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CASE NO.:

Appeal (civil) 5559 of 2001

PETITIONER:

Jamshed Hormusji Wadia

RESPONDENT:

Board of Trustees, Port of Mumbai & Anr.

DATE OF JUDGMENT: 13/01/2004

BENCH:

R.C. LAHOTI & BRIJESH KUMAR .

JUDGMENT:

JUDGMENT

With

C.A. No.5562/2001,

C.A. No.5561/2001,

C.A. No.5``563-5564/2001,

C.A. No.5565-5566/2001,

C.A. No.5567-5568/2001,

C.A. No. _______/2004

(Arising out of SLP (C) 19877/2001),

C.A. No. _______/2004

(Arising out of SLP (C) 6064/2002),

C.A. No. 3211/2002,

C.A. No. _______/2004

(Arising out of SLP (C) 8657/2002)

R.C. Lahoti, J.

Leave granted in SLP (C) Nos.19877/01, 6064/02 &

8657/02).

The Bombay Port Trust (hereinafter 'BPT', for short),

presently constituted and governed by the Major Port Trust Act,

1963, and now known as The Board of Trustees of the Port of

Mumbai, is an 'authority' within the meaning of Article 12 of the

Constitution of India. It has been the subject matter of several

legislations governing its constitution, administration, powers

and duties, some of which are The Bombay Port Trust Act, 1873,

The Bombay Port Trust Act, 1879 and the Major Port Trust Act,

1963. Bombay, presently known as Mumbai, continues to be

the commercial capital of the country. In spite of the

development of several other ports having taken place along the

coasts of India, some of them being of recent origin, the Bombay

port continues to be the Gateway of India for international trade

and commerce. Space is scarce in Mumbai as it is an island, and

demands on its land are heavy in view of the ever-growing

industrial, commercial and economic activities. Due to the

availability or continuously growing modern infrastructure at

Mumbai large sections of the population from throughout the

country continue to migrate to Mumbai, which, with its

characteristically liberal metropolitan culture, open-heartedly

accommodates anyone who seeks shelter in its arms.

The Bombay Port Trust Estate, admeasuring around 720

hectares (1800 acres approx.) of land is a huge stretch from

Colaba to Raoli junction, including Pir Pau, Butcher island, land

at Titwala and other islands. The population is highly urbanized

and dense. Out of the total area of 720 hectares the area under

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the jurisdiction of Estate department of the BPT is around 336

hectares. Out of these, 306 hectares of area is occupied by the

lessees of BPT holding leases of various tenures. Around 720

hectares of land was under intensive use for the Board's own

activities around the year 1980. There were about 600 lessees.

The lessees could broadly be divided into three categories:

monthly or annual lessees, 15 years' term lessees, and 99 years'

or long term lessees, with or without clauses for renewal. In case

of monthly or annual leases, the municipal taxes are borne by

the BPT, while in cases of 15 years term and long term leases,

the liability to pay municipal taxes is with the lessees. The BPT

Estate cannot be sold; it is all held out on leases excepting for

the land in the use of the Port and for Port activities i.e. for the

self requirement of the BPT. Leases were created long back,

some of which being around a century old. The lease rents were

revised and increased from time to time not as a matter of some

uniform policy decisions but only by way of adhoc arrangements.

In the year 1962, the World Bank advised BPT that its rate of

return on its real estate was hopelessly inadequate and needed

to be reviewed. The Comptroller and Auditor General of India

too, in his report of the year 1979-80, shared the opinion of the

World Bank and highlighted the obligation on the part of the

trustees to secure a fair and reasonable revenue for its estate so

as to attend better to its manifold public duties. The trustees

felt convinced that the Port Trust had to perform several

functions under the Law governing it which were in the nature of

public duties to fulfill public objects; that the expenditure on

maintenance was gradually increasing and there was disparity

between realised rent and the billed rent; and that a minus rate

on return was actually being secured taking into account the

expenditure incurred by the Board on maintenance. All these

factors persuaded the Board to undertake a massive exercise for

the revision of rent as also for the revision of the terms and

conditions of leases, whereunder the different categories of

lessees were holding land and estates from the Board. The

Board by inserting advertisements in all-India newspapers

invited proposals from consultancy firms and practicing valuers

for ascertaining the market value of the land of the Bombay Port

Trust, including lands in docks and bunders. Out of the several

offers received, the choice of BPT fell on Kirloskar Consultants

Ltd., Pune, who were entrusted with the task on the following

terms of reference:-

"i) To give an estimate of market values of

the Bombay Port Trust land (including

the lands in the Docks and Bunders)

dividing them into convenient zones or

blocks to be delineated on the Port Trust

estates and having regard to the various

factors relevant to the valuation for the

Port Trust estates ranging from Raoli

Junction to Colaba, Pir Pau and Butcher

Island. In all, the lands admeasure

about 1800 acres and are inclusive of

land at Titwala and Butcher and other

islands.

ii) The estimate of market value should

indicate values of lands both in vacant

and occupied conditions and for different

users.

iii) The market values should be given

separately for each zone or block on two

relevant dates, viz. as on 1st January

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1975 and 1st January 1978 (these dates

have since been modified at the time of

signing the agreement as 1st January

1975 and 1st January 1980).

iv) To lay down a general formula for the

guiding principles to enable the Port

Trust to arrive at land values rationally at

a future date and realize a fair share of

the future increase in land values

periodically."

At the point of time when Kirloskar Consultants embarked upon

their task, there were 764 law suits filed by BPT in several courts

and another 265 were in the pipeline - proposed to be filed.

Nearly 1/3rd of the land of BPT was rented out, and lessees were

holding the same on rates of rent which had remained stationary

for long number of years. The gigantic task entrusted to them

was well performed by Kirloskar Consultants Ltd. - the experts in

association with M/s. M.N. Dange & Associates, the government

approved valuers. The BPT(including its trustees, officers and

staff) and the several government departments - all rendered

their assistance. A draft report was submitted on October 18,

1980, and after discussions with the Estate department and the

Chairman of the BPT, the final report was submitted on

December 25, 1980. The report runs into volumes. The

experts in their report explained their approach and

methodology, took into account the factors influencing land

prices in Bombay, the legal aspects relevant to the land of BPT,

constraints of BPT estate, blockwise fair market rates during half

a decade preceding the report, future values and the factors of

leasing of land viz. a viz. its need. The experts also carried out

international port studies. In the meeting of BPT held on August

23, 1982, the report of the consultants was accepted, preceded

by serious deliberations. Notices were issued to several lessees

terminating the tenancies but with an option that the lessees

would continue as lessees subject to their agreeing to pay the

revised rent fixed in pursuance of the report submitted by the

experts.

Some of the lessees filed writ petitions under Article 226 of

the Constitution of India complaining that the BPT being an

instrumentality of the State within the meaning of Article 12 of

the Constitution, it was bound to be reasonable and fair in its

dealing with the lessees. The increase in rent proposed by the

BPT was exorbitant, for example, the rate of rent which was

Rs.66.44 in the year 1948 and which gradually increased to

Rs.317.11 in the year 1981, was proposed to be revised at

Rs.4515.86. The petitions were disposed of by a learned single

Judge (S.M. Daud, J.) vide his judgment dated 1/4.10.1990.

The learned single Judge dealt with two points around which the

controversy had centred. On the first point, the learned single

Judge held that the proposed revision of rent and the

consequent demand of rent did not breach the provisions of the

Major Port Trust Act, 1963. On the second issue, the learned

single Judge formed an opinion that the revision of rent by the

BPT was arbitrary and capricious and therefore violative of the

constitutional restraint on the Port Trust as an instrumentality of

the State. In the opinion of the learned single Judge, the BPT

was entitled to protect itself against erosion in the rentals as a

result of inflationary trends, but excepting this no other factor

could be taken into consideration and in any case the BPT could

not afford to behave like a private landlord indulging into rack-

renting by co-relating the rates of rent with market rates. The

notices terminating the tenancies with the option for continuance

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subject to revision of rent based on Kirloskar Consultants report

were struck down. Thus the decision of the learned single Judge

had the effect of nullifying the entire exercise undertaken by the

BPT through Kirloskar Consultants.

