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CASE NO.:

Appeal (civil) 5168 of 1998

PETITIONER:

Welfare Assocn. A.R.P., Maharashtra & Anr.

RESPONDENT:

Ranjit P. Gohil & Ors.

DATE OF JUDGMENT: 18/02/2003

BENCH:

R.C. LAHOTI & BRIJESH KUMAR.

JUDGMENT:

J U D G M E N T

WITH

C.A. Nos.5169/98, 5170/98, 920/99, 2484/99, C.A. Nos. 1405-

1407/2003 (@ SLP(C) 359-361/99), C.A. Nos. 5692/98, 5681-

5691/98, 6145/01, 6146/01, 7879/01, 4091/02, C.A. Nos. 1408-

1409/2003(@ SLP(C) Nos. 15262-15263/02), C.A. 5334/02

R.C. Lahoti, J.

Leave granted in all SLPs.

The Bombay Rents, Hotel and Lodging House Rates Control,

Bombay Land Requisition and Bombay Government Premises

(Eviction) (Amendment) Act, 1996 (Act No. XVI of 1997) having

been struck down as ultra vires of the Constitution and as being

beyond legislative competence of the State Legislature, the State of

Maharashtra, the Welfare Association of Allottees of Requisitioned

Premises, Maharashtra and several others have come up in appeal.

The decision by the Division Bench of the High Court of Judicature at

Bombay was delivered on 27th July 1998. The judgment posed the

threat of eviction against several allottees in occupation of premises

requisitioned by the State Government. Several Writ Petitions were

filed which were all disposed of by the impugned judgment of the

Division Bench. The principal question which arises for decision in

the batch of appeals is the constitutional validity of Amendment Act

No. XVI of 1997 abovesaid. (hereinafter referred to as the

Amendment Act, for short).

Historical background : Two decisions of this Court :-

A brief statement of historical background leading to the

present controversy is apposite.

In the year 1948, Bombay Land Requisition Act, 1948 (Act No.

XXXIII of 1948) was enacted to make provision for the requisition of

land and for the continuance of requisition of land and for certain

other purposes. 'Land' was widely defined so as to include therein

building also and 'premises' were defined to mean building or part of

building intended to be let separately and other things appurtenant (as

defined). Land and vacant premises could be requisitioned by the

State Government for any public purpose. Provision was also made

for continuance of requisitions made under the Requisitioned Land

(Continuance of Powers) Act, 1947 and the Defence of India Act,

1962 and the rules made thereunder. Section 8 of the Act made

provision for payment of compensation to persons whose property

was requisitioned or continued to be subjected to requisition to be

determined by an officer authorized in this behalf by the State

Government. The basis of compensation can be spelt out from the

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following part of sub-Section (1) of Section 8 :-

"The officer shall determine such amount of

compensation as he deems just having regard to all

the circumstances of the case; and in particular he

shall be guided by the provisions of sub-Section

(1) of Section 23 and Section 24 of the Land

Acquisition Act, 1894 (as in force in the Bombay

area of the State of Maharashtra) in so far as they

can be made applicable."

It appears that the shortage of accommodation in Bombay and

the difficulties likely to be faced by the occupants to whom the

requisitioned land and premises were allotted by the State

Government resulted in the requisitioned properties continuing under

requisition for endless periods of time. The constitutional validity of

such requisition was put in issue before the High Court in the

following factual background. On 2nd April, 1951 a flat was

requisitioned by the State Government and allotted to a person. The

owner made a request in 1964 to the Competent Authority for

derequisitioning the flat, which was rejected. A purchaser of the

property in 1973 once again made a request to derequisition the flat,

which too was turned down. The owner filed a Writ Petition in the

year 1980 under Article 226 of the Constitution, laying challenge to

the validity of the requisition. One of the grounds of challenge was

that the requisition order could not survive for such a long period of

time and the Government was bound to derequisition the flat. The

Writ Petition was allowed. The occupant came in appeal by special

leave to this Court. Vide its judgment dated February 22, 1984 (H.D.

Vora Vs. The State of Maharashtra and Ors. (1984) 2 SCC 337) this

Court held that the power of requisitioning is exercisable by the

Government only for a public purpose which is of a transitory

character. If the public purpose of requisition is of a perennial or

permanent character from the very inception, no order can be passed

requisitioning the premises and in such a case the order of requisition,

if passed, would be a fraud upon the statute; further Government

would be requisitioning the premises when really speaking they want

the premises for acquisition as the objective of taking the premises

was not transitory but permanent in character. This Court upheld the

decision of the High Court allowing the Writ Petition and directing

the State Government to derequisition the flat and to take steps to

evict the appellant and to handover possession of the flat to the owner.

Following the decision of the Bombay High Court in H.D.

Vora's case (supra) the Bombay High Court in numerous cases struck

down the continuance of requisition orders made in the late 1940s and

early 1950s particularly of residential premises. Two Writ Petitions,

relating to premises requisitioned under Bombay Land Requisition

Act, 1948 __ one of which was requisitioned for purposes of

residential use and the other was requisitioned for commercial use of

running fair price ration shop by a co-operative society, came to be

filed in this Court which were heard and decided on April 27, 1994 by

the decision reported as Grahak Sanstha Manch and Ors. Vs. The

State of Maharashtra, (1994) 4 SCC 192. The Writ Petitions in effect

had sought reconsideration of decision in H.D. Vora's case (supra),

which was a two Judges Bench decision, and therefore, were placed

for consideration and hearing by a Constitution Bench. The findings

of the Constitution Bench may briefly be summed up as under:-

i) That the purpose of a requisition order may be permanent

yet an order of requisitioning cannot be continued

indefinitely or for a period of time longer than that which, in

the facts and circumstances of the particular case, is

reasonable. The concept of requisitioning is temporary. The

concepts of acquisition and requisition are altogether

different as are the consequences that flow therefrom. A

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requisitioning which in effect and substance results in

acquisition and thereby depriving an owner of property of

his rights and title to property without being paid due

compensation is bad;

ii) That the decision in H.D. Vora's case does not require

reconsideration.

However, the Constitution Bench did not approve the two

Judges Bench observation in H.D. Vora's case that requisition orders

under the said Act cannot be made for a permanent purpose. The

Constitution Bench also held that the period of 30 years has not been

laid down in H.D. Vora's case as the outer limit for which a

requisition order may continue. An order of requisition can continue

for a reasonable period of time; what period is reasonable would

depend on the facts and circumstances of each case; and in H.D.

Vora's case the continuance of an order of requisition for as long as

30 years was rightly held to be unreasonable.

What is of significant relevance is the operative part of the

order of the Constitution Bench. The same (paras 20 and 21 of SCC,

at p.205) is extracted and reproduced verbatim as under:-

"The continuance of requisition orders made in the

late 1940s and early 1950s and thereabouts,

particularly of residential premises, have been

struck down by the Bombay High Court in

numerous cases following the judgments in H.D.

Vora case. There are no appeals thereagainst

(except one which was, by a separate order of this

Bench, dismissed). The allottees of these

requisitioned premises (except retired government

servants allotted premises requisitioned for the

purpose of housing government servants) and their

legal representatives have continued in occupation

thereof by reason of the interim orders of this

Court passed from time to time in Writ Petition

No. 404 of 1986. Having regard to the known

difficulty of finding alternate accommodation in

Bombay and other large cities in Maharashtra, the

protection of these interim orders is hereby

continued until 30-11-1994, on which date all

occupants of premises the continued requisition of

which has been quashed as aforesaid shall be

bound to vacate and hand over vacant possession

to the State Government so that the State

Government may, on or before 31-12-1994,

derequisition such premises and hand back vacant

possession thereof to the landlords.

The writ petitions are, accordingly, dismissed.

There shall be no order as to costs."

[N.B. : The portion which we have underlined to emphasise

will be of significance in constructing the operative part of

our judgment.]

The majority opinion endorsed by four out of five Judges

constituting the Constitution Bench was delivered by S.P. Bharucha,

J. (as his Lordship then was) which we have noticed and reproduced

hereinabove. P.B. Sawant, J. in his separate opinion agreed with the

findings on the questions of law recorded in the majority opinion but

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expressed dissent with the operative part of the order. His Lordship

observed:-

"I am of the view that notwithstanding the legal

position, the following directions can be given to

mitigate the hardship of the allottees of the

requisitioned premises. These directions will in no

way prejudice the interests of the landlords of the

premises. At present they are receiving the same

rent from the allottees as from the other tenants.

