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PETITIONER:

S. KANDASWAMY CHETTIAR

Vs.

RESPONDENT:

STATE OF TAMIL NADU AND ANR.

DATE OF JUDGMENT12/12/1984

BENCH:

TULZAPURKAR, V.D.

BENCH:

TULZAPURKAR, V.D.

PATHAK, R.S.

MUKHARJI, SABYASACHI (J)

CITATION:

1985 AIR 257 1985 SCR (2) 398

1985 SCC (1) 291 1984 SCALE (2)933

CITATOR INFO :

F 1987 SC2117 (20)

ACT:

Tamil Nadu Buildings (Lease and Rent Control) Act, 1960

(Tamil Nadu Act 18 of 1960). Section 29-Notification issued

thereunder granting total exemption to all buildings own-d

by the Hindu, Christian and Muslim religious Public Trusts

and Public Charitable Trusts from all the provisions of the

Act- Whether suffers from the vice of excessive delegation

of legislature powers, and therefore, violative of, Article

14 of the Constitution-Whether the total exemption is

excessive unwarranted and unsupportable in as much as o

partial exemption would have sufficed.

HEADNOTE:

In exercise of the powers conferred by section 29 of

the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960

the Government of Tamil Nadu issued a Notification G.O. Ms.

2000 (Homo Department) dated 16th August, 1976 exempting all

the buildings owned by the Hindu, Christian and Muslim

religious public trusts and public- charitable trusts from

all the provisions of the Act. The tenants challenged the

Notification granting total exemption through the said

Notification on three grounds namely; (a) that section 29 of

the Act suffers from the vice of excessive delegation of

legislative powers in as much as it vests in the State

Government unguided and uncontrolled discretion in the

matter of granting exemptions and is, therefore, violative

of Article 14 of the Constitution; (b) that the Notification

dated 16th August, 1976 deprives the tenants of all such

buildings (belonging to Hindu. Christian and Muslim

religious public trusts and public charitable trusts) of the

equal protection of the beneficial provisions of the Act

which is available to the tenants of other buildings and as

such the same is discriminatory offending against the equal

protection clause of Article 14; and (c) that in any event

the total exemption from all the provisions of the Act

granted to such buildings, where partial exemption would

have sufficed is excessive, unwarranted and unsupportable.

The State Government and the respondent landlords have

refuted all the grounds on which the exemption has been

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challenged and further sought to justify the grant of total

exemption mainly on the basis that the freedom (right) to

recover the reasonable market rent would be ineffective

without the freedom to evict the tenant.

Dismissing the writ petitions and the civil appeals

the Court,

399

^

HELD: 1.1 In view of the decision of the Supreme

Court in P.J. Irani v. The State of Madras, [1962] 2 SCR 169

dealing with an identical provision contained in the earlier

Madras enactment the challenge to the Constitutional

validity of section 29 cannot be sustained. [405A-B]

P. J. Irani v. State of Madras, [1962] 2 SCR 169;

State of Madhya Pradesh v. Kanhaiyalal, 1970 (15) M.P.L.U SC

973 relied on.

1. 2. The rationale behind the conferal of such power

to grant exemptions or to make exceptions is that an

inflexible application of the provisions of the Act may

under some circumstances result in unnecessary hardship

entirely disproportionate to the good which will result from

a literal enforcement of the Act and also the practical

impossibility of anticipating in advance such hardship to

such exceptional cases. In the matter of beneficial

legislations also there are bound to be cases in which an

inflexible application of the provisions of the enactment

may result in unnecessary and undue hardship not

contemplated by the legislature. The power to grant

exemption under section 29 of the Act, therefore, has been

conferred not for making any discrimination between tenants

and tenants but to avoid undue hardship or abuse of the

beneficial provisions that may result from uniform

application of such provisions to cases which deserve

different treatment. Of course, the power to grant exemption

has to be exercised in accordance with the policy and object

of the enactment gatherable from the preamble as well as its

operative provisions without subverting the general purpose

of the enactment. [406G-H, 407A-B]

P. J. Irani v. State of Madras, [1962] 2 SCR 169

relied on.

Gorieb v. Fox, [1926] 71 Lawyers Edition at page 1230

quoted with approval .