The BPT preferred an intra-Court appeal which was dealt

with by a Division Bench. On 28.6.1991, the matter came up for

consideration before a Division Bench (consisting of Chief Justice

P.D. Desai, and Justice Sukumaran). The Division Bench formed

an opinion and expressed it to the parties that the matter should

be put to an end and suggested that they would fix a cut-off

date and the number of years upto the expiry of which they

would direct the lessees to pay the increase in rent at a certain

percentage to be decided by them, so that at fixed intervals of

years BPT would get permanently an automatic increase in rent

at the percentage fixed by them. The Division Bench called upon

the BPT to suggest some formula to enable them to arrive at a

percentage of rent to be fixed by them. It was also suggested

that such formula could be made applicable to other lessees of

the BPT who were not parties in the appeal before the High

Court by giving a public notice under Order 1 Rule 8 of CPC.

The Board reconsidered the matter and a fresh exercise

was undertaken by the Board so as to respond to the suggestion

of the Court. The Board arrived at a formula which has been

termed as "compromise proposals", approved in the meeting of

the Board held on August 13, 1991, and submitted to the Court.

It is not necessary to deal with the exchange of views amongst

the trustees which received consideration in the meeting of the

Board. The summary of the "compromise proposals", which is

based on a detailed note submitted by the office of the BPT for

being placed before the Board, is as under:-

"(i) Nature of occupations may continue as at

present on revised rents. Development

may be in accordance with the

Development Plan and the Development

Control Regulations and BPT Master Plan

including restructuring from time to time

to cater for port's and city's needs.

(ii) Occupations may be classified for the

purpose of levy of rents either as 'Non-

Home Occupation' or as 'Home

Occupation' as defined in the

Development Control Regulations on the

basis of actual use.

(iii) Letting rates for 'Non-Home Occupation'

per sq. metre of floor space per month of

built up area (as derived from valuation

by Kirloskar Consultants) shall be as

under for the period 1.10.1982 to

30.9.1992.

(a) Sassoon Dock Estate : Rs.22.03

(b) Wellington & Apollo

Reclamation Estates: Rs.26.91

(c) Ballard and Mody Bay

Estates : Rs.24.00

(d) Elphinstone Estates

(TPS) : Rs.14.44

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(e) Bunders South : Rs.21.38

(f) All other Estates : Rs.12.66

Letting rate for 'Home Occupation' may

be at 20 per cent of the above rates.

Letting rates for future years from

1.10.1992 to 30.9.2012 for 'Non-Home

Occupation' and 'Home Occupation' shall

be as given in the Annexures".

Notwithstanding the fixation of letting

rates for 20 years for good and sufficient

reasons, Board may review and revise

the letting rates.

(iv) Minimum rent may be for built up area

upto 0.5 FSI irrespective of whether the

area is built up or not. Minimum rent

from 1.10.1982 to 30.9.1992 for non-

hazardous trade/use will be Rs.6.33 per

sq. metre per month and for POL and

hazardous trade/use will be Rs.8 per sq.

metre per month or for 0.5. FSI of built

up area, whichever is more. The rent

will increase proportionately to the built

up area but maximum rent may not

exceed the rent that would have been

payable on the basis of Fair Market Rents

recommended by Kirloskar Consultants

Ltd.

(v) In case of letting of BPT structures, the

revised rate of rent per sq. metre of floor

space may be at 2.5 times the letting

rates. The repairs and maintenance of

the structure shall be done by the

tenant/lessee. For this purpose the

lessee/tenant shall retain 0.5 times the

rent and pay to BPT a net rent at twice

the letting rates.

(vi) Rent in respect of occupations having

mixed use may be in proportion of the

floor space under use for 'Home

Occupation' and 'Non-Home Occupation'.

In case of change of use from 'Home

Occupation' to 'Non-Home Occupation'

rents will be regulated at the letting rate

for 'Non-Home Occupation' for the floor

space so changed with effect from date

of change of use.

(vii) Rents shall be increased by 4 per cent

every year over the rent in the previous

year from 1.10.1992.

(viii) Arrears for the period from 1.10.1982

upto 30.9.1991 in the case of monthly

tenancies and 15 monthly lease would be

recovered respective of the built up area

at a flat rate of Rs.6.33 per sq. metre per

month in case of non-hazardous

trade/use or at a rate of Rs.8 per sq.

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metre per month in case of POL and

hazardous trade/use with simple interest

at 8 per cent per annum.

(ix) Arrears in respect of structures would be

recovered at the applicable rate from

1.10.1987 upto 30.9.1991 with simple

interest at 8 per cent per annum.

(x) In case of monthly tenancies/15-monthly

leases where the pre-revised rent is

more than the rent under above terms or

where allotments have been made

through auction/tender at rates higher

than the rate applicable under the above

terms, the rents will continue at the

earlier rates till the applicable letting rate

for a year exceeds that rate of rent

where after the rent will increase to the

applicable letting rate and will further

increase at 4 per cent annum.

(xi) In case of expired lease, fresh lease on

new terms shall be at the sole discretion

of the Board. Grant of fresh lease may

be considered taking into account

restructuring requirements for the City's

Development Plan, BPT's Master Plan and

the Development Control Regulations.

Where a fresh lease is granted, arrears

may be recovered in the form of

premium at the applicable letting rate for

respective use with simple interest at 15

per cent per annum from the date of

expiry of lease till grant of fresh lease.

In case of expired leases without a

renewal clause, additional premium may

be recovered at 12 months' rent at the

applicable letting rate.

(xii) In the case of monthly tenancies the

applicable rates used to be more than

the above rates to cover general

property taxes. However, in view of the

restrictive tenure, the tax liability is to be

borne by BPT.

(xiii) In the case of subsisting leases,

assignments and consequent grant of

lease on new terms would be at the

prevailing letting rate at the relevant

time and in relation to use. However, in

case of amalgamation revised rent would

be at the letting rate prevailing at the

time of amalgamation subject to a ceiling

that the revised rent will not be more

than 12 times the earlier rent. Where

lessee is already paying rent at the

prevailing letting rate, assignment would

be permitted on levy of revised rent at

25 per cent over the applicable letting

rate or on levy of premium at 12 months

rent at the applicable letting rate as may

be desired by the lessee/tenant.

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(xiv) Subletting, change of user, transfer,

occupation through an irrevocable power

of attorney and any other breaches may

be regularized by levy of revised rent at

the applicable letting rate at the time of

such breach from the date of breach.

Where lessee/tenant is already paying

rent at the prevailing letting rate, such

regularization be permitted on levy of

revised rent at 25 per cent over the

applicable letting rate or a levy of

premium at 12 months' rent at the

applicable letting rate as may be desired

by the lessee/tenant.

(xv) In case of hardship where effect of the

terms is harsh, such cases may be

brought up before the Board for

consideration on merits.

(xvi) The above proposals are applied to

properties failing outside the port limits

which is within the Board's power to

sanction. For properties failing within

the port limits, proposals on the above

lines may be made to Government for

approval.

These proposals are made with deference to

the suggestions by the Division Bench

consisting of Hon'ble Chief Justice and Hon'ble

Justice Sukumaran for acceptance of the

respondents in the pending appeals. As

regards the proposals which do not affect the

pending appeals, the Board may, after the

result of these appeals, consider extending the

benefit of these proposals to the other affected

tenants. If the present proposals are not

accepted, the Board reserves the right to

withdraw them. The proposals are without

prejudice to the appeals. The proposals do not

ipso facto create any right in the tenants to the

fresh tenancy/lease but confine to only rents to

be charged in the event of grant of fresh

tenancy/lease."

