certain provisions of the Madras Act Shambooram v. Mangalsingh, is important because the Rajasthan Act, 17 of 1950, was held to be only supplementary to the provisions of the Transfer of Property Act, without affecting those provisions in any manner. For that reason, the assent of the President under Art. 254(1) of the Constitution was not required to make the statute effective. In Siddappa v. Venkatesah, AIR 1965 Mys 65 a Division Bench of the Mysore High Court held, following Punjalal's case that under Bombay ACT LVII of 1947a suit for eviction was not maintainable. unless the tenancy was both determined by a notice under S. 106 of the Transfer of Property Act and another notice as required by S. 12(2) of the Bombay Act. We have already stressed the great difficulty in adopting such a view on the interpretation of the Madras Act, and the consideration against that view.
In Prafulla Kumar Das v. House Rent Controller, Cuttack. , a Division Bench of that Court held that notice to quit under S. 106 of the Transfer of Property Act was not necessary for eviction proceedings under S. 7 of the Orissa House Rent Control Act 1958. It is interesting to note that the decisions of this court in 1949-1 Mad LJ 412: (AIR 1949 Mad 780), AIR 1949 Mad 139 and were noticed and relied on. Again in Sri Hemchand v. Smt. Shamdevi, ILR (1955) 8 Punj 36, with regard to the Delhi and Ajmer Merwara Rent Control Act, a Division Bench held that the provisions of S. 106 of the Transfer of Property Act, requiring the service of a notice on the tenant, had no relevance in considering the application for ejectment under this Act.
Md. Ghouse v. Karunnissa Begum, AIR 1951 Hyd 11 was on the Hyderabad Rent Control Order, and the Division Bench held that the provisions of S. 111 of the Transfer of Property Act did not apply to cases of ejectment of a tenant within the purview of this Order. Karmasey Kanji v. Velji Virji, (1954) 56 Bom LR 619 is of great interest, as here Chagla, C.J. was interpreting the application by a tenant for fixation of standard rent, in relation to a suit by a landlord for claiming contractual rent. The same argument, that have been urged before us, both with regard to the sanctity of contracts and the absence of a likelihood that the legislature intended to make inroads on prior law, were presses on the authority of the dicta in Clift v. Teylor, 1948-2 KB 394. The learned Chief Justice pointed out that the Act was passed to control rents, in days of scarcity of accommodation, and to prevent a landlord from exacting unconscionable rents, and also to provide protection from unjust eviction. Section 20 of that Act gave a right to the tenant to recover the amount paid to the landlord in excess of the standard rent. Section 4 and 7 of our Act, and indeed the entire scheme of the 1960 Act, render it clear beyond doubt that the tenant has a right to obtain a fixation of fair rent, whether it is a subsisting contractual tenancy, or a statutory tenancy that applies to his case.
Arguments based on the security of contracts, or the likely absence of an intention on the part of the legislature to make inroads upon property law, are in my view quite out of a place in construing a statute, which has the special purpose of regulating the letting rents and liability for eviction in respect of all tenancies of buildings in the State. We would therefore, unhesitatingly answer the reference in the form that, as far as the Madras Act is concerned the right to apply for fixation of fair rent is vested on all landlords and tenants of builiding, both during the subsistence of a contractual tenancy and after its determination and, that similarly, the right of a landlord to apply for eviction on the ground specified in S. 10 is not affected by the absence of a statutory notice under the Transfer of Property Act determining the tenancy.
(26) On the facts of the present case, it is Messrs. Raval and Co. (tenants) who are objecting to the determination of fair rent at the instance of the landlord, during the subsistence of the tenancy. But that can make no essential difference for the adoption of the view pressed by Sri Thiruvenkatachari would automatically disentitle from relief, who may be paying rents far higher than the fair rent, under agreements of tenancy, which might have a currency for years in future. As Jagadisan, J. points out in 1962-1 Mad LJ 406 a fair rent is essentially a just rent, having regard to all relevant circumstances; it is not a rent favorable to the landlord, or favorable to the tenant as such.
(27) We now turn to the aspect of the case which relates to Art, 14 and the attack on Amending Act 11 of 1964, both upon grounds of hostile discrimination and infringement of rights guaranteed under Art 19.