On account of the Rent Act, they will not receive

more rent from the new tenants whom they may

induct after the premises are released from

requisition. It is in rare cases that the premises

would be required by the landlords for bona fide

personal requirement. All that, therefore, they will

be deprived of for some time more, on account of

these directions, is the right to induct new tenants

of their choice. It is a notorious fact that such

choice is, more often than not, exercised in favour

of those who can offer competing illegal

consideration, commonly known as "pugree"

which is escalating with passage of time."

His Lordship noticed that there were two sets of allottees before

the Court:

(i) Consumer Cooperative Societies running fair price ration

shops in the allotted premises,

and

(ii) Individuals who are allotted residential premises.

As to category (i) his Lordship opined that the Consumer

Cooperative Societies were running ration shops and shall have to be

wound up. The employees of such societies should be allowed

sufficient time to find out alternative employment and the State

Government should also make alternative arrangements for housing

ration shops and for that purpose the derequisition and eviction should

not take place before 31-5-1996. As to category (ii), his Lordship

opined that they should be given preference in allotment of plots and

flats by making suitable arrangement with City and Industrial

Development Corporation of Maharashtra Limited and Maharashtra

State Housing Board. Alternative accommodation to such occupants

should be made available by the State Government latest by 31-5-

1996 and till then there should be no derequisition and eviction. The

premises other than those covered by the said two categories may be

derequisitioned as directed in the order proposed by the majority.

It is pertinent to note that the two writ petitions were directed to

be dismissed by the Constitution Bench. To mitigate the hardship

likely to be caused to the occupants - the allottees in requisitioned

premises continuing in occupation by virtue of interim orders of the

Court which stood vacated by dismissal of the writ petitions, this

Court allowed time until 30-11-1994 for vacating the premises by the

occupants and for restoring of possession of the premises by the State

Government to the owners.

Rent Control Legislations leading upto the impugned amendment :-

Now the relevant Rent Control Legislations in their

chronological order leading upto the enactment of the impugned

Amendment Act held ultra vires by the impugned judgment of the

High Court, may be noticed.

The Bombay Land Requisition Act, 1948 as originally enacted

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was to remain in force upto 31-3-1950. The Act was amended from

time to time extending its life. Section 9 of the Act empowered the

State Government to release from requisition at any time the land

requisitioned or continued to be subject to requisition under the Act.

By Section 2 of Maharashtra Act 51 of 1973, sub-Section (1A) was

inserted below sub-Section (1) of Section 9 which made it obligatory

for the State Government to release land from requisition on the

expiry of the stated period. The said period was extended from time to

time by successive amendments. The period of requisition was to

expire on 31-12-1994 when the matter came up for consideration and

disposed of by the Constitution Bench in Grahak Sanstha Manch

case (supra).

The paucity of accommodation and the impact of war on the

population and habitation conditions in Bombay led to the enactment

of the Bombay Rent Restriction Act, 1939 followed by the Bombay

Rents, Hotel Rates and Lodging Houses Rates (Control) Act, 1944 to

curb the sky rocketing greed of the landlords pitted against the

miseries of roofless. Both these Acts were repealed by a more

comprehensive legislation namely, the Bombay Rents, Hotel and

Lodging House Rates (Control) Act, 1947 which was enacted to

amend and consolidate the law relating to the control of rents and

repairs of certain premises, of rates of hotels and lodging houses and

of evictions and also to control the charges for licenses of premises

etc. The Act protected tenants and licensees in occupation of the

premises. Section 13 made provision for the events and contingencies

on proof whereof the landlord could recover possession. Maharashtra

Act 17 of 1973 conferred the status of tenant on certain licensees in

occupation of any premises or any part thereof, which is not less than

a room since 1st February 1973 or before. Several other amendments

and enactments were also passed by the State Legislature beneficial in

nature to the tenants, licensees and occupants of the premises, the

details whereof are being omitted as not necessary for our purpose.

What is relevant for our purpose is to note that the life of requisition

or continued requisition of any land which was coming to an end by

virtue of sub-section (1-A) as inserted in Section 9 of the Bombay

Land Requisition Act, 1948 by Maharashtra Act 5 of 1973, further

amended by Maharashtra Act 29 of 1990 was given an extension by

issuing an ordinance, namely, the Bombay Land Acquisition

(Amendment) Ordinance, 1994 (Maharashtra Ordinance No. XX of

1994) which extended the life of such requisitions for a period of 24

years from 27-12-1973 that is upto 27th December, 1997. The

statement of objects and reasons accompanying the said Ordinance

referred to the two decisions of this Court in H.D. Vora (supra) and

the subsequent decision of this Court dated 27-4-1994 in Grahak

Sanstha Manch and Ors. case (supra). The preamble noticed the

difficulty which was likely to be faced by several persons in

occupation of the accommodation requisitioned and allotted by the

State Government and the difficulties which the Government was

facing on account of paucity of funds and ever rising prices in

constructing alternative accommodation to accommodate Government

employees in-service and others. The statement noticed the factum of

both Houses of the State Legislature being not in session and the

Governor of Maharashtra having felt satisfied of the existence of

requisite circumstances for issuing the Ordinance and concluded by

stating :-

"In the facts and circumstances as aforesaid, it is

considered expedient to extend the period of

requisition under the Act for a further period of

three years beyond the 26th December, 1994, so as

to enable the State Government to complete the

process of derequisitioning during the extended

period of three years. It is, therefore, proposed to

suitably amend sub-Section (1A) of Section 9 of

the principal Act extending the total period of

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requisition from twenty-one years to twenty-four

years."

The Ordinance was replaced by Maharashtra Act No. VII of

1995. The assent of the President of India under Article 254(2) of the

Constitution of India was received.

Now the crucial amendment. On 7-12-1996, the Governor of

Maharashtra promulgated the Bombay Rents, Hotel and Lodging

Houses Rates Control, Bombay Land Requisition and Bombay

Government Premises (Eviction) (Amendment) Ordinance, 1996

(Maharashtra Ordinance XXIII of 1996) whereby certain

amendments were incorporated in the Bombay Rents, Hotel and

Lodging House Rates Control Act, 1947 (hereinafter referred to as

"the Principal Act, 1947") by Section 2 of the Ordinance. It is not

necessary to burden the judgment by extracting and reproducing the

entire text of the Ordinance (which is published in Maharashtra

Government Gazette Extraordinary - Part VIII - dated December 7,

1996). It would suffice for our purpose to note the following effect of

the Ordinance and consequences flowing therefrom (as crystalised and

agreed to by the learned counsel for all the parties, at the hearing):-

1) Section 5 of the Principal Act, 1947 was amended so as to

confer the status of the tenant of the landlord on such person or

his legal heir as was allotted by the State Government for

residential purpose any premises requisitioned or continued

under requisition. The status conferred on them by amending

Section 5 of the Principal Act and by inserting Section 15B in

the Principal Act was that the allottee or his legal heir in

occupation or possession of the allotted premises for own

residence "shall, notwithstanding anything contained in this

Act, or in the Bombay Land Requisition Act, 1948, or in any

other law for the time being in force, or in any contract, or in

any judgment, decree or order of any court passed on or after

the 11th June, 1996, be deemed to have become, for the

purposes of this Act, the tenant of the landlord; and such

premises shall be deemed to have been let by the landlord to the

State Government or, as the case may be, to such Government

allottee, on payment of rent and permitted increases equal to the

amount of compensation payable in respect of the premises

immediately before the said date."

2. All the premises requisitioned or continued under requisition

under the Bombay Land Requisition Act, 1948 and allotted to

Government allottees and allowed by the State Government to

continue or to remain in occupation or possession of such

premises were deemed to have been released from requisition.

3. The premises requisitioned and continued under requisition and

allotted by the State Government for any non-residential

purpose to any department or office of the State Government or

Central Government or any public sector undertaking or

Corporation owned or controlled fully or partly by the State

Government or any registered co-operative society or any

foreign consulate and allowed by the State Government to

remain in their occupation or possession were included in the

definition of 'Government Premises' within the meaning of

Section 2 clause (b) of the Bombay Government Premises

Eviction Act, 1955.