Proceedings under Order 1 Rule 8 of the CPC were initiated

putting all the lessees of the Board on notice through publication

in newspapers. Several lessees filed applications for intervention

and were permitted to make submissions in respect of the

compromise proposals. It appears that in spite of the indulgence

shown by the Court, the writ petitioners and the interveners

were not agreeable to accept the proposals. The Division

Bench (M.L. Pendse & A.A. Cazi, JJ) heard the Board, the writ

petitioners and the interveners at length. The Division Bench

rightly formed an opinion that the decision by the learned single

Judge did not bring to an end the entire controversy inasmuch as

merely striking down the action of the Board based on Kirloskar

Consultants' report was not a solution to the problem. The

Division Bench, on a review of the case law, formed an opinion

that if the action of the Board satisfied the test of being fair and

reasonable, it was to be accepted. Leaving aside the grievances

made by the lessees in respect of individual prpoperties as in the

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opinion of the Division Bench it was not permissible to expand

the ambit of enquiry in the proceedings pending before it and to

determine whether a particular lessee was entitled to some other

advantage or not, the Division Bench concentrated on the issue

as to the right of the Port Trust to increase the rent and the

modalities adopted by it in determining the rates at which the

rent would be increased. On behalf of the Board a chart was

tendered before the Division Bench indicating the rents which

were paid by the lessees (who had filed petitions before the

Court) prior to October 1, 1991, and the revised rent as

suggested by Kirloskar Consultants and the modified rent fixed

by the Port Trust in pursuance of the directions of the Division

Bench with a view to demonstrate the fairness and

reasonableness writ in the proposals. The chart was taken on

record and annexed as exhibit 'B' to the judgment dated

11.3.1993 of the Court. The Port Trust made it clear to the

Division Bench that it was not insistent on levying and

recovering rents as was initially suggested by Kirloskar

Consultants and was satisfied with the revised formula placed

before the Court. Taking an overall view of several relevant

factors brought to the notice of the Court on behalf of the Port

Trust as also on behalf of the lessees, the Division Bench formed

an opinion that in their judgment "the revised proposals

submitted by the Port Trust are extremely reasonable and fair".

The document entitled "revision of rents of monthly tenancies/15

monthly leases - compromise proposals" was marked as exhibit

'A' and annexed with the judgment. The Division Bench put its

seal of approval on the compromise proposals.

BPT felt satisfied with the judgment of the Division Bench.

However, the grievances of some of the lessees persisted and

resulted in filing of a few SLPs in this Court. The principal

appellant before us namely Jamshed Hormusji Wadia too was

one of the appellants. Mainly three grievances were raised

before this Court:

(i) That the High Court was in error in not permitting the

individual lessees to make their submissions about their

complaint in the matter of increase in rent in relation to

their particular leases;

(ii) That no proper justification has been offered by the Port

Trust in support of the 'compromise proposals'; and

(iii) That the Division Bench of the High Court has not

considered the matter of revision of rents on the basis of

the report of the Kirloskar Consultants on merits and there

is no consideration of the reasons that were given by the

learned single Judge for setting aside the enhancement of

the rates by the Port Trust on the basis of the Kirloskar

Consultants' report.

A Bench of two learned Judges of this Court granted leave in all

the Special Leave Petitions and disposed of the Civil Appeals by

an order of remand dated 31.10.1995. The judgment of the

Division Bench was set aside and the case was remanded for

decision afresh in the light of the following direction made by this

Court:-

"Having regard to the aforesaid

submissions urged on behalf of the appellants,

we are of the view that it is necessary that the

'Compromise proposals' submitted by the Port

Trust are considered by the Division Bench of

the High Court in the light of the reasons given

by the learned single Judge and submissions

that are made by the lessees in support of the

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said judgment to show that the said

'Compromise Proposals' fo renhancement of

rent suffer from the vice of arbitrariness.

Since this question has not been gone into by

the Division Bench of the High Court, we

consider it appropriate to set aside the

impugned judgment of the Division Bench of

the High Court for reconsideration of the

appeals in the light of the submissions that are

made by the appellant lessees as well as

intervenors with regard to the 'Compromise

proposals' that are submitted by the Port Trust

and consider the same on merits. It will be

open to the respondents in the Letters Patent

Appeals before the High Court as welll as the

intervenors to agitate the points which were

agitated before the learned single judge and

which have been decided against them by the

learned single judge. If any of the appellants

in these appeals had not intervened before the

High Court in Letters Patent Appeals still will be

open to him to move the High Court for

intervention."

(emphasis supplied)

The matter reached back and has been disposed of afresh

vide the impugned judgment dated 1.8.2000 by a Division Bench

(N.J. Pandya & Dr. D.Y. Chandrachud, JJ). This time the Division

Bench has formed an opinion that so far as the exercise of the

Port Trust to call consultants for determining the fair market rate

of that property is concerned, nothing wrong can be found with

that. The subsequent compromise proposals were only by way

of a softening blow to relieve the lessees of the hardship caused

by revision of rent. So far as the question of interest on arrears

is concerned, the Division Bench thought that the rate of interest

deserved to be confined to 6% per annum only. The Division

Bench also held that the Kirloskars' report and the action based

thereon was already set aside by the learned single Judge and in

their opinion even the so-called 'compromise proposals' did not

meet with the test of fairness and reasonableness. Then the

Division Bench held:-

"1. For granting upwards revision, we will divide the entire

period starting from 1981 to 2000 into two parts. .............

the first period will commence from the year 1981 and end

with 31.3.1994. The second period will start on and after

1.4.1994.

2. In view of the stand of the Port Trust itself before the

Supreme Court in S.L.P. upto 31.3.1994 it should be

permitted to apply its original norms of proper revision as

it was doing right upto the year 1981, periodically. It may

accordingly revise the same upto 31.3.1994.

3. As to the second period, i.e. on and after 1.4.1994, the

revision will have to be on the basis of 6% of the market

rate instead of 15% for non-residential use and for

residential purpose the return shall be worked out at the

rate of 4% on the market value. At this rate the

Kirloskars' report has to be worked out on and from 1994

till 31.3.2000.

4. On and after 1.4.2000, the new Maharashtra Rent Control

Act 1999 has come into force. The Bombay Port Trust has

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been omitted from the definition of "local authority". The

1999 Act has received Presidential assent and the

provisions of Article 254 of the Constitution of India will,

therefore, come into play. The appellant-Trust will stand

governed by the provisions of the Maharashtra Rent

Control Act, 1999. To the extent permissible therein, the

appellant-Trust can certainly increase the rent periodically

and the occupants of the plots, on whatever terms and

conditions at present, will also have to abide by the same.

The appellant-Trust cannot claim any exemption from the

provisions of the 1999 Act."

5. As to the individual submissions or as to the cases of

individual hardships, the court made certain observations

and formed an opinion that by and large the same were

already taken care of.

At the end the Division Bench allowed the Port Trust liberty

to go ahead with the fixation of rent consistently with the

observations made by the Court.

Feeling aggrieved by the decision of the Division Bench,

Jamshed Hormusji Wadia has once again come up in the present

appeal by special leave. There are other appeals by a few other

lessees and a host of intervention applications by other lessees.

The BPT has also filed a memo of cross-objections seeking

relief beyond the one allowed by the Division Bench of the High

Court. In substance, the BPT seeks its initial action based on

Kirloskar Consultants' report being restored and sustained. On

behalf of the appellants, not only the maintainability of cross-

objections in an appeal under Article 136 of the Constitution has

been objected to, but it has also been submitted that the cross-

objections are devoid of any merit.

We have heard the learned counsel for the parties, i.e.

several appellants, the BPT as also the interveners. The matters

have been argued from very many angles. On 12.11.2002,

when we were almost reaching the end of the hearing, an offer

for settlement was mooted on behalf of the appellants. The

terms of the offer were reduced into writing and tendered

"without prejudice" to the learned Addl. Solicitor General

appearing for the BPT. The hearing was adjourned to enable the

learned ASG to obtain instructions from the BPT who could

report if it was inclined to accept the offer or offer its comments

or make counter-offers. On 3.12.2002, the learned ASG filed

the response of the BPT to the terms of settlement proposed on

behalf of the appellants. Any mutual settlement was not

possible, it was reported. Further hearing was resumed and

then concluded.