2. That Tamil Nadu Act is a piece of beneficial

legislation intended to remedy the two evils of rackrenting

(exaction of exhorbitant rents) and unreasonable eviction

generated by a large scale of influx of population to big

cities and urban areas in the post Second World War period

creating acute shortage of accommodation in such areas and

the enactment avowedly protects the rights of tenants in

occupation of buildings in such areas from being charged

unreasonable rents and from being unreasonably evicted

therefrom. The Legislature itself has made a rational

classification of buildings belonging to government and

buildings belonging to religious, charitable, educational

and other public institutions and the different treatment

accorded to such buildings under section 10(3) (b) of the

Act, which obviously proceeds on the well-founded assumption

that the government as well as the landlords of such

buildings are not expected to and would not indulge in rack-

renting or unreasonable eviction. This and similar other

provisions crystalize the policy and the purposes of the Act

and furnish the requisite guidance which can legitimately

govern the exercise of power conferred on the State

Government under section 29 of the Act The power to grant

exemptions or make exceptions could be legitimately

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exercised by the State Government in areas or cases where

the mischief sought to be remedied by

400

the Act is neither prevalent nor apprehended as also in

cases (individual or class of cases) where a uniform or

inflexible application of the law is likely to result in

unnecessary or undue hardship (here the landlords) or in

cases where the beneficial provision is likely to be or is

being abused by persons for whom it is intended there the

tenants) [407D-E, 408F-H, 409A]

3.1. Public religious and charitable endowments or

trusts constitute a well recognised distinct group in as

much as they not only serve public purposes but the

disbursement of their income is governed by the objects with

which they are created and buildings belonging to such

public religious and charitable endowments or trusts clearly

fall into a distinct class different from buildings owned by

private landlords. Therefore, their classification into one

group done by the State Government while issuing the

impugned notification must be regarded as having been based

on an intelligible differentia. [409F-G]

3.2. In view of the counter affidavit filed by the

State Government dated 10-2-1981 and the supplementary

counter affidavit dated 24th September, 1983 to the effect

that the government was satisfied that "in all these cases,

the rent paid by the tenants was very low, meagre and that

the provisions of fixation of fair rent under the Act would

not meet the ends of justice and the situation will still

continue in which the tenant will be exploiting the

situation and the helplessness of the public religious

trusts and charitable institutions and hence they decided to

withdraw the protection given under the Act to the tenants

of such buildings", not having been challenged by way of

rejoinder affidavits by the petitioners/appellants, it is

clear that buildings belonging to such public religious and

charitable endowments or trusts clearly fell into a class

where undue hardship and injustice relating to them from the

uniform application of the beneficial provisions of the Act

needed to be relieved and the exemption granted will have to

be regarded as being germane to the policy and purposes of

the Act. In other words, the classification made has a clear

nexus with the object with which the power to grant

exemption has been conferred upon the State Government under

section 29 of the Act. [411C, 412B-G]

State of Rajasthan v. Mukanchand and Others, [1964] 6

SCR 903; held inapplicable.

3.3. Granting total exemption cannot be regarded as

excessive or unwarranted. The two objectives of the

enactment, namely, to control rents and to prevent

unreasonable eviction are interrelated and the provisions

which subserve these objectives supplement each other It is

obvious that if the trustees of the public religious trusts

and public charities are to be given freedom to charge the

normal market rent then to make that freedom effective it

will be necessary to arm the trustees with the right to

evict the tenants for non-payment of such market rent. The

State Government on materials before it came to the

conclusion that the 'fair rent' filled under the Act was

unjust in case of such buildings and it was necessary to

permit the trustees of such buildings to recover from their

tenants reasonable market rent and if that be so non-

eviction when reasonable market rent is not paid would be

unreasonable and if the market rent is paid by the

401

tenants no trustee is going to evict them. Further, it

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is conceivable that trustees of buildings belonging to such

public religious institutions or public charities may desire

eviction of their tenants for the purpose of carrying out

major or substantial repairs or for the purpose of

demolition and reconstruction and the State Government may

have felt that the trustees of such buildings should be able

to effect evictions without being required to fulfil other

onerous conditions which must be complied with by private

landlord when they seek evictions for such purpose. [413D-E,

414C-G]

3.4. The manner in which exemption from rent control

provisions should be granted, whether it could be partial or

total and if so on what terms and conditions would be

matters for each State Government to decide in the light of

the scheme and provisions of the concerned enactment and the

facts and circumstances touching the classification made.

And if the State of Madras has thought fit to grant the

exemption in a particular manner by the impugned

notification is cannot be faulted. if to exemption so

granted is not illegal or unconstitutional. [415A-B]

JUDGMENT:

ORIGINAL JURISDICTION: W.P. Nos 4433,4642-57/78, 337-

339, 757-58, 943, 291 and 1351 of 79,4103 and 6271/80,731

and 1943/81, 8274 and 9879/83 and C.A. NOS. 3108-3109/81

with W.P. NOS. 7941 and 7883/81.

N. Natesan, A. T. M Sampath and P. N. Ramalingam for

the petitioners in W.P. NOS. 4642-57 and 4433 of 1978

Dr. Y S. Chitale, A T.M. Sampath, S.A. Rajan and P.N.

Ramalingam for the petitioners in W.P. NOS. 337-339 of 1979.

M. Natesan, and Raghuraman for the petitioner in W.P.

No. 1943 of 1981.