(28) The argument based upon hostile discrimination(Art. 14) will have to be considered, both for its proper appreciation and for the purpose of the imputation of mala fides against the concerned Minister, upon certain facts, including the legislative history of the Amending Act 11 of 1964. Upon the pleadings, as they stand, the respective parties in W.P. 1124 of 1963, are not agreed on the applicability of the Amending Act at all. The terms of the lease between Messrs. Raval and Co., and the landlord are set out in the affidavit of Sri Damodaran for Messrs Raval and Co. inclusive of the original agreement that rent was to be Rs. 225 per mensem, that the lease should endure till 1-5-1969, and that the lessees should further make an annual contribution towards repairs and a sum of Rs. 220 towards property tax. In paragraph 7 of this affidavit, the average monthly rental is claimed to be Rs. 419, which would come within the ambit of Section 30 of Act 18 of 1960, ambit of Section 30 of Act 18 of 1960, only by virtue of the Amending Act 11 of 1964.
According to the affidavit for the landlord, the monthly rent is only Rs. 225 with an additional 25 percent, and hence the premises were within the scope of the 1960 Act itself. For the purpose of the argument, as based upon Art. 14, we shall assume that but for the amending Act 11 of 1964, these non-residential premises will be wholly exempt from the Rent Control enactments as argued by Sri Thiruvankatachari; indisputably upon such issues of fact concerning which there is controversy between the parties, this court will not embark on a trial of the issue under Art 226 of the constitution.
(29) On the matter of the bona fides of the concerned Minister the record stands thus. In the additional affidavit of Sri Damodaram for Messrs. Raval and Co., there is an allegation that in respect of certain non-residential premises, in the lease of which the Minister has a direct interest, there was pressure from the landlord, and hence the Minister sponsored Madras Act 11 of 1964 influenced by personal predilection and pique. The concerned Minister has filed and affidavit before us that with regard to these non-residential premises (Nos. 6 and 7, Umpherson Street, Madras 1) the concerned private firm has an agreement in its favour that it is entitled to occupation of these premises on a rent of Rs. 500 per mensem, so long as it is in business. There was hence no necessity for resort to the protection of the Rent Control legislation, in favour of the buildings, and the allegations are emphatically denied.
There is a reply affidavit on record in which Sri Damodaram frankly admits that his enquiries with the land lord were ineffective, and hence that the allegations of pressure in respect of these premises could not be proves. We shall later discuss this question of bona fides on the legal aspect, either as relating to the legislature or as relating to the particular Minister. Upon the record, we can only conclude that the allegations have been controverted and that there is no material of any kind to substantiate them.
(30) The legislative history of the Amending Act has been stressed, in some detail but it will clearly be travelling far outside the scope of this reference to embark upon an investigation of the legislative process, as relating to the Amending Act. However, a few salient features may be tersely stated. It appears that the Select Committee upon the original Act (Act of 1960) recommended that the Act should not apply to non-residential buildings at all, and that even with regard to residential buildings, it should be confined to tenants of the low and middle income groups and that tenancies of the higher class be excluded.
An amendment was introduces by Government, which brought in the classification of residential and non-residential tenements within the scope of the Act. Legislative Assembly Bill 38 of 1961 was then brought as a private Bill, which proposed to substitute in S. 30 the assessment formula, on which that section had been originally based by the formula of actual rent paid by the tenant, which was accepted. The consequence was that residential buildings, upto the rental limits of Rs. 250 per mensem and non-residential buildings upto the rental limits of Rs. 400 per mensem were brought within the Rent Control enactment the Act not to apply with regard to higher rental in both categories.
(31) Legislative Assembly Bill 17 of 1964 (Government Bill) was introduced into the Assembly on 28-3-1964 and published the Gazette Extraordinary on the same day. The Bill was taken up and passed in the Assembly on 31-3-1964 and in the council(Upper House) it was taken up on 21-4-1964, and passed the day; it received the assent of the President on 5-6-1964. According to the affidavit on record both oral and written, from members of the business community, concerning demands of exorbitant rents from tenants of non-residential premises and threats of eviction these were not compiled with great injury to trade and industry, with consequential employment, was a apprehended, unless these non-residential buildings on rentals exceeding Rs. 400 per mensem were also brought within the scope of the Rent Control legislation.