The questions arising for decision in these appeals and

several intervention applications can suitably be formulated as

under:-

(i) What is the status of the BPT as a landlord? Is it free to

charge any rent from its lessees as it pleases in view of its

having been exempted from the operation of the Rent

Control Law or is it only to act in a fair and reasonable

manner in the matter of dealing with its lessees and

charging rent from them?

(ii) Whether the cross-objections preferred by the BPT are

maintainable and, if so, to what effect?

(iii) Can the grievances raised by individual lessees be said to

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have been satisfactorily disposed of by the Division Bench

of the High Court?

(iv) The relief to which the parties are entitled.

The Bombay Port Trust is an instrumentality of State and

hence an 'authority' within the meaning of Article 12 of the

Constitution. (See - M/s Dwarkadas Marfatia And Sons Vs.

Board of Trustees of the Port of Bombay (1989) 3 SCC 293).

It is amenable to writ jurisdiction of the Court. This position of

law has not been disputed by either party. The consequence

which follows is that in all its actions, it must be governed by

Article 14 of the Constitution. It cannot afford to act with

arbitrariness or capriciousness. It must act within the four

corners of the statute which has created and governs it. All its

actions must be for the public good, achieving the objects for

which it exists, and accompanied by reason and not whim or

caprice.

It was submitted by the learned Additional Solicitor

General that not only does the Bombay Port Trust happen to be

an instrumentality of State, it is also an owner-cum-landlord.

When the private landlords are making money in the commercial

capital city of Bombay, there is no reason why the Bombay Port

Trust should be kept pegged down to abysmally low rates of

rent which were settled decades before and at a point of time

when in Bombay the land was available for occupation more or

less like just a bounty of nature and people were being

persuaded and encouraged by holding out incentives to come to

Bombay and settle there. He submitted that the Bombay Port

Trust has to manage and administer a huge port, most vital to

the industrial and economic life of the nation, and it needs

money for funding its activities. Every additional penny earned

by Bombay Port Trust has to be and is spent for public good and

the increase in rent would augment the resources of the Bombay

Port Trust and thereby strengthen its hands in rendering better

service to the nation. The learned Addl. Solicitor General

pointed out from facts and figures that most of the tenants were

indulging in such activities as were not expected of them such as

sub-letting, encroachments, unauthorized constructions and so

on. They were pocketing huge sums of money by inducting sub-

tenants and collecting premiums and exorbitant rents while they

were not prepared to bear even with a reasonable increase of

rent proposed by the Bombay Port Trust. The Bombay Port Trust

was being dragged into endless litigation by the tenants. It was

pointed out that as on 30.9.2002 there were 1900 cases pending

in different courts at different levels all based on landlord-tenant

relationship. This litigation was consuming a good chunk of the

Bombay Port Trust's earnings, time and energy, all going waste.

The learned Addl. Solicitor General made a very passionate

appeal submitting that the Bombay Port Trust did not intend to

indulge in rack-renting, but at the same time the Court ought

not to deny ordinary rights available to any reasonable landlord

under the ordinary law of the land. The Bombay Port Trust

should not be placed in a worse position than that of an

ordinary landlord merely because it happened to be an

instrumentality of State. Needless to say, such submission

made by the learned Addl. Solicitor General was only a defensive

response to the vehement attack laid on the Bombay Port Trust's

proposals to enhance the rent paid by the appellants and

interveners.

The position of law is settled that the State and its

authorities including instrumentalities of States have to be just,

fair and reasonable in all their activities including those in the

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field of contracts. Even while playing the role of a landlord or

a tenant, the State and its authorities remain so and cannot be

heard or seen causing displeasure or discomfort to Article 14 of

the Constitution of India.

It is common knowledge that several rent control

legislations exist spread around the country, the emergence

whereof was witnessed by the post world war scarcity of

accommodation. Often these legislations exempt from their

applicability the properties owned by the Government, semi-

Government or public bodies, Government-owned corporations,

trusts and other instrumentalities of State. What is the purpose?

Does the Legislatures intend to leave such entities absolutely

unbridled and uncontrolled as landlords from the operation of

the rent control legislation or do they do so with some hope and

trust in such institutions? In M/s. Dwarkadas Marfatia And

Sons (supra) a few decisions and authorities were cited before

this Court. The observations of Chief Justice Chagla (as His

Lordship then was) in Rampratap Jaidayal Vs. Dominion of

India - 1952 L.R. 54 Bom. 927 were quoted with approval

stating that while enacting rent control legislations, the

Government seeks to achieve the object of protecting the

tenants and preventing the rent from being increased and people

from being ejected unreasonably; then it cannot be assumed

that that the very Government would itself be indulging into

those very activities which it was proposing to prevent by

enacting such laws. The underlying assumption behind granting

exemption from the operation of the rent control legislations was

that the Government would not increase rents and would not

eject tenants unless it was necessary to do so in public interest

and a particular building was required for the public purpose. It

was also pointed out that the Government or local authority or

the Board would not be actuated by any profit-making motive so

as to unduly enhance the rents or eject the tenants from their

respective properties as private landlords are or are likely to do.

This Court in Baburao Shantaram More Vs. Bombay

Housing Board - 1954 SCR 572 recognised that the basis of

differentiation in favour of public authorities-like the Bombay

Port Trust - was on the ground that they would not act for their

own purpose as private landlords do but would act for public

purposes. The Court held in Dwarkadas Marfatia (supra) that

the public authorities which enjoy the benefit without being

hidebound by the requirements of the Rent Act, must act for

public benefit and where they fail to do so they render

themselves amenable to adjudication under civil review

jurisdiction of the Court. A Division Bench of the Bombay High

Court presided over by Mrs. Sujata Manohar, J (as Her Lordship

then was) held in Ratti Palonji Kapadia & Anr. Vs. State of

Maharashtra & Ors. - 1992 Bom. L.R. 1356 that the

exemption from the provisions of the rent control law casts an

obligation on the State and its instrumentalities and authorities

to comply with the public policy of ensuring a fair return of

investments without charging exorbitant rates based on the

prevailing market price of the land. Thus, a balance has to be

struck between ensuring a fair return on investment and

charging exorbitant rates based on the prevalent market prices

of land, which would be of utmost relevance to any other

landlord. The State Government in order to justify a steep

increase in rent, cannot plead exploitative increases in prices of

lands. Reference in this connection may also be made to

Kumari Shrilekha Vidyarthi etc.etc., Vs. State of U.P. &

Ors. - (1991) 1 SCC 212, wherein this Court held that while

acting in the field of contractual rights the personality of the

State does not undergo such a radical change as not to require

regulation of its conduct by Article 14. It is not as if the

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requirements of Article 14 and contractual obligations are alien

concepts which cannot co-exist. Our Constitution does not

envisage or permit unfairness or unreasonableness in State

action in any sphere of activities contrary to the professed ideals

in the Preamble. Exclusion of Article 14 in contractual matters is

not permissible in our constitutional scheme. In P.J. Irani Vs.

State of Madras and Anr. - AIR 1961 SC 1731 the Constitution

Bench observed that a tenant in a building owned by the State

or its instrumentality is not liable to eviction solely because the

tenancy has terminated. The existence of rent control

legislation, though not applicable to such building, is suggestive

of the State's policy of protecting tenants because of the great

difficulty of their obtaining alternative accommodation.

In our opinion, in the field of contracts the State and its

instrumentalities ought to so design their activities as would

ensure fair competition and non-discrimination. They can

augment their resources but the object should be to serve the

public cause and to do public good by resorting to fair and

reasonable methods. The State and its instrumentalities, as the

landlords, have the liberty of revising the rates of rent so as to

compensate themselves against loss caused by inflationary

tendencies. They can - and rather must - also save themselves

from negative balances caused by the cost of maintenance, and

payment of taxes and costs of administration. The State, as

landlord, need not necessarily be a benevolent and good

charitable Samaritan. The felt need for expanding or stimulating

its own activities or other activities in the public interest having

once arisen, the State need not hold its hands from seeking

eviction of its lessees. However, the State cannot be seen to be

indulging in rack-renting, profiteering and indulging in whimsical

or unreasonable evictions or bargains.

A balance has to be struck between the two extremes.