A.T.M. Sampath and P.N. Ramalingam for the petitioner

in W.P. NOS. 757-58 of 1979.

S. Srinivasan for the petitioner in W.P. NO. 943 of

1979.

P.R. Ramasesh for the petitioner in W.P. NO. 731 of

1982.

A.T.M. Sampath and P.N. Ramalingam for the petitioner

in W.P. NO. 7941 and 7883 of 82.

A.T.M. Sampath and P.N. Ramalingam for the petitioner

in W.P. NOS. 1357-58 of 79.

P. Sinha for the petitioner in W.P. NO. 8274 of 83.

P.N. Ramalingam for appellants in C. NOS. 3108-09 Of

81,

402

R.S. Ramamurthy, P. Govindan Nair, M.K.D.

Namboodry, S. Balakrishnan and E.C. Agarwala for the

respondents in W.P. Nos. 6271/80 and 4642-57 and 4433 of 78.

T.S. Krishnamoorthy, Mrs. S. Gopalakrishnan and Gopal

Subramanian for the respondents is W.P. No. 4103180.

Shanker Ghosh, and D.N. Gupta for the respondents in

W.P. No. 943/79.

S.T. Desai, T.S. Krishnamurthy, A.V. Rangam, K.

Ramamurthy and S.Balakrishnan for the respondents in W.P.

No. 731182.

Mohan Pandey and Ali Ahmed for the interveners in W.P.

Nos. 4642-57 of 78. K. Ram Kumar for the respondent in C.A.

Nos. 3108-3109/81 and W.P. Nos. 7941 and 7883/82.

The Judgment of the Court was delivered by

TULZAPURKAR, J. In these writ petitions and civil

appeals by special leave the petitioners and appellants, who

are tenants of several buildings belonging to the Hindu,

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Christian and Muslim religious public trusts as also to

public charitable trusts in the State

of Tamil Nadu, have challenged the legality and or validity

of the total exemption granted to all such buildings from

all the provisions of the Tamil Nadu Buildings (Lease and

Rent Control) Act, 1960 (Tamil Act 18 of 1960) (for short

'the Act') in exercise of the powers conferred upon the

State Govt. under s. 29 of the Act.

Section 29 of the Act runs thus:

"22. Exemptions-Notwithstanding anything

contained in this Act, the Government may, subject to

such condition as they deem fit, by notification,

exempt any buildings or class of buildings from all or

any of the provisions of this Act"

It appears that initially by G. O. Ms. No. 1998 (Home)

dated 12th August, 1974, the State Government had, in

exercise of its powers under s. 29 exempted all the

buildings owned by the Hindu Christian and Muslim religious

trusts and charitable institutions from all the provisions

of the Act; in other words the exemption was available to

buildings of private religious trusts as also private

charitable trusts. But later on by a fresh G. O. Ms. No.

2000

403

(Home) dated 16th August, 1976, the State

Government, in super- A session of the earlier Notification

dated 12th August, 1974, confined the exemption to all

buildings owned by the Hindu, Christian and Muslim religious

public trusts and public charitable trusts. 'the relevant

Notification which is being impugned herein runs thus:

"G O. Ms . No. 2000, Home, 16th August, 1976) No. II

(2)/HO/4520/76.-In exercise of the powers conferred by

section 29 of the Tamil Nadu Buildings (Lease and Rent

Control) Act, 1960 (Tamil Nadu Act 18 of 1960), and in

supersession of the Home Department Notification No. II

(2)/HO/3811/74, dated the 12th August, 1974, published at

page 444 of Part ll-section 2 of the Tamil Nadu Government

Gazette, dated the 12th August, 1974, the Governor of Tamil

Nadu hereby exempts all the buildings owned by the Hindu,

Christian and Muslim religious public trusts and public

charitable trusts from all the provisions of the said Act."

The tenants have challenged the aforesaid Notification

granting total exemption to all buildings belonging to the

Hindu, Christian and Muslim religious public trusts and

public charitable trusts from all the provisions of the Act

on three grounds-(a) that s. 29 of the Act suffers from the

vice of excessive delegation of legislative powers in as

much as it vests in the State Government unguided and

uncontrolled discretion in the matter of granting exemptions

and is, therefore, violative of Art. 14 of the Constitution,

(b) that the Notification dated 16th August, 1976 deprives

the tenants of all such buildings (buildingsr belonging to

Hindu, Christian and Muslim religious public trusts and

public charitable trusts) of the equal protection of the

beneficial provisions of the Act which is available to the

tenants of other buildings and as such the same is

discriminatory offending against the equal protection clause

of Art. 14 and (c) that in any event the total exemption

from all the provisions of the Act granted to such

buildings, where partial exemption would have sufficed, is

excessive, unwarranted and unsupportable.