(32) But Sri Thiruvenkatachari points out the statement of Objects is a repetition of the Statement of Objects in an earlier Bill 51 of 1961, which had gone to the Select Committee which Committee disapproved of the deletion of Cls. (ii) and (iii) of S. 30 as was then contemplated. According to learned counsel this essentially implies that there is a declassification of tenements upon higher rental hitherto exempt from the Act, which is a hostile discrimination against the landlords of non-residential buildings. A certain document (page 35 of Volume II) is relied on to show that though there was a demand in the Legislative Council for reference to a Select Committee, this was not compiled with. The haste of the legislative process, the absence of scrutiny by the Select Committee, the repetition of the same objects and Reasons without any fresh basis for the discrimination are all relied upon in support of the argument
Per contra, the learned Advocate General has placed before us the rules of the Legislative Assembly, and pointed out that the Legislative process has strictly been in order; any reference to a Select Committee has to be proposed and carried through as a Resolution, and this was not done. Indeed, we are quite unable to see how this matter of the character, of the legislative process in this case, could at all be canvassed here. The legislature is presumed to have knowledge of the facts and conditions, which render a particular piece of legislation expedient and beneficial. We have been referred to an extract from Ilbert's (Legislative Methods and Forms) page 222, concerning the American Method of powers of initiating legislation and of scrutiny of Bills delegated to Committees Passages from Rottschaefer's Handbook of American Constitutional law, 1939 Edn. have also been adverted to in support of the proposition that the reasonableness of legislative action cannot be determined "without considering the factual situation existing when the legislation was enacted" (pages 454 to 460)
(33) All that can be said on this aspect is that the Government claim that the Bill was sponsored in response to agitation and representations, both to the Chief Minister and the Minister for Industries, from numerous concerns, which were tenants of non-residential premises. In the leading case upon Art 14, namely, Ram Krishna Dalmia v. S.R. Tendolkar, , the learned Chief Justice has enunciated the criteria(page 297) and two of these are:
(i) A presumption in favour of the constitutionality of an enactment; and
(ii) A presumption that the legislature understands and correctly appreciates the need of its own people.
(34) Again, the good faith of a legislature must also be presumed and as interesting catena of decisions on this aspect will be found in Keir and Lawson's "Cases in Constitutional law", 4 th Edn, 1954, page 301. As laid down in Radio Corporation Pty. Ltd v. Common Wealth, (1937-1938) 59 CLR 170 at p. 185, the motives of a legislative body cannot be canvassed at all, and do not affect the validity of the legislation. In Fletcher v. Peck (1810) 6 Cranch 27, corruption of the Members of the legislature was actually alleged, but it was held that the bona fides of the exercise of legislative powers cannot be impugned; vide Trustees Executors and Agency Co Ltd. v. Federal Commissioner of Taxation, (1934) 49 CLR 220 at p. 240 and Stenhouse v. Coleman, 1944-69 CLR 471. The Supreme Court of United States of America has taken the same view. Hamilton v. Kentucky Distilleries & W. Co., (1919) 251 US 146 at p. 161. We are unable to see how it could be alleged that the legislative history of this measure affords any basis, for the plea of hostile discrimination or in equality of treatment.
(35) The criteria with regard to the test of hostile discrimination have been enunciated in many decisions, and it is sufficient to refer here to the following that were cited before us: Dalmia's case, ; Gull C& S.F.R. Co. v. Ellis, (1896) 41 Law Ed 666; V.M. Syed Md and Co. v State of Andhra ; State of
Madhya Pradesh v. Bhopal Sugar Industries, and S.M. Transports (P) Ltd. v. Sankaraswamigal Mutt, . All
these lay down that Art. 14 of the Constitution embodies the principle that classification must be found on an intelligible differentiation, and that the differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be on different basis.
The decision in is particularly significant as it is stressed there that to make out a case of denial of the equal protection of the laws under Art. 14, a plea of differential treatment, by it self, would not be sufficient. The party advancing such a case must show that he had been treated differently from persons similarly circumstanced, without any reasonable basis, and that this was unjustified. In Chiranjitlal v. Union of India it has been laid down that there is a strong presumption in favour of the validity of legislative classification.