Having been exempted from the operation of rent control

legislation the courts cannot hold them tied to the same shackles

from which the State and its instrumentalities have been freed

by the legislature in their wisdom and thereby requiring them to

be ruled indirectly or by analogy by the same law from which

they are exempt. Otherwise, it would tantamount to defeating

the exemption clause consciously enacted by the Legislature. At

the same time the liberty given to the State and its

instrumentalities by the statute enacted under the Constitution

does not exempt them from honouring the Constitution itself.

They continue to be ruled by Article 14. The validity of their

actions in the field of landlord-tenant relationship is available to

be tested not under the rent control legislation but under the

Constitution. The rent control legislations are temporary, if not

seasonal; the Constitution is permanent and all time law.

In the backdrop of these principles let us test what the

Bombay Port Trust proposed to do. The learned Addl. Solicitor

General has pointed out by filing a chart incorporating requisite

facts in requisite details that a good number of lessees were

running into huge arrears and were not willing to pay the rent

even where the rates were nominal. Sub-letting,

encroachments, and unauthorized constructions were rampant.

The observations made and the wise counsel tendered by the

World Bank and the Comptroller and Auditor General of India

could not have been ignored as the Bombay Port Trust as also its

Trustees could otherwise be accused of inaction. In the

aforesaid background the Port Trust and its Trustees acted very

reasonably. They invited competitive quotations for providing

professional service to them by inviting financial experts and

valuers through an all-India public invitation. The Kirloskar

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Consultants Ltd., whose expertise and competency is not in

question, performed the gigantic task entrusted to them with the

assistance of Government approved valuers. The report

submitted by Kirloskar Consultants reveals a very scientific and

methodical research carried out by them, followed by

recommendations for such action as logically flew from the facts

found by them. Relevant historical and geographical facts were

collected, analysed and given due weight and consideration for

drawing deductions therefrom. There was nothing wrong in the

procedure adopted by the Bombay Port Trust and in the decision

taken on Kirloskars' Report but for the fact that the

consequence which followed from the action taken on

recommendations made by Kirloskar Consultants was a sudden

and exorbitant increase in rates of rent which turned out to be

manifold compared to the current rates at which the rent was

being paid by the lessees. Two factors weighed heavily with the

1993 Division Bench decision of the High Court. The learned

judges felt that the proposals, if accepted, would result in the

distinction between an ordinary private landlord and the Bombay

Port Trust - a landlord yet an instrumentality of State, being

lost. Secondly, accepting the current market rates of real estate

and working out a return on such rates by reference to the

market trends, would tantamount to indulging into profiteering.

The Division Bench rightly held out the hope and trust that the

Bombay Port Trust would act reasonably as also that the lessees

would be willingly prepared for a reasonable increase. Another

factor which weighed heavily with the Division Bench was that

the lessees whose rent was sought to be revised, were all

continuing on the premises holding the property as tenants for

quite some length of time, and it was not a case where the

property was proposed to be let out for the first time or by way

of fresh lease to aspirants bidding with each other. The Division

Bench rightly put the ball in the court of Bombay Port Trust

calling upon it to take the lead and respond with a reasonable

proposal, and also indicated its desire to intervene and find out a

solution which would be acceptable to the Bombay Port Trust as

also to all the lessees and bring to an end the multiple litigation

already pending in courts and to avert the likelihood of further

litigation in waiting.

The proceedings of the Board reveal the Trustees having

fallen on the horns of a dilemma. Any step in retreat would have

a toning down effect on the voluminous exercise undertaken by

them through Kirloskar Consultants and at the same time, as is

writ large, the Court was pressing for a settlement and as an

instrumentality of State they could not afford to be indifferent to

the trust and faith reposed in them by the Division Bench of the

High Court. The matter came up before the Board in several

meetings. There were exchanges of views and dissents. Yet the

Board succeeded in arriving at a resolution shaped as

'Compromise Proposals' and submitted the same for the

consideration of the Court. But the lessees would not agree.

The Court found the 'Compromise Proposals' reasonable and

meeting its approval. The Compromise Proposals were taken on

record and made a part of the Division Bench judgment dated

11/12.3.1993.

We have set out in the earlier part of this judgment, the

order of remand dated 31.10.1995 made by this Court. A

careful reading of the judgment of the High Court and the order

of remand passed by this Court together significantly reveals

that none has cast any reflection __ much less any adverse one __

on the report of Kirloskar Consultants and the decision of the

Board based thereon. The only consideration which prevailed

with the High Court and this Court was one of reasonability and

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the need for striking a balance before taking a long leap in the

direction of an upwards revision of rates. The stand throughout

taken by the Board has to be appreciated. It has been agreeable

to every reasonable suggestion made by the Court and has

never treated the issue as to revision of rent as a matter of its

prestige or with the ego of a landlord. This Court made a

remand to the Division Bench of the High Court persuaded by

the consideration that there were a few aspects of paramount

significance which needed the attention of the Division Bench of

the High Court. The fact remains that in the quest for an

amicable, and if not so, then at least a reasonable resolution of

the dispute, the Division Bench of the High Court as well as this

Court have proceeded on an assumption that for the future, the

settlement whether mutual or by dictum of the Court, shall

centre around the Compromise Proposals. This Court wanted

the Court to be assured for itself and the lessees to be satisfied

for themselves that the Compromise Proposals were not just an

arrow shot in the dark but were capable of being illuminated by

assigning reasons. At the same time, though all the lessees

were to be treated alike so far as laying down of common

standards governing different classes of leases was concerned,

care had also to be taken to redeem the grievances of certain

individual lessees who could make out a case for further

legitimate reduction in rates on account of peculiarities attaching

with the land or lease held by them. Later, while delivering the

2000 judgment, which is impugned herein, the Division Bench

certainly assumed a wider field of jurisdiction than the one

which had been permitted by this Court and entered into

examining the whole controversy afresh and as if all the

contentions of all the parties were open before it, which view of

the High Court, in our opinion, cannot be countenanced on a

reading as a whole of the order of remand passed by this Court

along with the judgment of the Division Bench which was

impugned then.

In our opinion, the matter between the parties has to be

decided by treating the Compromise Proposals dated 13th August

1991 as the base. Any going behind would unsettle the settled

issues __ expressly or by necessary implication. We made this

clear to the learned counsel for the parties on 12.11.2002, when

we adjourned the hearing with the earnest hope that the parties

would show a fine gesture of "give a little and take a little" and

thereby relieve the Court from the need of pronouncing its

verdict in place of a mutual settlement by the parties which is

always welcome. We may place on record that during the course

of the hearing we suggested to the learned counsel for the

parties that instead of perpetuating the life of the litigation they

may advise their respective clients suitably and persuade them

to arrive at a settlement using their good offices. We place on

record our appreciation of the positive gesture shown by all the

learned senior counsel, their assisting counsel and the other

learned counsel appearing for the parties and the interveners.

By discussion and exchange of views across the Bar the scope of

controversy has very much narrowed down as stated

hereunder:-

(1) It was agreed at the Bar that in view of the

Maharashtra Rent Control Act 1999, having

been brought into force w.e.f. 31.3.2000, the

controversy among the parties can be treated

safely as confined to the period from

1.10.1982 to 31.3.2000. This period is divisible

into three parts i.e. (i) 1.10.1982 to

31.3.1994; (ii) 1.4.1994 to 31.3.2000; and (iii)

the period post 31.3.2000. In the

'Compromise Proposals' the Bombay Port Trust

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has agreed that for the period 1.10.1982 to

31.3.1994 the original terms would continue to

apply and the lessees give up their contest, if

any, for this period.

(2) The period between 1.4.1994 and 31.3.2000 is

the bone of contention. The Compromise

Proposals proposed 15% return for non-

residential use and 12% return for residential

use as the fair market rent on the estate value.

The Division Bench of the High Court has

directed these rates to be reduced to 6% and

4% respectively. Instead of our undertaking

an exercise afresh as to what would be a fair

and reasonable return to the Bombay Port

Trust, it is sufficient to record that all the

learned counsel for the parties excepting the

Bombay Port Trust, have agreed that the

lessees are prepared to accept the rates

revised as 10% and 8% respectively.