On the other hand, the State Govt. and the respondent

landlords have refuted all the grounds on which the

exemption has been challenged. It is denied that unguided

and uncontrolled discretion has been conferred upon the

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State Govt. by s. 29 of the Act and it is contended that

enough guidance is afforded by the Preamble and the

operative provisions of the Act for the exercise of the

404

discretionary power vested in the State Govt. It is pointed

out that in P. J. Irani v. The State of Madras(') an

identical provision contained in the earlier enactment,

namely, the Madras Buildings (Lease and Rent Control) Act,

1949 was upheld in the context of Art. 14 of the

Constitution by this Court on the basis that the Preamble

and the operative provisions of that Act gave sufficient

guidance for the exercise of the discretionary power vested

in the State Govt., namely, that the said power was to be

exercised in cases where the protection given by the Act

caused great hardship to the landlord or was the subject of

abuse by the tenant; and it is urged that similar guidance

is afforded by the Preamble and the operative provisions of

the instant Act and s. 29 cannot be said to be violative of

Art. 14. The respondents have further contended that even

the point regarding the constitutional validity of granting

exemption to buildings belonging to charities, religious or

secular in the context of the equal protection clause of

Art. 14 could be said to have been concluded against the

tenants of such buildings by the observations of this Court

in P.J. Irani's case (supra), it is pointed out that though

in that case this Court was dealing with a Notification

granting exemption in favour of a particular individual

building, the Court has made observations which clearly

indicate that where it is a case of granting exemption in

favour of a class of buildings all that is required is that

the classification must be based on rational grounds i.e.

grounds germane to carry out the policy or the purpose of

the Act and by way of illustration the Court has in terms

stated that if such exemption were to be granted in favour

of all buildings belonging to charities, religious or

secular, such classification would be reasonable and proper,

being based on intelligible differential having nexus to the

object sought to be achieved by the exercise of power of

exemption. Even otherwise, the State Govt. in their counter-

affidavit dated 10th February, 1981 and supplementary

counter-affidavit dated 24th September, 1983 have furnished

material on the basis of which it has sought to justify the

said exemption and it has been urged that the same conforms

to and falls within the guidelines indicated in that

decision governing the exercise of the power. The

respondents have further sought to justify the grant of

total exemption mainly on the basis that the freedom (right)

to recover the reasonable market rent would be ineffective

without the freedom to evict the tenant.

As regards the attack directed against s.29 of the Act

itself we would like to observe at the outset that though

the challenge to the

(1) [1962] 2 SCR 269.

405

section under Art. 14 has been made in the petitions and the

appeals A Counsel appearing for the petitioners and the

appellants fairly stated before us, and in our view rightly,

that in view of the decision of the Constitution Bench of

this Court in P. J. Irani's case (supra) dealing with an

identical provision contained in the earlier Madras

enactment (Madras Act XXV of 1949) the challenge cannot be

sustained. Section 13 of the Madras Act XXV of 1949 with

which this Court was concerned in that case ran thus:

"Notwithstanding anything contained in this Act

the State Government may by a notification in the Fort

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St. George Gazette exempt any building or class of

buildings from all or any of the provisions of this

Act."

This Court upheld the constitutional validity of that

provision in the context of the challenge thereto under

Art. 14 on the basis that sufficient guidance was afforded

by the Preamble and the operative provisions of the Act for

the exercise of the discretionary power vested in the

Government in the matter of granting exemptions to a

building or class of buildings from all or any of the

provisions of the Act. It may be stated that following the

said decision this Court in the case of State of Madhya

Pradesh v. Kanhaiyalal(l) did not find any infirmity in s.

3(2) of the Madhya Pradesh Accommodation Control Act, 1961

(Act 41 of 1961) which ran thus:

"The Government may, by notification exempt from

all or any of the provisions of this Act any

accommodation which is owned by any educational,

religions or charitable institution or by any nursing

or maternity home, the whole of the income derived from

which is utilised for that institution or nursing home

or maternity home."

'the challenge to s. 29 of the instant Act, which was

not pressed, has therefore to be rejected.

Even so, since the Notification dated 16th August 1976

issued under s. 29 has been challenged the guidance afforded

by the Preamble and the operative provisions of the Act will

have a bearing on the question Whether this particular

exercise of the power conforms to such guidance or not and,

therefore, it will be useful to advert briefly to the

guidance so afforded. At the outset we would like to point

out that the rationable behind the conferal of such power to

(1) [1970] IS M.P.L.J. 973

406

grant exemptions or to make exceptions has been very

succinetly elucidated by the American Supreme Court in the

leading case of Gorieb v. Fox. (1) In that case the Court

was concerned with an Ordinance which related to the

establishment of a building line on public streets but it

contained a reservation of power in the City Council to make

exceptions and permit the erection of buildings closer to

the street. It was contended that this reservation rendered

the Ordinance invalid as denying the equal protection of the

laws, Negativing the contention Sutherland J. speaking for

the court, observed thus:

"The proviso under which the Council acted also

is attacked as violating the equal protection clause on

the ground that such proviso enables the Council

unfairly to discriminate between lot-owners by fixing

unequal distances from the street for the erection of

buildings of the same character under like

circumstances.. The proviso evidently proceeds upon the

consideration that an inflexible application of the

Ordinance may under some circumstances result in

unnecessary hardship In laying down a general rule,

such as the one with which we are here concerned, the

practical impossibility of anticipating in advance and

provi-

ding in specific terms for every exceptional case which may

arise, is apparent. And yet the inclusion of such cases may

well result in great and needless hardship, entirely

disproportionate to the good which will result from a

literal enforcement of the general rule. Hence the wisdom

and necessity here of reserving the authority to determine

whether, in specific cases of need, exceptions may be made

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without subverting the general purposes of the ordinance. We

think it entirely plain that the reservation of authority in

the present ordinance to deal in a special manner with such

exceptional cases is unassailable on constitutional

grounds."

In our view the same rationale must apply to the

conferal of such power on the State Government to grant

exemptions or to make exceptions even in cases of beneficial

legislations like the present enactment. In the matter of

beneficial legislations also there are bound to be cases in

which an inflexible application of the provisions of the

enactment may result in unnecessary and undue hard-

(1) [1926] 71 Las Ed. 1228 at 1230.

407

ship not contemplated by the legislature. Obviously the

power to grant exemptions under s. 29 of the Act has been

conferred not for making any discrimination between tenants

and tenants but to avoid undue hardship or abuse of the

beneficial provisions that may real it from uniform

application of such provisions to cases which deserve

different treatment. Of course, as observed by this Court in

P. J. Irani's case (supra) the power has to be exercised in

accordance with the policy and object Or the enactment

gatherable from the preamble as well as its operative

provisions or as said in the American decision without

subverting the general purposes of the enactment.

As the preamble of the instant Act shows the three

purposes, to achieve which it has been enacted are the same

as those under the earlier enactment, the Madras Act XXV of

1949, namely, (1) the regulation of letting of residential

and non-residential buildings, (2) the control of rents of

such buildings, and (3) the prevention of unreasonable

eviction of tenants from such buildings, except that the

enactment is of a comprehensive nature by way of amending

and consolidating the rent-control law obtaining in the

State till then Unquestionably it is a piece of beneficial

legislation intended to remedy the two evils of rack-renting

(exaction of exhorbitant rents) and unreasonable eviction

generated by large scale of influx of population to big

cities and urban areas in the post Second World War period

creating acute shortage of accommodation in such areas and

the enactment avowedly protects the rights of tenants in

occupation of buildings in such areas from being charged

unreasonable rents and from being unreasonably evicted

therefore; it further protects their possession even after

the determination of their contractual tenancies by

enlarging the definition of a 'tenant' so as to include

persons who have held over after such determination.

Sections 3 and 3-A deal with the regulation of letting while

ss.4 to 8 effectuate the objective of controlling the rents

and ss.l0 and 14 to 16 confine eviction of a tenant to

stated grounds subject to certain terms, qualifications

and/or reservations thereby preventing unreasonable eviction

In other words a landlord's freedom of contract to charge

even the market rent (if it is in excess of 'fair rent' as

defined) and his freedom to evict a tenant on several

grounds available to him either nuder his lease-deed or the

Transfer of Property Act have been curtailed to a large and

substantial extent. At the same time the enactment contains

other significant provisions which indicate that the

legislature itself felt that there might be areas and cases

where the two evils were neither prevalent nor apprehended

and as such the landlord's

408

freedom need not be curtailed at all, as also cases where

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attenuated freedom could be allowed to the landlord and

limited protection be extended to the tenant. not instance,

under s.1 (2) (a) (i) of the Act itself does not apply to

the entire State but only to the city of Madras, the city of

Madurai and to all Municipalities (i.e Municipal areas)

which shows that non-urban areas or rural areas are excluded

from the operation of the Act, presumably because in such

areas the evils of rack-renting and unreasonable eviction do

not obtain; and under the proviso there to power has been

reserved to the Government to withdraw the application of

the Act to any municipal areas or to the city of Madras or

to the city of Madurai from such date as may be mentioned

in the notification as also to reintroduce the Act in such

areas where it has ceased to apply by reason of the

notification issued under the proviso; similarly, s.1 (2)