(36) In the present matter, it is difficult even to appreciate the plea of hostile discrimination urged on behalf of Messrs. Raval and Co., who seek to impugns the Amending Act (Act 11 of 1964) on this ground. Firstly, the party advancing this plea is a tenant, and it is urged that landlords were subject to this hostile discrimination; it is not a landlord who is coming forward with the plea that he was been treated differently from those similarly situated. Next, the classification of "residential" and "non-residential" tenancies has been adopted in many Tenancy enactments, and is a well-recognised and rational principle of differentiation. Actually, this has been conceded by learned counsel. But, if this be conceded, and as the learned Advocate General rightly stressed hostile discrimination can be conceivably urged only if persons of this class(landlords of non-residential tenements) had been differentially treated. Certainly, the argument is sustainable, that on the contrary, it was the 1960 Act which prescribed some differential treatment with regard to landlords of non-residential premises: this was in the sense that only landlords of premises with rentals of Rs. 400 and below were brought within the scope of the legislation.
(37) In our view, there is no basis for the plea of hostile discrimination or the denial of equal protection of the law, either with regard to the Amending Act (Act 11 of 1964) or with regard to the earlier Rent Control enactments, including the Act of 1960. These successive enactments have embodies a perfectly rational principle of classification, and the criteria and their application have been evolved, from time to time, in accordance with the needs of this class of citizens. There is also a clear and discernible nexus between the object of the measure, and the differential themselves. As the measure stands today, if any group of tenants has a right to complain, it is the group of tenants occupying residential buildings with rental of over Rs. 250 per mensem who do not have protection of these beneficial laws at all.
The entire argument has to be repelled in the context of an evolving Democratic State with far-flung needs for legislation based upon intelligible different in relation to the objects of such legislation. In Sha Manumal Misrimal v. Natha Rukmani Ammal, 1964-1 Mad LJ 312, Venkatadri, J. has held that S. 30 of Act 18 of 1960 does not violate the equality guaranteed under Art. 114 of the Constitution and is not void or ultra vires and that the classification of protected buildings and exempted buildings on the basis of the rent is a reasonable one, consistent with the object of the Act, and is not discriminatory.
(38) A word is now called for with regard to the facts in C.S. 163 of 1962 and the points that have been urged before us concerning the interpretation of S. 3 of Act 11 of 1964. We need not dwell much upon the facts of C.S. 163 of 1962, for the simple reason that within the scope of this reference, we are not dealing with the evidence of a particular action at all. But it may be noted that the suit was one filed by the landlord(plaintiff) against the tenant(defendant), after the termination of the tenancy for delivery of possession, mesne profits subsequent to the date of termination till date of plaint with future mesne profits etc. There is also a compromise decree, which may complicate matters on the application of S. 3 to this case Section 3 provides as follows:
"Every proceeding in respect of any non-residential building of part thereof pending before any Court or other authority or officer on the date of the publication of this Act in the Fort St. George Gazette and instituted on the ground that such building or part was exempt from the provisions of the principle Act by virtues of CI. (iii) of Section 30 of the principal Act, shall abate in so far as the proceeding relates to such building or part. All rights and privileges which may have accrued before such date to any landlord in respect of any non-residential building or part thereof by virtue of CI (iii) of S. 30 of the principal Act shall cease and determine and shall not be enforceable; Provided that nothing contained in this section shall be deemed to invalidate any suit or proceeding in which the decree or order passed has been executed or satisfied in full before the date mentioned in this section".
(39) It has to be immediately conceded that the wording of this section can by an means be described as happy, or free from any cloud of ambiguity. It is not very clear how a proceeding could have been instituted "on the ground that such building or part was exempt from the provisions of the principal Act by virtues of CI. (iii) of S. 30", or what is the precise scope of the rights and privileges which may accrue to the landlord, and which are to cease and determine. However, the Section does not require to be struck down, either on the ground that it infringes Art. 14, or upon nay other patent ground of ultra vires. Its applicability to the stated facts of C.S. 163 of 1962, such as the effect of this section on the compromise decree in that proceeding is a matter quite outside the scope of the present reference.