In our opinion, (1) the rates of 10% and

8% abovesaid are very fair and reasonable and

the Bombay Port Trust ought to accept the

same; (2) the above said rates are of general

application. Shri Fali S. Nariman, the learned

senior counsel appearing for J.H. Wadia, the

appellant, insisted that the piece of land held

by the appellant on lease suffers from several

adversities and, therefore, some exception

must be carved out in favour of this appellant.

Similar contentions were advanced by a few

other lessees. We find some merit in the

submissions so made as we would illustrate a

little after. However still, we feel that we

cannot enter into the factual enquiries

referable to individual lessees and record any

findings thereon. A suitable mechanism

devised in this regard would take care of such

individual grievances and would also bring the

dispute to an end.

(3) So far as the period post 31.3.2000 is

concerned there is a controversy. According to

the lessees the Maharashtra Rent Control Act,

1999, applies to Bombay Port Trust and its

premises including land and buildings and the

Act would take care of the rent as well. Shri

R.N. Trivedi, the learned Addl. Solicitor

General, has vehemently opposed this

contention and submitted that 1999 Act does

not apply to the Board and its estates. He

submitted that the question is not free from

difficulty and would need additional pleadings

and documents which are not available on

record and it would be safer if that plea is left

out from adjudication insofar as the present

appeals are concerned.

To appreciate the abovesaid three zones of controversy

now surviving, we need to take note of some additional facts and

events, part of which have occurred during the pendency of

these proceedings. Excerpts from the proceedings of the

meeting of the Board of Trustees of the Port of Mumbai held on

14.11.2000 are available on record. They give an indication of

the number of lessees with whom the terms could be settled and

were settled. The status of cases with lessees as on 31.7.2000

as reflected in the minutes of the meeting dated 14.11.2000 is

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as under :-

(i)

Total number of cases where

compromise can be

considered including cases

where suits have not been

filed.

2490

(ii)

Number of cases where

applications are received for

compromise as on 31.7.2000.

1611

(iii)

Less : Applications received

but cannot be compromised

due to reservations, etc.

37

(iv)

Eligible applications received

for compromise.

1574

(v)

Number of cases fully settled

as on 31.7.2000

408

(vi)

Number of eligible cases

where parties have not

approached for compromise.

916

It was pointed out at the Bar by the learned Addl. Solicitor

General that by the time the Division Bench of the High Court

pronounced its judgment, 408 lessees had accepted the

Compromise Proposals mooted by the Board and also entered

into new leases. Subsequent to the said judgment another 79

lessees have settled their disputes and accepted the

Compromise Proposals. Thus 487 lessees have already taken

advantage of the Compromise Proposals. This figure is very

encouraging and shows that other lessees too should have joined

in and should not at least now abstain from joining in the stream

of settlements. So far as the Bombay Port Trust is concerned its

stand is reflected in the following record made by the High

Court, vide para 7 of its Judgment dated 11/12.3.1993 :

"It is no longer in dispute that the Port Trust

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does not wish to levy and recover rents as

initially suggested by Kirloskar Consultants Ltd.

and the Port Trust desires to levy and recover

rent in accordance with the revised formula."

Vide para 15 of the Memo of cross objection (the

maintainability whereof shall be dealt with shortly hereinafter)

the Bombay Port Trust has stated :

"It is further submitted that if the impugned

judgment were accepted in toto, as a package, and

as it stands today, the Port Trust, would, without

prejudice to its submissions and contentions in law,

be willing to implement the impugned judgment and

order."

The BPT is rightly happy with the Compromise Proposals,

in the prevailing circumstances and situation.

So far as the individual grievances are concerned we need

not make a detailed statement thereof by placing on record the

cases of several individual lessees. By way of illustration it

would suffice to state the grievance of only one of them, namely,

J.H. Wadia, who has been vigilantly fighting his case craving for

justice accompanied by sympathy and consideration for the

circumstances in which the property held by him is situated. It

is pointed out that a storm water drain flows underground across

the full length of the land leased out to him and thereon no

development can take place according to the Municipal Laws.

The only development which the appellant has been able to

make over the property, is the construction of sheds wherein

only timber business is being run. If Wadias can neither make

use of the entire property nor develop it fully in the same

manner as others can, they legitimately deserve some relaxation

over the others being allowed to them. The status and nature of

the land held by the Wadias, as pointed out by them, finds

support from the documentary evidence available and was

noticed by Kirloskar Consultants also in their report.

We will take care of the individual grievances in the

operative part of the judgment by making suitable directions in

that regard.

We agree with the submission of the learned Addl. Solicitor

General that in the absence of adequate material being available

on record the question as to the applicability of the Maharashtra

Rent Control Act, 1999, to the Bombay Port Trust and its

premises should not be decided in the present case and should

rather be left open to be taken care of in appropriate

proceedings at an appropriate point of time.

Now we digress a little to deal with the issue as to the

maintainability of the cross objections. For three reasons we

find the cross objection not entitled to consideration on merits :

firstly, in an appeal by special leave under Article 136 of the

Constitution, cross objections do not lie; secondly, the BPT

having given a proposal to the Court though on being prompted

by the Court to do so, the Bombay Port Trust should not be

permitted to beat a retreat and withdraw from the compromise

proposals or lay challenge to it in the facts and circumstances of

the case. The compromise proposals have been held to be fair,

just and reasonable, and challenge to it is devoid of any merit;

and thirdly, the issue as to compromise proposals stands

implicitly circumscribed by the order of remand dated

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31.10.1995 and cannot be allowed to be reagitated at this stage.

The first of these three needs elaboration.

BPT has filed cross-objections. A question of significance

arises whether a cross-objection, as contemplated by Order 41

Rule 22 of the Code of Civil Procedure, 1908, is at all

maintainable in a civil appeal by special leave under Article 136

of the Constitution in this Court? No decision by this Court

squarely dealing with the point has been brought to our notice.

Alopi Nath & Ors. Vs. Collector, varanasi, 1986 (Supp) SCC

693, too is not directly on the point but comes very near to it. A

question as to the admissibility of cross-objections under a local

law of Uttar Pradesh arose for the consideration of this Court.

The U.P. Municipal Corporations Adhiniyam, 1959, has

constituted a tribunal with power and functions of the Court to

deal with reference arising out of acquisition of land for U.P.

Municipal Corporation under the Land Acquisition Act 1849. The

Indian Evidence Act 1872 and the Code of Civil Procedure, 1908,

apply to all proceedings before the Tribunal. Its decisions are

final subject to appeal under sub-Section (1) of Section 381

which reads as under:-

"381. Appeals__ (1) An appeal to the High

Court shall lie from a decision of the Tribunal,

if__

(a) the Tribunal grants a certificate

that the case is a fit one for appeal, or

(b) the High Court grants special leave

to appeal, provided that the High Court

shall not grant such special leave unless

the Tribunal has refused to grant a

certificate under clause (a).

xxx xxxx xxx

(3) Notwithstanding anything contained in

the foregoing provisions, no appeal shall lie

under this section unless the appellant has

deposited the money which he is liable to pay

under the order from which the appeal is filed.

(4) Subject to the provisions of sub-section

(1), the provisions of the Code of Civil

Procedure, 1908, with respect to appeals from

original decrees, shall, so far as may be, apply

to appeals under this Act.

(5) (i) An application for the grant of a

certificate under clause (a) of sub-

section (1) may be made within thirty

days from the date of decision of the

Tribunal.

(ii) An appeal against the decision of

the Tribunal may be preferred within

sixty days from the date of the grant of

the said certificate.

(iii) An application to the High Court for

special leave to appeal under clause (b)

of sub-section (1) may be made within

sixty days from the date of the order of

refusal of the said certificate.

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xxx xxxx xxx

A question arose whether cross-objections are maintainable

before the High Court in an appeal under Section 381. This

Court held that the provision of Order 41 Rule 22 of the CPC is

inconsistent with the provisions of the said Act inasmuch as an

appeal is admissible only by a certificate or special leave under

Section 381. "It is difficult to contend that a cross-objection is

anything other than an appeal as generally understood in law."