(c) confers powers on the Government to apply all or any of

the provisions of the Act by notification to any other area

in the state to which it has not already been made

applicable by the Act itself and to cancel or modify any

such notification. Again by the proviso to s.10 (1) the

restrictions imposed by ss.10 and 14 to 16 (which enumerate

the grounds and the circumstances under which alone eviction

can be sought under the Act) have been made inapplicable to

tenants in buildings of which the landlord is the

Government. Similarly, under s.10 (3) (b) a much wider

latitude to evict a tenant is afforded to landlords of

religious, charitable, educational or other public

institutions if possession is required for the purposes of

such institutions, inasmuch as, unlike in the cases falling

under s. 10 (3)(a) (i) (ii) and (iii), there is no

insistence that such landlords should not be occupying any

other building of his own in the city, town or village

concerned. In other words the legislature itself has made a

rational classification of buildings belonging to Government

and buildings belonging to religious, charitable,

educational and other public institutions and the different

treatment accorded to such buildings obviously proceeds on

the well-founded assumption that the Government as well as

the landlords of such buildings are not expected to and

would not indulge in rack-renting or unreasonable eviction.

These and similar other provisons crystalize the policy and

purposes of the Act and furnish the requisite guidance which

can legitimately govern the exercise of power confered on

the State Government under s 29 of the Act. The guidance

thus afforded may illustratively be indicated by stating

that the power to grant exemptions or make exceptions could

be legitimately exercised by the State Government in areas

or cases where the mischief sought to be remedied by the Act

is neither

409

prevalent nor apprehended as also in cases (individual or

class of A cases) where a uniform or inflexible application

of law is likely to result in unnecessary or undue hardship

(here to landlords) or in cases where the beneficial

provison is likely to be or is being abused by persons for

whom it is intended (here the tenants). The question is

whether in issuing the Notification dated 16th August 1976

the State Government has exercised the power in conformity

with such guidance and the same is valid as not offending

Art. 14 of the Constitution.

We have already stated that the respondents have

contended that the question of constitutional validity of

granting exemption to buildings belonging to charities,

religious or secular from rent control legislation as

offending the equal protection clause of Art. 14 has been

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concluded by the observations made by this Court in P J.

Irani's case (supra) while Counsel for the petitioners and

the appellants on the other hand have urged that it is not;

according to Counsel for the petitioners and the appellants

all that the observations made by this Court in that case

decide is that the classification of buildings belonging to

Hindu, Christian and Muslim religious public trusts as also

to public charitable trusts could be regarded as a

reasonable classification based on intelligible differentia

but that test of nexus which is also required to be

satisfied for purposes of Art. 14 has not been pronounced

upon by this Court and this aspect is still open to

argument- We shall proceed on the basis that the question is

res integra and consider whether the respondents,

particularly the State Government have furnished proper

material on the basis of which the exemption granted can be

justified.

lt cannot be disputed that public religious and

charitable endowments or trusts constitute a well recognised

distnict group inasmuch as they not only serve public

purposes but the disbursement of their income is governed by

the object with which they are created and buildings

belonging to such public religious and charitable endowments

or trusts clearly fall into a distinct class different from

buildings owned by private landlords and as such their

classification into one group done by the State Government

while issuing the impugned notification must be regarded as

having been based on an intelligible differentia. Counsel

for the petitioners and the appellants also fairly conceded

that such classification would be a rational one, more so in

view of the observations made by this Court in that behalf

in P.J. Irani's case (supra). The question is whether the

said classification has any nexus with the object with which

the powers to H

410

grant exemptions has been conferred upon the State

Government under s. 29 of the Act. On this aspect of the

matter before we go to the material furnished by the State

Government on the basis of which such nexus is sought to be

established it will be useful to refer to certain

observations made by this Court in the case of State of

Madhya Pradesh v. Kanhaiya Lal (supra) which afford a clear

indication as to what kind of material would go to establish

such nexus, The facts of that case were these. Respondent

No. 4 in that case was a public trust registered under the

Madhya Pradesh Public Trusts Act and it owned a house

property, one portion whereof was occupied by girls school,

the rest being let out to tenants. Since the rents issuing

from the property were wholly utilised for the pure poses of

the schools respondent No. 4 became entitled to get

exemption from the provisions of the M. P. Accommodation

Control Act under s. 3(2) thereof for that house-property.