(4) In spite of such status of tenant having been conferred on the

person in occupation or possession and the owner of the

property having been declared to be landlord, the Ordinance

took care to clarify (by sub-section (2) of Section 3) :-

"Save as otherwise provided in this section or any

other provisions of this Act, nothing in this Section

shall affect:-

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(a) the rights of the landlord including his right to

recover possession of the premises from such

tenant on any of the grounds mentioned in

Section 13 or in any other Section;

(b) the right of the landlord or such tenant to apply

to the court for the fixation of standard rent

and permitted increases under this Act, by

reason only of the fact that the amount of the

rent and permitted increases, if any, to be paid

by such tenant to the landlord is determined

under sub-Section (1);

(c) the operation and the application of the other

relevant provisions of this Act in respect of

such tenancy."

Certain consequential amendments were also effected in the

Bombay Land Requisition Act, 1948 and the Bombay Government

Premises (Eviction) Act, 1955, which it is not necessary to notice and

reproduce.

The statement of objects and reasons accompanying the

Ordinance is very relevant and shall have to be referred to while

dealing with the contentions raised by the contending parties before

this Court and therefore the same is reproduced hereunder :-

STATEMENT

"The Bombay Land Requisition Act, 1948 is

enacted to provide for requisition of land for

relieving the pressure of accommodation,

especially in urban areas, by regulating distribution

of vacant premises for public purposes, and for

certain other purposes incidental thereto. Certain

premises which have been requisitioned or

continued under requisition under the said Act

have been allotted for non-residential purpose to

many departments or offices of the State

Government or Central Government or public

sector undertakings, corporations owned or

controlled fully or partly by the State Government

or co-operative societies or foreign consulates and

for residential purpose to different categories of

persons such as employees of the State or Central

Government, public sector undertakings,

corporations, or homeless persons, etc. Many of

these premises have since been derequisitioned by

the Government, as per Court orders or having

regard to certain other circumstances. But still

there are quite a large number of allottees in

occupation of such premises, for a number of

years, on payment of compensation as determined

under the said Act. The allottees of such premises

include Government servants who are still in

Government service and others.

2. Under the existing provisions of Section 9

of the Bombay Land Requisition Act, 1948, as last

amended by Mah. Act No. VII of 1995, the

premises which have been requisitioned on or

before 27th December, 1973 will have to be

released from the requisition on or before 26th

December, 1997 and those which have been

requisitioned after 27th December, 1973, within

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twenty-four years from the date on which

possession of such land was surrendered or

delivered to, or taken by, the State Government.

Further the Supreme Court in Writ Petition No.

404 of1986 filed by the Association of Allottees of

the Requisitioned Premises and Writ Petitions No.

53 of 1993 and 27 of 1994 filed by the Grahak

Sanstha Versus State of Maharashtra, has given a

final decision on the 27th April, 1994 in the matter

of requisitioned premises (AIR 1994, S.C., 2319),

upholding the decision in the H.D. Vora's case

[(1984) 2 S.C.C. 337] and has directed that the

occupants of the requisitioned premises, the

continued requisition of which was quashed, were

bound to vacate and hand over vacant possession

of such premises to the State Government on or

before 30th November, 1994 so that the

Government could derequisition such premises and

hand over the vacant possession thereof to the

landlords. Accordingly, derequisitioning process,

in respect of all such premises and applying the

ratio of the said Supreme Court Judgment, in

several other premises, has already been completed

by the State Government. There are however as

aforesaid, nearly 604 residential premises and

about 90 non-residential premises which are still

under requisition in Brihan Mumbai and 138 in

other districts which include requisitioned

premises allotted to Government servants who are

still in Government service and others.

3. As a matter of policy, the State

Government has stopped requisitioning of new

premises except in some special cases. As a result

of this policy and also due to continued acute

shortage of accommodation with Government and

astronomical rise in the cost of properties in

Mumbai, it would not be possible for Government

to give suitable alternative accommodation to all

such allottees if, applying the ratio of the said

Supreme Court Judgment the Government has to

vacate all the requisitioned premises. The situation

is, therefore, likely to result in the Government

allottees presently in occupation of the

requisitioned premises being rendered without any

office accommodation or homeless. It is

imperative to find a solution to this grave situation

and to give some kind of statutory protection to

these allottees of the requisitioned premises.

4. As the landlords are generally unwilling

to accept such Government allottee, as contractual

tenants, on payment of the standard rent and

permitted increases, Government considers it

expedient, in greater public interest, to make

suitable provisions for providing the protection of

statutory tenancy under the Rent Act to the State

Government and to such Government allottees;

and consequently to provide for the release of such

premises from requisition.

5. As many landlords have already

approached the High Court seeking eviction orders

of the allottees of the requisitioned premises and

the possibility of others also approaching the Court

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for such eviction orders cannot be ruled out,

thereby frustrating the very object of this

legislation, it is also considered expedient to

provide in the proposed section 3 of this Ordinance

that, such conferral of statutory tenancy rights on

the allottees shall not be affected by any eviction

orders passed by the Court on or after 11th June,

1996 (being the date of the Government decision

to undertake such legislation).

6. As both Houses of the State Legislature

are not in session and the Governor of

Maharashtra is satisfied that circumstances exist

which render it necessary for him to take

immediate action further to amend the Bombay

Rents, Hotel and Lodging House Rates Control

Act, 1947, the Bombay Land Requisition Act,

1948 and the Bombay Government Premises

(Eviction) Act, 1955, suitably for the purposes

aforesaid, this Ordinance is promulgated.

Mumbai: P.C. ALEXANDER

Dated the 7th December 1996. Governor of Maharashtra

By order and in the name of the Governor of Maharashtra,

JAYANT DESHPANDE,

Secretary to Government."

In due course of time, the Ordinance was replaced by the

Bombay Rents, Hotel, Lodging House Rates Control, Bombay Land

Requisition and Bombay Government Premises (Eviction)

(Amendment) Act, 1996 (Maharashtra Act XVI of 1997).

The vires of this Amendment Act XVI of 1997 is under

challenge and arises for consideration by this Court in these appeals,

in view of the High Court having upheld the challenge. The vires of

the Ordinance need not be gone into as the same has lapsed with the

passage of time and its provisions merged into the provisions of the

Amendment Act above-said.

Though the challenge before the High Court was laid on very

many grounds, in view of the findings arrived at by the High Court all

the learned counsel for the parties agreed that only the following three

issues survive and are relevant for decision in these appeals, namely,

i) whether the State Government has requisite legislative

competence to enact the impugned amendments?

ii) whether the impugned legislation is a colourable one

and is an interference with the judicial mandate of

Supreme Court contained in H.D. Vora's case and

Grahak Sanstha Mancha and Ors. case or has the

effect of overruling the decisions of this Court and

hence violative of doctrine of separation of powers?

and

iii) whether the impugned enactment is violative of Article

14 of the Constitution as being arbitrary and

unreasonable?

We proceed to deal with each of the three issues seriatem.

(i) Legislative competence ?

While the writ petitioners challenged the legislative competence

of the State Legislature to enact the impugned Amendment Act, the

State of Maharasthra and the beneficiaries of legislation have

defended the impugned legislation by attributing legislative

competence to State Legislature by reference to entries 6, 7 and 13 of

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List-III and entry 18 of List-II of Seventh Schedule which are

reproduced hereunder for ready reference:-

"List - III ? Concurrent List

6. Transfer of property other than agricultural

land; registration of deeds and documents.

7. Contracts, including partnership, agency,

contracts of carriage, and other special

forms of contracts, but not including

contracts relating to agricultural land.

13. Civil procedure, including all matters

included in the Code of Civil Procedure at

the commencement of this Constitution,

limitation and arbitration.

List - II ? State List

18. Land, that is to say, right in or over land,

land tenures including the relation of

landlord and tenant, and the collection of

rents; transfer and alienation of agricultural

land; land improvement and agricultural

loans; colonization."

So far as entry 18 of List-II is concerned, we may repel the

defence summarily by referring to three decisions of this Court,

namely, Accountant & Secretarial Services (P) Ltd. & Another Vs.

Union of India & Others, (1988) 4 SCC 324, Dhanapal Chettiar Vs.

Yesodai Ammal, (1979) 4 SCC 214 and Indu Bhusan Bose Vs.