The cross-objection was held to be not maintainable.

An overview of the nature of jurisdiction conferred on this

Court under Article 136 of the Constitution becomes necessary.

The framers of the Constitution visualized the Supreme Court as

a Court having a final and appellate jurisdiction on questions

relating to the constitutional validity of laws. It was to have

appellate jurisdiction in all cases involving a substantial question

of law as to the interpretation of the Constitution except where

an appeal had come to this Court on a Certificate given by the

High Court. In spite of the Certificate having been refused, this

Court could grant a special leave. (The Framing of India's

Constitution, B. Shiva Rao, pp. 483 & 488). Article 136 as

framed, opens with a non-obstante clause giving it overriding

effect on all other provisions contained in Chapter IV of the

Constitution and confers a discretionary jurisdiction on this Court

to grant special leave to appeal from any judgment, decree,

determination, sentence or order in any cause or matter passed

or made by any Court or Tribunal in the territory of India. It is

well-settled that Article 136 of the Constitution does not confer

a right to appeal on any party; it confers a discretionary power

on the Supreme Court to interfere in suitable cases. The very

conferment of the discretionary power defies any attempt at

exhaustive definition of such power. When no law confers a

statutory right to appeal on a party, Article 136 cannot be called

in aid to spell out such a right. (M/s Bengal Chemical &

Pharmaceutical Works Ltd. - 1959 Suppl.(2) SCR 136, The

State of Bombay Vs. Rusy Mistry and Anr. - AIR 1960 SC

391 and Basudev Hazra - (1971) 1 SCC 433. Article 136

cannot be read as conferring a right on anyone to prefer an

appeal to this Court; it only confers a right on a party to file an

application seeking leave to appeal and a discretion on the Court

to grant or not to grant such leave in its wisdom. The

discretionary power of this Court is plenary in the sense that

there are no words in Article 136 itself qualifying that power.

The power is permitted to be invoked not in a routine fashion but

in very exceptional circumstances as when a question of law of

general public importance arises or a decision sought to be

impugned before this Court shocks its conscience.

(Arunachalam Vs. P.S.R. Sadanatham - (1979) 2 SCC 297).

This overriding and exceptional power has been vested in this

Court to be exercised sparingly and only in furtherance of the

cause of justice (Subedar Vs. The State of UP (1970) 2 SCC

445). The Constitution Bench in Pritam Singh Vs. The State -

1950 SCR 453 cautioned that the wide discretionary power

vesting in this Court should be exercised sparingly and in

exceptional cases only when special circumstances are shown to

exist. In another Constitution Bench (The Bharat Bank Ltd.,

Delhi - 1950 SCR 459) Mahajan, J. (as His Lordship then was)

reiterated the caution couching it in a different phraseology and

said that this Court would not under Article 136 constitute itself

into a Tribunal or Court just settling disputes and reduce itself

into a mere Court of error. The power under Article 136 is an

extraordinary power to be exercised in rare and exceptional

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cases and on well-known principles.

All said and done, in spite of the repeated pronouncements

made by this Court declaring the law on Article 136 and

repeatedly stating that this Court was a Court meant for dealing

only with substantial questions of law, and in spite of the clear

constitutional overtones that the jurisdiction is intended to settle

the law so as to enable the High Courts and the courts

subordinate to follow the principles of law propounded and

settled by this Court and that this Court was not meant for

redeeming injustice in individual cases, the experience shows

that such self-imposed restrictions placed as fetters on its own

discretionary power under Article 136 have not hindered the

Court from leaping into resolution of individual controversies

once it has been brought to its notice that the case has failed to

deliver substantial justice or has perpetuated grave injustice to

parties or is one which shocks the conscience of the Court or

suffers on account of disregard to the form of legal process or

with violation of the principles of natural justice. Often such are

the cases where the judgment or decision or cause or matter

brought to its notice has failed to receive the needed care,

attention and approach at the hands of the Tribunal or Court

below, or even the High Court at times, and the conscience of

this Court pricks or its heart bleeds for imparting justice or

undoing injustice. The practise and experience apart, the

framers of the Constitution did design the jurisdiction of this

Court to remain an extraordinary jurisdiction whether at the

stage of granting leave or at the stage of deciding the appeal

itself after the grant of leave. This Court has never done and

would never do injustice nor allow injustice being perpetuated

just for the sake of upholding technicalities.

A few decisions were brought to the notice of this Court by

the learned Additional Solicitor General wherein this Court has

made a reference to Order 41 Rule 22 of the CPC and permitted

the respondent to support the decree or decision under appeal

by laying challenge to a finding recorded or issue decided against

him though the order, judgment or decree was in the end in his

favour. Illustratively, see Ramanbhai Ashabhai Patel (1965) 1

SCR 712; Management of Northern Railway Co-operative

Society Ltd. (1967) 2 SCR 476; Bharat Kala Bhandar Ltd. -

(1965) 3 SCR 499. The learned ASG is right. But we would like

to clarify that this is done not because Order 41 Rule 22 CPC is

applicable to appeals preferred under Article 136 of the

Constitution; it is because of a basic principle of justice

applicable to Courts of superior jurisdiction. A person who has

entirely succeeded before a Court or Tribunal below cannot file

an appeal solely for the sake of clearing himself from the effect

of an adverse finding or an adverse decision on one of the issues

as he would not be a person falling within the meaning of the

words 'person aggrieved'. In an appeal or revision, as a matter

of general principles, the party, who has an order in his favour,

is entitled to show that even if the order was liable to be set

aside on the grounds decided in his favour, yet the order could

be sustained by reversing the finding on some other ground

which was decided against him in the court below. This position

of law is supportable on general principles without having

recourse to Order 41 Rule 22 of the Code of Civil Procedure.

Reference may be had to a recent decision of this Court in

Nalakath Sainuddin Vs. Koorikadan Sulaiman - (2002) 6

SCC 1 and also Banarsi & Ors. Vs. Ram Phal - JT 2003 (5) SC

224. This Court being a Court of plenary jurisdiction, once the

matter has come to it in appeal, shall have power to pass any

decree and make any order which ought to have been passed or

made as the facts of the case and law applicable thereto call for.

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Such a power is exercised by this Court by virtue of its own

jurisdiction and not by having recourse to Order 41 Rule 33 of

the CPC though in some of the cases observations are available

to the effect that this Court can act on the principles deducible

from Order 41 Rule 33 of the CPC. It may be added that this

Court has jurisdiction to pass such decree or make such order as

is necessary for doing complete justice in any cause or matter

pending before it. Such jurisdiction is conferred on this Court

by Article 142 of the Constitution and this Court is not required

to have recourse to any provision of CPC or any principle

deducible therefrom. However still, in spite of the wide

jurisdiction being available, this Court would not ordinarily make

an order, direction or decree placing the party appealing to it in

a position more disadvantageous than in what it would have

been had it not appealed.

The exercise of appellate jurisdiction under Article 136 of

the Constitution is not dependent on the provisions of Order 41

of the CPC. The Court may frame rules governing its own

procedure and practice. No such rule has been framed by the

Court which entitles or permits a respondent to file a cross-

objection.

Right to file cross-objections is the exercise of substantive

right of appeal conferred by law. Cross-objections partake of the

right of preferring an appeal. The procedure is different and so

is the rule of limitation (See, Municipal Corporation of Delhi

& Ors. Vs. Intnl. Security & Intelligence Agency Ltd. - JT

2003 (2) SC 103 and Superintending Engineer & Ors. Vs. B.