(40) We may now proceed to the other grounds of constitutional validity urged before us, which is the effect of Art. 19 either upon Amending Act 11 of 1964, or upon the 1960 Act it self. In this context we may assume for an analysis of the argument that the interest possessed by a tenant in a lease is certainly "property" for the purpose of Act. 19 equally with the interest of the landlords, vide Municipal Corporation of Greater Bombay v. Pancham. . The learned Advocate General has advanced two main contentions on this aspect; after nothing them we shall proceed to consider the argument that the 1960 Act infringes the rights guaranteed under Art 19(1)(f) and goes beyond the scope of reasonable restrictions on such rights enunciated in sub-clause (5); it will be clear that this is the only matter that is open for the consideration of Court.
(41) The first point stressed by the learned Advocate General is that a company is not citizen, as has been held in State Trading Corporation of India Ltd. v. Commercial Tax Officer, AIR1963 SC 1811, and, in consequence that Messrs. Raval and Co. cannot invoke the protection of Art. 19 at all. This apart the learned Advocate General makes the next point that in the context of Art 358 of the constitution Art. 19 will not restrict the power of the state to make a law which may infringe these rights during the Emergency, since the bar of Art. 13(2) will not be operative. But it is not disputed that Act 11 of 1964 was enacted during the Emergency and that Art. 358 would therefore apply.
The Supreme Court held in Makhan Singh v. State of Punjab, that "the suspension of Art. 19 during the pendency of the proclamation of emergency removes the fetters created on the legislative and executive powers by Art. 19". In Jan Mahomed Noor Mahomed v. State of Gujarat, W.P.No. 111 of 1964:
their Lordships of the Supreme Court again observed
"...........the President of India having declared in the month of December 1962 a state of emergency in exercise of the powers reserved under the constitution, the right to enforce the fundamental rights guaranteed under Art. 19 of the Constitution remains suspended by virtue of Art 358 for the duration of the period of the emergency".
Sri Thiruvankatachari contends, and we think rightly, that this will not prevent him from seeking to show that the Madras Buildings(Lease and Rent Control) Act 18 of 1960 itself infringe Art. 19 in certain respects, inclusive of the enacted right of a landlord or tenant to obtain a fixation of fair rent, notwithstanding a rent determined by a contractual tenancy, and hence that it must be struck down with reference to those provisions.
This matter came up before a Full Bench of the Assam High Court in Shyam Behari v. Union of India, AIR 1963 Assam 94 (FB). The learned Judges held that the infraction of Art, 358 on Art. 19 was only in respect of a law enacted during the emergency, and the validity of an earlier law could certainly be challenged on the ground of violating Art. 19 of the constitution. With respect, we agree with this view, and must hold that it is open to Sri Thiruvenkatachari to show that certain provisions of the 1960 Act were violative if Art 19. If that be so the validity of Act 11 of 1964 may not really arise since both in respect of eviction under a contractual tenancy and the fixation of fair rent differing from the contractual rent, during its subsistence, the relevant provisions of the 1960 Act would have to be struck down, should the argument prevail. The very basis of Act 11 of 1964 will therefore disappear.
(42) Upon this aspect, it is strenuously contended that it is not a reasonable restriction upon the right to property, to interfere by means of a special enactment, with the rent agreed upon between the parties during the subsistence of the tenancy contract. There is absolutely no justification for thus infringing the sanctity of a contract and of property right particularly as these Rent Control Acts are invariably ad hoc and limited in time. An even more vehement argument is that on the same basis, there ought not to be an eviction of a tenant, during the contract of tenancy even though he may be guilty of "wilful default" in the payment of rents without first determining the contractual tenancy; where the contractual tenancy does not provide, by its terms for eviction or forfeiture of the lease for non-payment of rent, this ought not be introduced by a special enactment.
But, upon deeper scrutiny, it will be seen that this line of reasoning misses the significance of the Rent Control enactment's altogether, in the context of rapid industrialsation, and accelerating urban rents for buildings. Taking up the second limb of the argument first, it can easily be shown that his misses the true feature of the protection afforded to tenants, by the Rent Control Act. That is a protection which, as their Lordships of the Supreme Court have pointed out is extended to occupiers of buildings, even after the determination of tenancy, who thus become "statutory tenants"; that is a powerful restriction on the right of a landlord to obtain possession of the leased premises, on determining the lease, under the ordinary law of property.