On an application made in that behalf by respondent No. 4

the State Government granted the exemption by issuing a

notification under that provision. The notification was

challenged on two grounds, (i) that s. 3 (2) was void on the

ground of the excessive delegation of Legislative powers to

the State Government; (ii) that the notification itself was

discriminatory as the grant of exemption was not germane to

the policy of the Act. The High Court upheld the validity of

s. 3 (2) but struck down the notification as being

discriminatory. This Court confirmed the High Court's view

eon both the points. While holding the notification bad on

the ground that the exemption granted was not germane to the

policy of the Act this Court observed thus:

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"In this case there is no affidavit by any

officer who had anything to do with the order granting

exemption. The returns filed on behalf of the State

Government do not throw any light on this question. It

would appear that in granting the exemption the State

applied merely a rule of thumb and issued the

notification on the basis of the assertion by the trust

that the entire rental income from the property was

being applied to meet the expenses of the trust. Such a

statement on allows an institution to apply for

exemption. It was not the case of the trust that they

wanted to evict the tenants because they wanted the

whole of the accommodation itself nor was it their plea

that the income according to them was very low compared

to prevailing rates of rent and that it was wholly

inadequate for meeting the expenses of the trust. If

grounds like these or other relevant grounds had

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been alleged it would have been open to the State

Government to consider the same and pass an order

thereon. In our view the State Government did not apply

its mind which it was required to do under the Act

before issuing a notification and the return does not

disclose any ground which was germane to the purposes

of the Act to support the claim for exemption ."

(Emphasis supplied)

The above observations clearly indicate what kind of

material the State Government is required to take into

consideration which would justify the grant of an exemption

in favour of a particular ill building or class of

buildings. C

Coming to the material furnished by the State

Government on the basis of which the impugned exemption is

sought to be justified it may be stated that in paragraph 4

of its Counter Affidavit dated 10.2.1981 Shri J.

Ramachandran, Joint Secretary, Home Department, has stated:

D

"The prime object behind the grant of exemption to

the buildings belonging to religious institutions is to

enable J the institutions to get enhanced income by

increasing their rents. The buildings were endowed to

the public religious and charitable trusts for carrying

out certain religious or charitable purposes. With the

escalation of prices, the religious and charitable

trusts are not in a position to carry out the

endowment, if the income of the property is not -

increased suitably and this nullifies the specific

purpose of endowment."

In para 13 the deponent has further stated:

"As stated already, numerous representations were

made to the Government about the plight of the temples

and the public charities like poor feeding, etc. and

the ridiculous position which is prevailing, and the

Government on a consideration of all the aspects of the

matter was fully satisfied that the tenants are fully

exploiting the situation and the fixation of a fair

rent under the Rent Control Act is no criterion at all

and that it would cause immense in justice and would be

highly oppressive so far as temples and religious

endowments and public charities are concerned. lt is

only in the context of such a serious predicament and

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critical situation that the Government intervened and

issued the notification under s. 29 of the Act to

relieve the hard ship and injustice."

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It has also been pointed out that the procedure and

machinery indicated in s. 4 of the Act and the concerned

Rules for fixing fair rent only yields on the total cost of

the building together with the market value of the site, a

gross return of 9 per cent for residential buildings and 12

per cent for non-residential buildings which is very low as

compared to the bank rate of interest and grossly inadequate

when compared to the reasonable rents at the market rate

obtaining in the locality or the neighbourhood (i.e., rent

which a willing land lord will charge to a willing tenant)

and it was a case of the tenants of all such buildings

exploiting the situation arising from the beneficial

provisions of the Act. In the supplementary counter

affidavit dated the 24th September 1983, Shri N. Srinivasan,

Deputy Secretary. Home Department, has categorically

asserted that "in all these cases the Government was

satisfied that the rent paid by the tenants was very low,

meager and that the previsions of fixation of fair rent

under the Act would not meet the ends of justice and the

situation will still continue in which the tenant will be

exploiting the situation and the helplessness of the public

religious trusts and charitable institutions" and that,

therefore, the Government felt that it was

necessary to withdraw the protection given under the Act to

the tenants of such buildings.

It may be stated that no rejoinder affidavit has been

filed on behalf of the writ petitioners or the appellants

and as such the before said material furnished by the two

counter affidavits and the averments made therein have gone

unchallenged. In our view, the aforesaid material clearly

shows that buildings belonging to such public religious and

charitable endowments or trusts clearly fell into a class

where undue hardship and injustice resulting to them from

the uniform application of the beneficial provisions of the

Act needed to be relieved and the exemption granted will

have to be regarded as being germane to the policy and

purpose of the Act. In other words the classification made

has a clear nexus with the object with which the power to

grant exemption has been conferred upon the State Government

under s. 29 of the Act.

It may be stated that counsel for the petitioners and

the apple lands during the course of the hearing placed

reliance upon a decision of this Court in State of Rajasthan

v. Mukanchand and Others(l)

(1) [1964] 6 S.C.R. 903.

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where the impugned part of s. 2(c) of the Jagirdar's Debt

Reduction A Act (Rajasthan Act 9 of 1937) was held to be

violative of Article 14 on the ground that the test of nexus

between the classification made and the object sought to be

achieved by the statute in question had not been satisfied.

The ratio of the decision was that Jagirs having been

deprived of their lands were entitled to the benefits of the

Act providing for reduction of debts and it made no

difference whether the debts were owed to the Government or

local authority or other bodies mentioned in the impugned

part of s. 2(e) of the Act and such debts due to the

Government, local authority and other bodies could not be

excluded while granting the benefit of reduction of debts.