Rama Sundari Debi & Another, 1970 (1) SCR 443, wherein it has

been categorically held that tenancy of buildings or of house

accommodation or leases in respect of non-agricultural property are

not included in Entry 18 of List-II and that they more appropriately

fall within the field of entries 6, 7 and 13 of List-III.

What should be the approach of the Court dealing with a

challenge to the constitutionality of a legislation has been succinctly

set out in Principles of Statutory Interpretation by Justice G.P. Singh

(Eighth Edition, 2001 at pp 453-454 and 36). A statute is construed

so as to make it effective and operative on the principle expressed in

the maxim "ut res megis valeat quam pereat". (It is better to validate

a thing than to invalidate it). There is a presumption that the

Legislature does not exceed its jurisdiction. The burden of

establishing that the Act is not within the competence of the

Legislature, or that it has transgressed other constitutional mandates,

such as those relating to fundamental rights, is always on the person

who challenges its vires. If a case of violation of a constitutional

provision is made out then the State must justify that the law can still

be protected under a saving provision. The courts strongly lean

against reducing a statute to a futility. As far as possible, the courts

shall act to make a legislation effective and operative.

In Charanjit Lal Chowdhary Vs. Union of India & Ors., 1950

SCR 869, the Constitution Bench held that the presumption is always

in favour of the constitutionality of an enactment, and the burden is

upon him who attacks it to show that there has been a clear

transgression of the constitutional principles.

It must be mentioned in all fairness to the writ petitioners and

their learned counsel that the challenge to the constitutional validity of

impugned Amendment Act was pursued and pressed by resting

submissions not on the ground of violation of any property rights of

the owner-landlords but mainly on the ground of the lack of

legislative competence in State Legislature by reference to the

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relevant entries in Seventh Schedule. The submission of the learned

counsel for the writ petitioners - respondents has been that within the

meaning of entries 6 & 7 of List-III what can be enacted is a law

dealing with any existing transfer of property or an existing contract;

the legislation cannot by itself create a transfer of property or bring a

contractual relationship in existence which if done would fall outside

the scope of entries 6 & 7 abovesaid. It was submitted that the owners

have not transferred any property in the premises to the occupants nor

does any contractual relationship exist between the owners and the

occupants on the date of coming into force of the Amending Act and,

therefore, the Amending Act cannot be said to be a law governing

transfer of property or contract and hence does not fall within the

purview of these entries 6 & 7. To test the validity of such

submission forcefully advanced it will be useful to have a recap of

certain well-established principles.

The fountain source of legislative power exercised by the

Parliament or the State Legislatures is not Schedule __ 7; the fountain

source is Article 246 and other provisions of the Constitution. The

function of the three Lists in Seventh Schedule is merely to demarcate

legislative fields between Parliament and States and not to confer any

legislative power. The several entries mentioned in the three Lists are

fields of legislation. The Constitution makers purposely used general

and comprehensive words having a wide import without trying to

particularize. Such construction should be placed on the entries in the

Lists as makes them effective; any construction which will result in

any of the entries being rendered futile or otiose must be avoided.

That interpretation has invariably been countenanced by the

constitutional jurists, which gives the words used in every entry the

widest possible amplitude. Each general word employed in the entries

has been held to carry an extended meaning so as to comprehend all

ancillary and subsidiary matters within the meaning of the entry so

long as it can be fairly accommodated subject to an overall limitation

that the courts cannot extend the field of an entry to such an extent as

to result in inclusion of such matters as the framers of the Constitution

never intended to be included within the scope of the entry or so as to

transgress into the field of another entry placed in another List.

In every case where the legislative competence of a Legislature

in regard to a particular enactment is challenged with reference to the

entries in the various Lists, it is necessary to examine the pith and

substance of the Act and to find out if the matter comes substantially

within an item in the List. The express words employed in an entry

would necessarily include incidental and ancillary matters so as to

make the legislation effective. The scheme of the Act under scrutiny,

its object and purpose, its true nature and character and the pith and

substance of the legislation are to be focused at. It is a fundamental

principle of Constitutional Law that everything necessary to the

exercise of a power is included in the grant of the power (See the

Constitution Bench decision in Chaturbhai M. Patel Vs. Union of

India & Ors., 1960 (2) SCR 362).

In Diamond Sugar Mills Ltd. & Another Vs. State of Uttar

Pradesh & Another, 1961 (3) SCR 242, the Constitution Bench

defined the two bounds between which the stream of interpretative

process dealing with entries in Seventh Schedule must confine itself

and flow. One bank is the salutary rule that the words conferring the

right of the legislation should be interpreted liberally and the powers

conferred should be given the widest amplitude; the other bank is

guarding against extending the meaning of the words beyond their

reasonable connotation in an anxiety to preserve the power to

legislate. The working rule of the game is to resolve, as far as

possible, in favour of the legislative body any difficulty or doubt in

ascertaining the limits.

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A note of caution was sounded by Constitution Bench in

Synthetics & Chemicals Ltd. etc. Vs. State of U.P. & Others, (1990)

1 SCC 109. The Constitution must not be construed in any narrow or

pedantic sense and that construction which is most beneficial to the

widest possible amplitude of its power must be adopted. An

exclusionary clause in any of the entries should be strictly and,

therefore, narrowly construed. No entry should be so read as to rob it

of its entire content. A broad and liberal spirit should inspire those

whose duty it is to interpret the Constitution. The Constitution is a

living and organic thing and must adapt itself to the changing

situations and pattern in which it has to be interpreted. To bring any

particular enactment within the purview of any legislative power, it is

the pith and substance of the legislation in question that has to be

looked into by giving widest amplitude to the language of the entries.

The Constitution must be interpreted in the light of the experience

gathered. It has to be flexible and dynamic so that it adapts itself to

the changing conditions in a pragmatic way. The undisputed

constitutional goals should be permitted to be achieved by placing an

appropriate interpretation on the entries. The Constitution has the

greatest claim to live. The claim ought not to be throttled. Directive

Principles of State Policy can serve as potent and useful guide for

resolving the doubts and upholding constitutional validity of any

legislation if doubted.

In United Provinces Vs. Mt. Atiqa Begum and Others, AIR

1941 FC 16, their Lordships upheld the principle that the question

whether any impugned Act is within any of the three Lists, or in none

at all, is to be answered by considering the Act as a whole and

deciding whether in pith and substance the Act is with respect to

particular categories or not and held that in doing so the relevant

factors are: (i) the design and the purport of the act, both as disclosed

by its language, and (iii) the effect which it would have in its actual

operation.

Article 37 provides that the Directive Principles of State Policy

though not enforceable by any court, yet the principles laid down

therein are fundamental in the governance of the country and the State

is obliged to apply these principles in making laws. Article 38

inspires the State to strive to promote the welfare of the people by

securing and protecting as effectively as it may, a social order in

which justice, social, economic and political prevails and citizens,

men and women are treated equally and so share the material

resources of community as to result in equitable judicious and

balanced distribution of means of livelihood - food, cloth and shelter

- the bare essentials for living as human being. Inequalities in status,

facilities, opportunities and income are to be eliminated and

minimized. The systems in a democratic society ought not to operate

to the detriment of individuals or groups of people.

The Constitution Bench decision of this Court in Indu

Bhushan Bose Vs. Rama Sundari Debi & Another, (1969) 2 SCC

289 needs a special mention. A Rent Control Legislation enacted by

State Legislature was sought to be extended to cantonment area. The

High Court held that the same was not permissible inasmuch as so far

as the cantonment area is concerned, legislation touching regulation of

house accommodation is governed by Entry 3 of List-I which reads,

inter alia, "the regulation of house accommodation (including the

control of rents) in such areas" i.e. cantonment areas. During the

course of its judgment, the Constitution Bench held that the entry has

to be liberally and widely interpreted. Regulation of houses in private

occupation would fall within the entry. The word 'regulation'

includes power to direct or control all housing accommodation in

cantonment areas, which in its turn, will include within it all aspects

as to who is to make the construction, under what conditions the

constructions can be altered, who is to occupy the accommodation and

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for how long, on what terms it is to be occupied, when and under what

circumstances the occupant is to cease to occupy it, and the manner in

which the accommodation is to be utilized. All these are ingredients

of regulation of house accommodation in its wide sense. The

Parliament could legislate in respect of house accommodations in

cantonment areas in all its aspects, including regulation of grant of

leases, ejectment of lessees and ensuring that the accommodation is

available on proper terms as to rents. The power of the State

Legislature to legislate in respect of landlord and tenant of buildings is

to be found in entries 6, 7 & 13 of List-III of the Seventh Schedule to

the Constitution and not in entry 18 of List-II, and that power was

circumscribed by the exclusive power of Parliament to legislate on the

same subject under entry 3 of List-I.