Having thus restricted such a right by providing that neither during the subsistence of a contract of tenancy, nor thereafter, can the tenant be evicted so long as he fulfils certain terms the legislature has, in equity, imposed corresponding obligations on the tenants, whether contractual or statutory. If they infringe these terms of protection, the landlord is given the right to obtain possession of the premises by the special machinery under the Act. The same argument is applicable to what are termed 'fair rents' under the Act. Whether the contractual tenancy includes a stipulation for rent at a higher figure, or otherwise, both the landlord and tenant are entitled notwithstanding the contract, to obtain this fixation; that is, a just and reasonable rent, and hence the provision is neither for landlords not for tenants, but for both. Such a restriction is eminently fair and equitable during a period when economic forces might compel persons to contract for rentals which are unjust.
(43) The following cases may be noticed upon this aspect. The right of the Legislature to impose reasonable restrictions upon this right to property has been noticed in . In Ramkrishna v.
Radhamal. a Bench of the Allahabad High Court was
concerned with the U.P. Rent Control Act III of 1947 and the Bench held that the restriction enacted were reasonable, and did not infringe Art. 19(1)(f). In Venkatachellum Kabalamurthi Pillai, ,
Ramaswami, J. pointed out that these provisions or restrictions were essential in public interest during a period of scarce accommodation, and did not violate Art. 19(1)(f). The learned Judge has referred to several decisions of other Courts, similarly upholding enactments in other states.
In Kishan Singh v. Rajasthan State, . Venkatarama
Ayyar, J. pointed out, with regard to Art. 19(1)(f) in the context of the Madras Land Revenue Act, that a fundamental right which a citizen has to hold and enjoy property imports only a right to recover reasonable rent... and therefore a legislation whose object is to fix fair and equitable rent cannot be said to invade that right". In Subramania v. Dharmalingam, AIR 1958 Mad 608 (FB) this court held with reference to (1) the Madras Cultivating Tenants Protection Act 1955 and (2) the Madras Cultivating Tenants(Payment of Fair Rent) Act, that they represented a valid exercise of the legislative power of the state, and that the restrictions imposed by these Acts on the fundamental rights guaranteed to the landowner by Art. 19(1)(f) were reasonable.
Indeed, we think it would be almost impossible to sustain any doctrine of the inviolability of contractual rights in the context of the welfare legislation, which has become so marked characteristic of modern times. It is difficult to see how, if a legislature would enact that an exorbitant rate of interest could be struck down by a Court and the debtor relieved against this notwithstanding the terms of a contract, it cannot validity enact that both a landlord and tenant may apply for the determination of fair rent for premises, though the contract may be subsisting. The same remarks would be applicable to many other restrictions upon property, imposed in numerous fields of human activity, which have been held to be reasonable.
(44) In our view, therefore the reference must be answered in the terms that we have indicated earlier. The Madras Rent Control Acts, viewed from any perspective such as that of legislative competence, legislative intendment or the plain significance of the structure of the enactments admits only of one interpretation; they interfere both with contractual and statutory tenancies, by affording a special protection to tenanted against eviction and also balancing this by certain corresponding obligation imposed on tenants. For this reason the determination of a contractual tenancy by notice under the Transfer of Property Act is not essential, for the landlord to obtain eviction on the grounds specified in S. 10, as those are the very terms of the protection afforded to tenants, even after the determination of tenancies. The Act is a complete code for Tribunals exercising this jurisdiction for the execution of the orders of such tribunals, and for appeal and revision. The absence of a non obstinate clause does not affect the interpretation of the Act, with regard to the inroads it makes upon the previous property law of landlords and tenants of buildings. Equally, it enables both landlords and tenants to seek the benefit of the fixation of fair rent under its provisions, and by the special machinery provided, whether a contractual tenancy with different terms prevails, or it has been determined.
The Acts within the competence of the Legislature and validity passed including Act 11 of 1964. None of them is liable to be struck down either on the ground of hostile discrimination under Art. 14 or on the ground that there has been an unreasonable restriction of fundamental rights guaranteed under Art. 19(1)(f) of the Constitution.
(45) W.P. 1124 of 1963, C.R.P. 1816 of 1963 and Appln No. 2443 of 1964 in C.S. 163 of 1962 will now have to be remitted to the respective courts where they were pending for disposal on the merits.
(46) Order accordingly.