Subha Reddy (1999) 4 SCC 423). Against a decision by the

High Court or Tribunal which is partly in favour of one and partly

in favour of the other, both the parties are aggrieved and each

one of them has a right to move an application in this Court

seeking leave to appeal. One who does not do so and allows the

prescribed period of limitation to lapse, cannot come up by way

of cross-objections on the other party coming up in appeal,

though we must qualify our statement of law by reference to Sri

Babu Ram Vs. Shrimati Prasanni & Ors. 1959 SCR 1403. In

that case, in an election petition the respondent before this

Court had sought to support the final conclusion of the High

Court by challenging a finding recorded against her which was

objected to by the appellant. This Court did not think it

necessary to decide the point and observed that assuming the

respondent should have preferred a petition for special leave to

appeal against the finding of the High Court on the issue in

question, yet the application made by the respondent for leave

to urge additional grounds could be converted into a petition for

special leave to appeal against the said finding, and the delay

made in filing the same could be condoned. Suffice it to observe

that the observation so made by this Court takes care of an

unusual situation where the Court feels inclined to relax the bar

of limitation by taking a sympathetic view on condoning of the

delay and entertains a belated prayer ex debito justicia . We

cannot close the topic without referring to Vashist Narain

Sharma Vs. Dev Chandra and Ors. - 1955 (1) SCR 509 (at

p.519). It was an election appeal and the learned counsel for

the respondent attempted to argue that he could support the

decision of the Tribunal on other grounds which had been found

against him and referred to the analogy of the Code of Civil

Procedure which permits a respondent to take that course. The

Court held - "that provision has no application under Article 136.

We have no appeal before us on behalf of the respondent and we

are unable to allow that question to be re-agitated". Vashist

Narain Sharma's case is a three-Judges Bench decision and

though available was not placed before the Court deciding Sri

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Balu Ram's case, which again is a three-Judges Bench decision.

Be that as it may, we are clearly of the opinion that in an appeal

under Article 136 of the Constitution, the respondent cannot file

cross-objections. If the judgment of the High Court was partly

against the respondent, it was for it to have filed an application

seeking leave to appeal. That right having been foregone by it

and the period of limitation having expired, the cross-objections

cannot be entertained. The filing of cross-objections by a

respondent in this Court is an attempt at exercising the right of

filing an application for special leave to appeal after the expiry of

limitation and in a manner not contemplated by Article 136 of

the Constitution. The Judgment of the High Court was delivered

on 1.8.2000. Leave was granted to the appellant on 13.8.2001

in the presence of counsel for the respondent. Formal notice of

lodgment of appeal was served on the respondent on 28.9.2001.

The application by way of cross-objections has been filed on

31.7.2002. The only reason assigned in the application seeking

condonation of delay is that though the respondent-Trust had

accepted the judgment of the High Court, it was advised and

persuaded to file cross-objections because of the appellants

having filed the application seeking leave to file an appeal and

leave having been granted to them. We do not think such

explanation, in the facts and circumstances of the case, amounts

to sufficient cause for condoning the delay.

Even on merits we do not find any reason to entertain the

plea sought to be urged in cross-objections. As we have already

pointed out, the respondents have accepted the judgment of the

High Court and also acted thereon. Merely because the other

party has preferred an appeal, that cannot be a ground for the

respondent also to disown that part of the judgment which was

acceptable to it. Further, the issue which is now sought to be

re-agitated stands concluded by the earlier order of remand

passed by this Court. The respondent cannot now, in the

second round of appeal to this Court, be permitted to urge such

pleas as it could have urged in the earlier round or which it

urged and was not accepted by this Court.

The cross-objections preferred by the respondent-Trust are

dismissed as not maintainable and as also being devoid of any

merit.

All the appeals are directed to be disposed of in terms of

the following directions : -

(i) by this judgment and in these proceedings the

controversy as to the rates of rent applicable

to the lessees shall be deemed to have been

resolved for the period 1.4.1994 to 31.3.2000;

(ii) the 'Compromise Proposals' as approved by

the Board of Trustees of the Port of Mumbai in

their meeting held on 13.8.1991 which are

very fair, just and reasonable, subject to the

modification that the revision in rent from

1.4.1994, shall be on the basis of rates of

return at 10% for non-residential uses and 8%

for residential uses, based on Kirloskar

Consultants' report, instead of 15% and 12%

respectively as was suggested in the

'Compromise Proposals'. The 'Compromise

Proposals' so modified shall bind the parties,

and all the lessees even if not parties to these

proceedings in view of the proceedings taken

by the High Court under Order 1 Rule 8 of the

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C.P.C.;

(iii) the rates of rent for the period upto 31.3.1994

shall remain as suggested in the 'Compromise

Proposals';

(iv) the interest chargeable by the Board of

Trustees of the Port of Mumbai in respect of

arrears of rent for the period commencing

1.4.1994 upto the date of actual payment shall

be calculated at the rate of 6% per annum,

(v) subject to the abovesaid modifications, all

other terms and conditions of 'Compromise

Proposals', shall remained unchanged;

(vi) within a period of eight weeks from today lease

deeds consistently with the 'Compromise

Proposals', subject to the modifications as

above said, shall be executed by the lessees

and even if lease deeds are not executed the

terms of 'Compromise Proposals' shall bind the

lessees;

(vii) such of the tenants as may wish to

contend that there are certain real and

material distinguishing features to be

considered for the purpose of carving out

an exception and relaxing the general

terms and entitling them to reduction in

the rates of rent applicable as above said,

may file representations each setting out

specific grounds and relevant facts

precisely in that regard in the office of the

Bombay Port Trust under a written

acknowledgement. The Bombay Port Trust

shall maintain a register of all such

representations filed. No representation

filed after the expiry of six weeks from

today shall be received or entertained.

(viii) We request the High Court to appoint a

retired Judge, preferably (and not

necessarily) of the rank of District Judge,

as a Sole Adjudicator of the

objections/representations filed in terms of

the above decision. The High Court shall

appoint a place of sitting and the amount

of remuneration to be paid per case (and

not on per day basis) to the Adjudicator.

The fee shall be paid by each lessee filing

the representation for decision. The

requisite secretarial and clerical assistance

shall be provided by the Bombay Port

Trust or as directed by the High Court.

The learned Adjudicator shall commence

his proceedings on expiry of eight weeks

from today and on the record of

representations being made available to

him and shall conclude the same within a

period of 4 months thereafter. The

Adjudicator shall not be bound to record

evidence and may determine and dispose

of the representations by summary

hearing, receiving such affidavits and

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documents as required by him, and/or

carrying out inspection of the leased

properties, if he deems fit to do so. The

Adjudicator shall examine and decide to

what relief in the rate of rent and/or any

other term of lease such representing

lessee is entitled. The decision by the

Adjudicator shall be final and binding on

the parties. In case of any difficulty in

implementing this procedure directions

may be sought for from the High Court.

(ix) The abovesaid procedure is not to be

utilised as justification for withholding the

payment of any arrears of rent to be

calculated in terms of these directions.

The payments have to be made and made

regularly. Any amount becoming due for

refund in terms of any relief granted by

the Adjudicator shall be refunded or

adjusted thereafter.

(x) We expect the lessees to cooperate in

finalisation of the disputes. We also

expect the lessees to desist from

preferring immaterial or frivolous

objections or objections just for their sake.

If any one does so the learned Adjudicator

may impose costs on him which shall be

payable to and recoverable under law by

the BPT as arrears of rent.

(xi) For the purpose of appointing an

Adjudicator and dealing with application, if

any, seeking resolution of difficulties, in

terms of the preceding direction, we

request the learned Chief Justice of the

High Court of Bombay at Mumbai to assign

this matter for being placed before any

learned judge of his Court. We, on our

part, suggest in the interest of expeditious

disposal, that the matter may be assigned

to any one of the judges available in the

High Court out of those who had earlier

dealt with the matter (i.e., the learned

Single Judge who passed the order dated

1/4-10-1990, the two learned Judges who

passed the judgment dated 11/12-3-1993

and the two learned judges who passed

the order dated 1-8-2000). His

acquaintance with the facts of the case

would accelerate the hearing and disposal.

However, this is only a suggestion and is

not in any manner intended to fetter the

power of the learned Chief Justice to

assign the matters for hearing in the High

Court.

(xii) The issue as to the applicability of the

Maharashtra Rent Control Act, 1999, to

the Port of Mumbai and the property held

by it is left open to be decided in

appropriate proceedings.

The appeals and all the pending applications shall stand

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disposed of. There shall be no order as to costs in these

proceedings.