Before the Constitution Bench in Indu Bhushan Bose's case

(supra) the English decisions in Prout Vs. Hunter, (1924) 2 KB 736,

Property Holding Co. Ltd. Vs. Clark, (1948) 1 KB 630 and Curl Vs.

Angale & Anr., (1948) 2 All England Reports 189 were cited with

approval. In Prout Vs. Hunter (supra), Rent Restrictions Act was

held to have been passed by the Parliament with the twofold object -

(i) of preventing the rent from being raised above the pre-war

standard, and (ii) of preventing tenants from being turned out of their

houses even if the term for which they had originally taken them had

expired. In Property Holding Co. Ltd. Vs. Clark (supra), the objects

of policy underlying rent restriction legislations were stated to be (i)

to protect the tenant from eviction from the house where he is living,

except for defined reasons and on defined conditions; (ii) to protect

him from having to pay more than a fair rent. The latter object is

achieved by the provisions for standard rent with (a) only permitted

increases, (b) the provisions about furniture and attendance, and (c)

the provisions about transfers of burdens and liabilities from the

landlord to the tenant which would undermine or nullify the standard

rent provisions. Such acts operate in rem upon the house and confer

on the house itself the quality of ensuring to the tenant a status of

irremovability. Tenants security of tenure is one of the distinguishing

characteristics conferred by statute upon the house. In Curl Vs.

Angelo and Another (supra), Lord Greene, M.R., dealing with Rent

Restrictions Act, held that the overriding purpose and intention of

such acts are to protect the person residing in a dwelling house from

being turned out of his home. In the opinion of Constitution Bench

these cases are a pointer to the principle that Rent Control

Legislations can be effective and purposeful only if they also regulate

eviction of tenants. Regulation of house accommodation, therefore,

includes within its sweep the power to regulate eviction of tenants.

The expression 'transfer of property' in entry 6 and the term

'contracts' in entry 7 of List-III are to be widely interpreted. Such

wide meaning has to be assigned to the said expression and term as

would make the entries meaningful and effective. The entries must

certainly take colour from the Directive Principles of State Policy

specially those contained in Articles 38 and 39 of the Constitution.

True that there was no voluntary transfer of property by the owners of

property in favour of the occupant allottees of the premises. The State

Government in exercise of its power of eminent domain, recognized

statutorily, had requisitioned the properties in public interest and

allotted it to the occupants. The Government paid compensation for

requisitioning to the owners. Out of the requisitioned premises some

were occupied by State itself. As to the premises which were allotted,

the allottees in occupation were liable to pay compensation in lieu of

their occupation of the premises. There was no privity of contract

between the owners and the occupants, yet a privity of estate was

brought into being by acts of State supported by law. Possession is

nine points in law and to that extent a transfer of property had resulted

and brought into being. Such privity of estate was compulsorily

converted into privity of contract by operation of law as a

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consequence of the impugned Amending Act. The Act also provided

civil procedure by which the landlords were entitled to snap the

relationship of landlord and tenant deemingly created by the statute

and seek eviction subject to making out a ground therefor under the

pre-existing Rent Control Legislation. Such legislation would clearly

fall within the purview of entries 6, 7 & 13 of List-III.

There is yet another angle of looking at the issue. In Lingappa

Pochanna Appealwar Vs. State of Maharashtra & Anr., (1985) 1

SCC 479, the provisions of Maharashtra Restoration of Lands to

Scheduled Tribes Act, 1975 came up for consideration which Act

related to transfers and alienation of agricultural lands by members of

Scheduled Tribes in the State to persons not belonging to Scheduled

Tribes. The legislation fell in entry 18 in List-II. Certain provisions of

the Act trenched upon the existing law, namely, the Transfer of

Property Act and the Specific Relief Act, both made by Parliament. It

was held that the power of the State Legislature to make a law with

respect to transfer and alienation of agricultural land carries with it not

only a power to make a law placing restrictions on transfers and

alienations of such lands including a prohibition thereof, but also the

power to make a law to reopen such transfers and alienations. The

legislative competence was spelt out from entry 18 in List-II of

Schedule 7. The Court observed :-

"Moreover, the legislation is a typical

illustration of the concept of distributive justice,

as modern jurisprudents know it. Legislators,

Judges and administrators are now familiar with

the concept of distributive justice. Our

Constitution permits and even directs the State

to administer what may be termed "distributive

justice". The concept of distributive justice in

the sphere of law-making connotes, inter alia,

the removal of economic inequalities and

rectifying the injustice resulting from dealings

or transactions between unequals in society.

Law should be used as an instrument of

distributive justice to achieve a fair division of

wealth among the members of society based

upon the principle : "From each according to his

capacity, to each according to his needs".

Distributive justice comprehends more than

achieving lessening of inequalities by

differential taxation, giving debt relief of

distribution of property owned by one to many

who have none by imposing ceiling on holdings,

both agricultural and urban, or by direct

regulation of contractual transactions by

forbidding certain transactions and, perhaps, by

requiring others. It also means that those who

have been deprived of their properties by

unconscionable bargaining should be restored

their property. All such laws may take the form

of forced redistribution of wealth as a means of

achieving a fair division of material resources

among the members of society or there may be

legislative control of unfair agreements."

(emphasis supplied)

In Maneklal Chhotalal & Ors. Vs. M.G. Makwana & Ors.,

1967 (3) SCR 65, the constitutional validity of Bombay Town

Planning Act, 1954 as amended by Gujarat Act 52 of 1963 was put in

issue. The legislation fell within entry No. 18 of List-II. The Court

also held after elaborately referring to the various provisions

contained in the Act that it was passed with a view to regulate the

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development of certain areas with the general object of framing proper

schemes for the healthy orderly development of the area in question

and it is with a view to achieve this purpose that a very elaborate

procedure and machinery have been prescribed under the Act. For

this reason it was held that the competency of the State Legislation

aimed at equitable distribution of landed property resulting in partial

deprivation of proprietary rights can also be rested under entry No. 20

of List-III which is "economic and social planning".

A grim and emergent situation was created on account of threat

posed before the likely evictees who were in occupation of

requisitioned premises. The impugned Amending Act also seeks to

bring into effect a scheme of equitable redistribution of wealth and

shelter so as to protect the licensee __ occupants by giving them the

status of tenant and regulating the right to eviction exercisable by the

landlords by making it conditional upon availability of grounds under

a pre-existing rent control law already governing similar properties in

the State of Bombay. The salutary goal of 'from each according to

his capacity, to each according to his needs' was sought to be

achieved. The essential need of shelter for other segments of society

such as the State Administration, Semi-Government bodies, PSUs and

the likes was also protected in public interest as otherwise their

activities would have been jeopardized, which in turn would have had

an adverse effect on the society. Thus, if any grey area of impugned

Amending Act is left out uncovered by entries 6, 7 & 13 of List-III, it

is covered by entry 18 of List-II, i.e. 'economic and social planning'.

For all the foregoing reasons, we are of the opinion that the

impugned Amending Act is intra vires and within the legislative

competence of the State Legislature.

(ii) whether the impugned legislation is in conflict with the judicial

mandate of Supreme Court or a colourable exercise of power?

It was submitted on behalf of the writ petitioner-respondents

that the impugned judgment has the effect of nullifying or overriding

the mandate of this Court issued in H.D. Vora and Grahak Sanstha

Mancha and Ors. cases (supra). It was submitted that the Legislature

could not have directly overruled the decisions or mandate of this

Court but the same thing is sought to be achieved indirectly by

resorting to device of an amendment in the legislation which is

nothing but colourable exercise of legislative power which ought not

to be countenanced by this Court.