The ratio, in our view, is clearly inapplicable to the facts

of the instant case inasmuch as we have come to the

conclusion that the classification of buildings made in the

impugned notification has a clear nexus with the object with

which the power to grant exemption has been conferred upon

the State Government.

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It was next contended that If the main object of

granting exemption to buildings belonging to public

religious institutions or public charities was to enable

these institutions to augment their income by increasing

rentals of their buildings such object could have been

achieved by granting exemption from these provisions of the

Act which deal with the controlling of rents (ss 4 to 8 and

the Rules made in that behalf) but a total exemption granted

to them from all the provisions of the Act particularly

those which prevent unreasonable eviction of tenants must be

regarded as excessive and unwarranted. And in this behalf

counsel for the petitioners and the appellants referred to a

Saurashtra Notification No. AB/15(17)/54-55 dated the 27th

December, 1954 issued by the State Government under s.4(3)

of the Saurashtra Rent Control Act, 1954 where under partial

exemptions p from changing only the standard rent subject to

certain conditions was granted to buildings belonging to

public trusts for religious and charitable purpose. It was

pointed out that the Notification provided that the

provisions of the Act except provisions in ss 23, 24 and 25

shall not, subject to conditions and terms specified in the

schedule thereto apply to such buildings and term No. l in

schedule A stated that no tenant of such premises to whom

the same has been leased on or before 30th December, 1948

shall be evicted provided such tenant agrees to increase the

monthly rent paid by him immediately before the said date by

50 per cent and does not allow, except for valid reasons,

the rent amount due at any time to run in arrears for more

than two consecutive months." In other words the Saurashtra

Notification was relied upon as an illustration where

414

partial exemption from the provisions of the Rent Control

enactment subject to terms and conditions could be granted.

Thus counsel urged that similarly in the instant case the

State Government of Tamil Nadu could have given partial

exemption to buildings belonging to public religious

institutions and public charities only in the matter of

'fair rent' and need not have taken away the protection

available to the tenants under the provisions which

prevented unreasonable eviction.

In our view there is no substance in the contention.

It cannot be disputed that the two objectives of the

enactment, namely, to control rents and to prevent

unreasonable eviction are interrelated and the provisions

which subserve these objectives supplement each other. Tn P.

J. Irani's case (supra), Sarkar, J, has also observed at

page 193 of the Report that "the purpose of the Act, quite

clearly, is to prevent unreasonable eviction and also to

control rent. These two purpose are intertwined." it is

obvious that if the trustees of the public religious trusts

and public charities are to be given freedom to charge the

normal market rent then to make that freedom effective it

will be necessary to arm the trustees with the right to

evict the tenants for non-payment of such market rent. The

State Government on material before it came to the

conclusion that the 'fair 'rent' fixed under the Act was

unjust in case of such buildings and it was

necessary to permit the trustees of such buildings to

recover from their tenants reasonable market rent and if

that be so non-eviction when reasonable market rent is not

paid would be unreasonable and if the market rent is paid by

the tenants no trustee is going to evict them. It is,

therefore, clear that granting total exemption cannot be

regarded as excessive or unwarranted.

Apart from this aspect of the matter it is conceivable

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that trustees of buildings belonging to such public

religious institutions or public charities may desire

eviction of their tenants for the purpose of carrying out

major or substantial repairs or for the purpose of

demolition and reconstruction and the State Government may

have felt that the trustees of such buildings should be able

to effect evictions without being required to fulfil other

onerous conditions which must be complied with by private

landlords when they seek evictions for such purpose. In our

view, therefore, the total exemption granted to such

buildings under the impugned notification is perfectly

justified.

The reliance on Saurashtra Notification, in our view,

would be of no avail to the petitioners or the appellants.

The manner in

415

which exemption from rent control provisions should be

granted, whether it could be partial or total and if so on

what terms and conditions would be matters for each State

Government to decide in the light of the scheme and

provisions of the concerned enactment and the facts and

circumstances touching the classification made. And if the

State of Madras has thought fit to grant the exemption in a

particular manner by the impugned notification it will be

difficult to find fault with it if the exemption so granted

is not illegal or unconstitutional. It will be interesting

to note that even under the Saurashtra Notification the term

or condition contained in Schedule 'A' thereto also makes

the position clear that eviction may follow if the permitted

enhanced rent is not paid or allowed to fall in arrears for

two consecutive months by the tenant of such buildings

belonging to public religious or charitable trusts.

In the result the challenge to impugned notification fails

and the writ petitions and the civil appeals are dismissed.

All interim orders, if any, are vacated. where will be no

order as to costs.

S. R. Petition and Appeals dismissed

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