The doctrine of Colourable Legislation came to be examined by

a Constitution Bench of this Court in K.C. Gajapati Narayan Deo &

Ors. Vs. State of Orissa, 1954 SCR 1. It was held that the doctrine of

colourable legislation does not involve any question of 'bona fides' or

'mala fides' on the part of the Legislature. The whole doctrine

resolves itself into the question of competency of a particular

Legislature to enact a particular law. If the Legislature is competent

to pass a particular law, the motives which impelled it to act are really

irrelevant. On the other hand, if the Legislature lacks competency, the

question of motive does not arise at all. Whether a statute is

constitutional or not is thus always a question of power (Vide

Cooley's Constitutional Limitations, Vol. 1, p. 379). The crucial

question to be asked is whether there has been a transgression of

legislative authority as conferred by the Constitution which is the

source of all powers as also the separation of powers. A legislative

transgression may be patent, manifest or direct or may also be

disguised, covert and indirect. It is to this latter class of cases that the

expression 'colourable legislation' has been applied in certain judicial

pronouncements. The expression means that although apparently a

Legislature in passing a statute which purports to act within the limits

of its powers, yet in substance and in reality it transgresses those

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powers, the transgression being veiled by what appears, on proper

examination, to be a mere pretence or disguise. The discerning test is

to find out the substance of the Act and not merely the form or

outward appearance. If the subject matter in substance is something

which is beyond the legislative power, the form in which the law is

clothed would not save it from condemnation. The constitutional

prohibitions cannot be allowed to be violated by employing indirect

methods. To test the true nature and character of the challenged

legislation, the investigation by the Court should be directed towards

examining (i) the effect of the legislation and (ii) its object, purpose or

design. While doing so, the Court cannot enter into investigating the

motives, which induced the Legislature to exercise its power.

The abovesaid view was reiterated by Larger Bench (Seven

Judges) in R.S. Joshi, S.T.O. Vs. Ajit Mills Ltd., (1977) 4 SCC 98,

108 and by Constitution Bench in Naga People's Movement of

Human Rights Vs. Union of India, (1998) 2 SCC 109, 137.

In K.C. Gajapati Narayan Deo & Others case (supra), the

Constitution Bench quoted with approval the statement by Lefroy in

his work on Canadian Constitution that even if the Legislature avowed

on the face of an Act that it intends thereby to legislate in reference to

a subject over which it has no jurisdiction, yet if the enacting clauses

of the Act bring the legislation within its powers, the Act cannot be

considered ultra vires.

In Shri Prithvi Cotton Mills Ltd. & Anr. Vs. Broach Borough

Municipality & Ors., (1969) 2 SCC 283, a legislation by way of

Validation Act was passed because of a decision of the Court

declaring a certain imposition of tax as invalid. The question arising

before the Court was, when a Legislature sets out to validate a tax

declared by a Court to be illegally collected under an ineffective or an

invalid law, then how is the validity of such Validation Act to be

tested? It was held that the cause for ineffectiveness or invalidity

must be removed before validation can be said to take place

effectively. The most important condition, of course, is that the

Legislature must possess the power to impose the tax, for, if it does

not, the action must ever remain ineffective and illegal. The

Constitution Bench held :-

"Granted legislative competence, it is not

sufficient to declare merely that the decision of

the Court shall not bind for that is tantamount to

reversing the decision in exercise of judicial

power which the Legislature does not possess or

exercise. A court's decision must always bind

unless the conditions on which it is based are so

fundamentally altered that the decision could not

have been given in the altered circumstances.

Ordinarily, a court holds a tax to be invalidly

imposed because the power to tax is wanting or

the statute or the rules or both are invalid or do

not sufficiently create the jurisdiction. Validation

of a tax so declared illegal may be done only if

the grounds of illegality or invalidity are capable

of being removed and are in fact removed and the

tax thus made legal. Sometimes this is done by

providing for jurisdiction where jurisdiction had

not been properly invested before. Sometimes

this is done by re-enacting retrospectively a valid

and legal taxing provision and then by fiction

making the tax already collected to stand under

the re-enacted law. Sometimes the Legislature

gives its own meaning and interpretation of the

law under which tax was collected and by

legislative fiat makes the new meaning binding

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upon courts. The Legislature may follow any one

method or all of them and while it does so it may

neutralise the effect of the earlier decision of the

court which becomes ineffective after the change

of the law. Whichever method is adopted it must

be within the competence of the Legislature and

legal and adequate to attain the object of

validation. If the Legislature has the power over

the subject-matter and competence to make a

valid law, it can at any time make such a valid

law and make it retrospectively so as to bind even

past transactions. The validity of a Validating

Law, therefore, depends upon whether the

Legislature possesses the competence which it

claims over the subject-matter and whether in

making the validation it removes the defect which

the courts had found in the existing law and

makes adequate provisions in the Validating Law

for a valid imposition of the tax."

(emphasis supplied)

Thus, it is permissible for the Legislature, subject to its

legislative competence otherwise, to enact a law which will withdraw

or fundamentally alter the very basis on which a judicial

pronouncement has proceeded and create a situation which if it had

existed earlier, the Court would not have made the pronouncement.

In Indian Aluminium Co. and Others Vs. State of Kerala and

Others, (1996) 7 SCC 637, the Government of Kerala issued a

statutory order levying surcharge on electricity. The order was

declared by the court to be ultra vires followed by a direction to

refund the amount collected thereunder. The State Legislature

introduced a Validating Act, which was impugned unsuccessfully

before the High Court as also this Court. This Court laid down the

following tests for judging the validity of the Validating Act: (i)

whether the Legislature enacting the Validating Act has competence

over the subject-matter; (ii) whether by validation, the Legislature has

removed the defect which the court had found in the previous law;

(iii) whether the validating law is inconsistent (sic consistent) with the

provisions of Part III of the Constitution. If these tests are satisfied,

the Act can with retrospective effect validate the past transactions

which were declared to be unconstitutional. The Legislature cannot

assume power of adjudicating a case by virtue of its enactment of the

law without leaving it to the judiciary to decide it with reference to the

law in force. The Legislature also is incompetent to overrule the

decision of a court without properly removing the base on which the

judgment is founded. The court on a review of judicial opinion,

proceeded to lay down the following principles among others so as to

maintain the delicate balance in the exercise of the sovereign powers

by the Legislature, Executive and Judiciary :-

"(i) in order that rule of law permeates to fulfil

constitutional objectives of establishing an

egalitarian social order, the respective

sovereign functionaries need free play in

their joints so that the march of social

progress and order remains unimpeded;

(ii) in its anxiety to safeguard judicial power, it

is unnecessary to be overzealous and conjure

up incursion into the judicial preserve

invalidating the valid law competently

made;

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(iii) the court, therefore, needs to carefully scan

the law to find out: (a) whether the vice

pointed out by the court and invalidity

suffered by previous law is cured complying

with the legal and constitutional

requirements; (b) whether the Legislature

has competence to validate the law; (c)

whether such validation is consistent with

the rights guaranteed in Part III of the

Constitution;

(iv) the court does not have the power to validate

an invalid law or to legalise impost of tax

illegally made and collected or to remove

the norm of invalidation or provide a

remedy. These are not judicial functions but

the exclusive province of the Legislature.

Therefore, they are not encroachment on

judicial power;

(v) in exercising legislative power, the

Legislature by mere declaration, without

anything more, cannot directly overrule,

revise or override a judicial decision. It can

render judicial decision ineffective by

enacting valid law on the topic within its

legislative field fundamentally altering or

changing its character retrospectively. The

changed or altered conditions are such that

the previous decision would not have been

rendered by the court, if those conditions

had existed at the time of declaring the law

as invalid............. It is competent for the

Legislature to enact the law with

retrospective effect;

(vi) the consistent thread that runs through all

the decisions of this Court is that the

Legislature cannot directly overrule the

decision or make a direction as not binding

on it but has power to make the decision

ineffective by removing the base on which

the decision was rendered, consistent with

the law of the Constitution and the

Legislature must have competence to do the

same."

(emphasis supplied)

In State of Tamil Nadu Vs. Arroran Sugars Ltd., (1997) 1

SCC 326, the Constitution Bench made an exhaustive review of all the

available decisions on the point and summed up the law by holding:-

"It is open to the Legislature to remove the defect

pointed out by the court or to amend the

definition or any other provision of the Act in

question retrospectively. In this process it cannot

be said that there has been an encroachment by

the Legislature over the power of the judiciary. A

court's directive must always bind unless the

conditions on which it is based are so

fundamentally altered that under altered

circumstances such decisions could not have been

given. This will include removal of the defect in

a statute pointed out in the judgment in question,

as well as alteration or substitution of provisions

of the enactment on which such judgment is

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based, with retrospective effect."

Recently a Constitution Bench in Naga People's Movement of

Human Rights Vs. Union of India, (1998) 2 SCC 109, held that

'colourable legislation' is enacting by the Legislature of a legislation

seeking to do indirectly what it cannot do directly. But ultimately, the

crucial question would be - Whether the Legislature had the

competence to enact the legislation ? If the impugned legislation falls

within the competence of the Legislature, the question of doing

something indirectly which cannot be done directly becomes

irrelevant.

Here we may, with advantage, quote certain observations of the

larger Bench (7 Judges) of this Court in Dhanapal Chettiar Vs.

Yesodai Ammal (supra). In all social legislations meant for the

protection of the needy, not necessarily the so-called weaker section

of the society as is commonly and popularly called, there is

appreciable inroad on the freedom of contract and a person becomes a

tenant of a landlord even against his wishes on the allotment of a

particular premises to him by the Authority concerned. When the

State Rent Act provides under what circumstances and on what

grounds a tenant can be evicted, it does provide that a tenant forfeits

his rights to continue in occupation of the property and makes himself

liable to be evicted on fulfillment of those conditions. Once the

liability to be evicted is incurred by the tenant under the State Rent

Legislation, he cannot turn around and say that the contractual lease

has not been determined under the provisions of the Transfer of

Property Act and, therefore, he is not liable to be evicted. Various

State Rent Control Acts make a serious encroachment in the field of

freedom of contract. The landlord is not permitted to snap his

relationship with the tenant merely by his act of serving a notice to

quit on the tenant. In spite of the notice, the Rent Control Law says

that the tenant continues to be tenant enjoying all the rights of a lessee

but at the same time deemed to be under all the liabilities such as

payment of rent etc. in accordance with the law. Various Rent Acts

confer immunity on tenants from eviction whether in execution of a

decree or otherwise except in accordance with the provisions of the

Act and/or liability for eviction being incurred on one of the grounds

provided for by the Act. Some Rent Control Acts provide that no

landlord can treat the building to have become vacant by merely

terminating the contractual tenancy as the tenant still lawfully

continues in possession of the premises. The tenancy actually

terminates on the passing of the order or decree for eviction and the

building falls vacant by his actual eviction. All such provisions have

been held to be constitutionally valid.

The Constitution Bench in Dhanapal Chettiar's Case (supra)

continues to observe that Rent Acts do encroach upon to a very large

extent on the field of freedom of contract but the encroachment is not

entirely and wholly one-sided. Some encroachments are envisaged in

the interest of the landlord also and equity and justice demand a fair

play on the part of the Legislature not to completely ignore the

helpless situation of many landlords who are also compared to some

big tenants, sometimes weaker section of the society. Finding fault

with the Rent Acts and doubting their constitutional validity is at

times founded on stretching too far the theory of double protection or

additional protection and without a proper and due consideration of all

its ramifications.

We have already seen that the impugned Amending Act is

within the legislative competence of the State Legislature. The

impugned Amending Act does not either directly or indirectly

overrule the judgments of this Court. The law enunciated by this

Court in the two decisions was that the Executive was exercising

power of requisitioning the premises in such a manner that the

premises were in fact acquired under the guise or pretext of

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requisitioning. It was a colourable and hence a mala fide exercise of

its executive power by the State. Such tainted requisition was struck

down by this Court as ultra vires of the Constitution. The

consequence of invalidating and striking down the requisitioning

continuing for unreasonable length of time was that such invalid

requisitioning came to an end. It followed as a natural corollary that

the premises in occupation of the allottees became liable to be

restored to the possession of the owners. By virtue of interim orders

passed by the Court, the possession of the occupants was protected

and that protection was continuously enjoyed by the occupants upto

the date of decision. To relieve the occupants from the hardship of

sudden eviction caused by its judicial pronouncement, the Court

allowed some more time to the occupants by directing the protection

under the interim orders of the Court to remain in operation for some

more period of time in spite of the cases having been disposed of.

Allowing time to vacate the premises under the protection of the

interim orders is not the same thing as issuing mandamus to vacate the

premises by certain date. What the impugned Amending Act has done

is to fundamentally alter the very basis of occupation of the premises

by the occupants. Instead of their remaining in occupation by virtue

of orders of allotment of requisitioned premises, the Amending Act

declared that the requisitioning shall come to an end and the

occupants shall become tenants under the owners who would become

the landlords and the amount of compensation shall become rent.

The privity of estate was converted into privity of contract.

The foundation for pre-existing transfer of property underwent a

fundamental change. The separate concurring opinion recorded by

P.B. Sawant, J. in Grahak Sanstha Manch and Ors. case (supra)

records that the landlords were receiving the same rent from the

allottees as from the other tenants (i.e. non-allottees). The effect of

allowing more time to vacate the premises in spite of the

requisitioning having been struck down was, as stated by P.B. Sawant,

J., that what the landlords will be deprived of for some time more on

account of the directions made by the Court, is the right to induct new

tenants of their choice and consequentially also deprived of the illegal

consideration commonly known as 'pugri'. Such time to vacate the

premises as was allowed by the Court stood extended on account of

the Amending Act. The compensation which the landlords were

receiving earlier stood converted into rent payable by the occupants,

whosoever they might be, to the landlords. The right of landlords to

seek revision of rent was not taken away but became subject to the

provisions governing the standard rent or controlled rent determinable

by the competent authority under the Rent Control Legislation by

which the relationship of the owners and the occupants was to be

governed henceforth as one of landlord and tenant. The right of the

owners to seek eviction of occupants and have the premises restored

to their possession was also not taken away but was made subject to

the pre-existing law governing eviction of tenants. The larger Bench

in Dhanapal Chettiar's case (supra) has opined, as already stated, that

there is nothing objectionable, much less unconstitutional, in the right

to recover possession which accrued under the general law from being

made dormant and made subject to a special law so as to become

conditional and dependant on availability of certain statutory grounds

to eviction as provided for by the State Rent Act. The object, purpose

and design of the Amending Act is to extend protection of existing

Rent Act to such occupants who, on account of declaration of law

made by this court, ran the risk of being rendered suddenly shelterless.

We have already pointed out while dealing question No. 1 that the

impugned legislation is squarely covered by entries 6, 7 & 13 of List-

III and hence within the legislative competence of the State

Legislature. So long as the legislative competence is available, the

motive behind enactment cannot be enquired into. Though the

Statement of Objects and Reasons makes a reference to the two

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decisions delivered by this Court but that is only by way of narration

of facts. The judgments of this Court are nowhere referred to in the

body of the provisions introduced by the Amendment Act so as to

spell out any motive of overruling the judgment. The writ petitioners

cannot make any capital out of the fact that two decisions have been

referred to in the Statement of Objects and Reasons. On the contrary,

what is relevant in the State of Objects and Reasons is the factual

statement to the following effect (i) that the State Government has

honoured the decisions of this Court and commenced derequisitioning

process and taken a policy decision not to continue with such

requisitionings for future, except in some special cases; (ii) that in

spite of the said process having been commenced there were 604

residential premises, above 90 non-residential premises still under

requisition in Greater Bombay and 138 in other districts of the State of

Bombay, most of them occupied by Government servants and

departments, the eviction whereof would have imperatively resulted

into creation of a grave situation much to the detriment of public

interest; (iii) that the landlords were rushing to the High Court seeking

mass evictions from the premises under requisition; (iv) that the likely

evictees need to be protected from imminent eviction solely on ground

of requisitioning coming to an end, unless and until liability for

eviction was incurred under a pre-existing Rent Control Act; (v) that

there existed a continuing acute shortage of accommodation and

astronomical rise in the cost of properties in Mumbai, and unless the

State intervened through an Ordinance followed by an Act, a grim and

emergent situation was likely to emerge; and (vi) that such premises

as were specifically covered by any specific order of eviction of the

Court of a date prior to 11th June 1996 (being the date of Government

decision to undertake such legislation) were left untouched and

unaffected by the impugned Amendment.

We are definitely of the opinion that the impugned Amending

Act is neither in conflict with the judgments of this Court nor can it be

said to be a piece of colourable legislation.

The Amending Act has altered the basis of occupation of the

occupants over the premises. So long as the legislation is within the

legislative competence of the State Legislature, which it is, as we have

already held, merely because the indirect effect of the amendment

would be to place additional restrictions on the right of the owners to

seek eviction of the premises consequent upon the judgment of the

Supreme Court, it cannot be held that the Legislature has overruled

the judgment of this Court or made an inroad on the doctrine of

separation of powers. If the Amendment Act had been enacted on the

dates of decision in H.D. Vora's case or Grahak Sanstha Mancha

and Ors. case, the Court would not have been called upon to

adjudicate upon and invalidate the unreasonably stretched

requisitioning providing cloak for acquisition without adequate

compensation and the occupants would have been held protected as

tenants under the Rent Act. The situation is squarely covered by the

law laid down by three Constitution Benches of this Court and other

decisions of this Court referred to hereinabove. We do not think that

the impugned Amendment Act is "colourable legislation" or is in

conflict with the decisions of this Court.

(iii) The impugned legislation if arbitrary and unreasonable ?

Tenancy laws and rent restriction legislations in the country,

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whenever enacted, have almost invariably been challenged either as

violative of the fundamental right guaranteed by Article 19(1)(f) of

the Constitution (so long as the Clause existed in the body of Article

19) or as arbitrary and unreasonable on the touchstone of Article 14 of

the Constitution. However, the history of precedents shows that, by

and large, such challenges have failed as often as laid. It is the angle

with which the issue is approached that makes the difference. The

Legislatures showing pro-activeness in the field have been motivated

not with the idea of destroying or jeopardizing the property rights of

the landlords but rather with the benevolent desire of extending the

protective umbrella of legislation to the tenants so as to save them

from unscrupulous evictions and rack-renting mentality of greed

which clings to the owning of the property, and, for achieving the

avowed object of striking a judicious balance of equity between two

sections of the society, i.e. the landlords, generally called haves, and

tenants, generally called have nots, so far as the urban property is

concerned. The courts while upholding the constitutionality of such

legislations have referred to the statements of objects and reasons and

the preambles for the purpose of finding out the conditions prevailing

at the time when the bills were sponsored and the evils which were

prevailing and which were sought to be remedied. Whenever the

courts have felt doubt about the constitutionality of certain provisions

in Rent Control Legislations, they have been read down so as to save

them from the vice of unconstitutionality.

In Charanjit Lal Chowdhary Vs. Union of India & Ors

(supra), Fazl Ali, J. opined that Article 14 lays down an important

fundamental right, which should be closely and vigilantly guarded but

in construing it, the Court should not adopt a doctrinaire approach

which might choke all beneficial legislation.

In Kishan Singh & Ors. Vs. State of Rajasthan & Ors., 1955

(2) SCR 531, the Constitution Bench held that a legislation whose

object is to fix fair and equitable rent and which regulates the relation

of landlord with his tenant cannot be said to be a legislation

interfering with the fundamental right of a citizen to hold and enjoy

property even though the legislation has the effect of reducing or

diminishing the rights hitherto exercised by the landlord.

In Maneklal Chhotalal & Ors.'s case (supra), the Constitution

Bench thus summed up the principles to be borne in mind when

applying Articles 14 and 19 of the Constitution - "A fundamental

right to acquire, hold and dispose of property, can be controlled by the

State only by making a law imposing, in the interest of the general

public, reasonable restrictions on the exercise of the said right. Such

restrictions on the exercise of a fundamental right shall not be

arbitrary, or excessive, or beyond what is required in the interest of

the general public. The reasonableness of a restriction shall be tested

both from substantive shall be tested both from substantive and

procedural aspects. If any uncontrolled or unguided power is

conferred, without any reasonable and proper standards or limits being

laid down in the enactment, the statute may be challenged as

discriminatory".

Article 14 of the Constitution permits reasonable classification

for the purpose of legislation and prohibits class legislation. A

legislation intended to apply or benefit a "well defined class" is not

open to challenge by reference to Article 14 of the Constitution on the

ground that the same does not extend a similar benefit or protection to

other persons. Permissible classification must satisfy the twin tests,

namely, (i) the classification must be founded on an intelligible

differential, which distinguishes persons or things grouped together

from others left out of the class, and (ii) such differential must have a

rational relation with the object sought to be achieved by the

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legislation. It is difficult to expect the Legislature carving out a

classification which may be scientifically perfect or logically

complete or which may satisfy the expectations of all concerned, still

the court would respect the classification dictated by the wisdom of

Legislature and shall interfere only on being convinced that the

classification would result in pronounced inequality or palpable

arbitrariness on the touchstone of Article 14.

Bombay as a State and also as a cosmopolitan city__ unofficially

crowned as commercial capital of the country, has its own peculiar

problems. People from all over the country rush to Bombay in search

of employment and opportunities. Not all are blessed enough to find

shelter much less of their own. A huge administrative set up in the

governance is needed involving a large number of personnel to

manage the huge population accompanied by evergrowing influx of

people. Accommodation is needed to house the people and activities

including official ones catering to the needs of people. The premises

were liberally requisitioned to satisfy the needs of the needy. The

requisitioning did not solve the problem which continued to persist

resulting in endless renewals of requisitioning which was held by this

Court to be vitiated on account of virtual acquisitioning without

payment of compensation resulting from recurring and non-

intermittent cycles of requisitioning. It was struck down. Consequent

upon constitutional interpretation and adjudication by this Court

thousands, if not lakhs of persons and substantial activity of

government, semi-government bodies and PSU's ran the risk of being

rendered roofless and out of gear. They all needed to be protected by

State intervention and constituted a class by themselves. All such

premises whose occupants were under the threat of eviction also

constituted property capable of identification by a well defined

classification. The Legislature chose to step in and enact a legislation,

which would protect the threatened evictees from likely eviction. The

persons and premises - both constitute a well defined class by

themselves and the classification cannot be said to be arbitrary; it is

capable of being distinguished from others not included in that class.

Such classification has an apparent and clear nexus with the object

sought to be achieved. The impugned legislation does not, therefore,

suffer from either arbitrariness or invidious discrimination. The

challenge that the impugned Amendment Act falls foul of Article 14

of the Constitution must therefore fail.

The contention that the impugned Amending Act cannot

withstand the test of Article 14 of the Constitution was raised in the

High Court but was not dealt with for the reason that even otherwise,

in the opinion of the High Court, the impugned legislation was

unconstitutional. However, in view of the submissions made, we have

dealt with the issue and disposed of the same.

Conclusion

Thus the challenge to the constitutional validity of the

impugned Amending Act fails on all the counts. The decision of the

High Court wherein view to the contrary has been taken is held

unsustainable and liable to be reversed. However, this is subject to a

clarification.

We have in the earlier part of this judgment extracted and

reproduced para 20 of the Constitution Bench decision in Grahak

Sanstha Manch's case containing some categorical and definite

directions given by the Supreme Court to the occupants of

requisitioned premises and the State Government, which protected the

occupants in Bombay and other large cities in Maharashtra until

30.11.1994, and with effect from that date directed that "all occupants

of premises the continued requisition of which has been quashed"

shall be bound to vacate and hand over vacant possession to the State

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Government so that the State Government may on or before

31.12.1994 derequisition such premises and hand back vacant

possession thereof to the landlords. The reversal of the impugned

judgment of the High Court and upholding the validity of the

impugned legislation shall not have the effect of undoing or

overruling the abovesaid mandate of the Supreme Court contained in

the decision of Grahak Sanstha Manch's case.

Accordingly, all the appeals are allowed and the impugned

judgment of the High Court is set aside subject to the clarification

made hereinabove.

It was stated at the Bar, during the course of hearing that the

impugned judgment decided only the question of vires of the

impugned Amending Act. Some of the writ petitions filed in the High

Court raised the question of vires of the impugned Act as the sole

issue for decision which writ petitions shall stand dismissed in view of

this judgment. Some of the writ petitions filed in the High Court

raised other issues as well which in the event of the impugned

judgment being set aside shall have to be remanded to the High Court

for hearing on issues other than the issue as to vires of the impugned

Amendment Act. All the appeals shall therefore now be listed for

appropriate consequential directions before the Court.