Supreme Court of India
D.C. BHATIA AND ORS.versusUNION OF INDIA AND ANR.
- Citation
- 1994 INSC 468
- Decided
- 19 October 1994
- Disposal
- Dismissed
- Bench
- M N VENKATACHALIAH
Holding
Section 3(c) of the Delhi Rent Control Act, 1958 (as amended) is constitutionally valid and does not contravene Article 14.
Summary
The Supreme Court examined the constitutional validity of Section 3(c) of the Delhi Rent Control Act, 1958 (as amended in 1988), which excludes premises with a monthly rent exceeding Rs 3,500 from the Act’s protection. The appellants argued that the classification was arbitrary, violated Article 14, and was retrospectively applied to existing tenancies. The Court held that the legislature has wide latitude to set reasonable classification criteria and that the cut‑off point of Rs 3,500 bears a rational nexus to the statutory goal of balancing landlord and tenant interests and encouraging construction. The term “rent” was interpreted as the actual rent paid, not “standard rent”. The provision was deemed prospective and not violative of vested rights. Consequently, Section 3(c) was upheld as constitutionally valid. The appeal was dismissed.
Issues considered
- The classification of premises based on a rent ceiling of Rs 3,500 under Section 3(c) violates Article 14 of the Constitution.
- Whether Section 3(c) operates retrospectively and infringes vested rights of tenants.
- The proper construction of the word “rent” in Section 3(c) – actual rent versus standard rent.
Legislation cited
- Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960s. 32(b)
- Delhi Rent Control Act, 1958 (as amended by Act No. 52 of 1988)s. 14, s. 25B, s. 2(k), s. 3(c), s. 3(d), s. 6, s. 7
- Jammu & Kashmir Houses and Shops Rent Control Act, 1966s. 1(3)
- Tamil Nadu Buildings (Lease and Rent Control) Act, 1960s. 30(ii)
- Transfer of Property Act, 1882
Subjects
Article 14constitutional validityrent controlclassificationlegislative policyprospective legislationinterpretation of rentvested rights
Judgment
D.C. BHATIA AND ORS. A
v.
UNION OF INDIA AND ANR.
OCTOBER 19, 1994
B
(M.N. VENKATACHALIAH, CJ, SUHAS C. SEN AND
S.B. MAJMUDAR, JJ.]
Constitution of Indi~Article 14-Constitutional validity of Section
3(c) of Delhi Rent Control Act-Held Not violative of Article 14 of Constitu- C
tion.
Delhi Rent Control Ac~ 1958, as amended by Act No. 52 of 1988-Sec-
tion 3(c)-lnapplicability of provisions of Act to any premises whose monthly
rent exceeded Rs. 3,5or>-Constitutional validity-{Jpheld.
D
Delhi Rent Control Act, 1958, as amended by Act No. 52 of 1988-Sec-
tion 3(c)-lnterpretation orApplicability of provision to tenancies created
prior to 1.12.198&-l'rovision to apply to premises which had already been let
out at monthly rent in excess of Rs. 3,500 when amendment made in 1988
came into force on 1.12.1988.
E
Delhi Rent Control Act, 1958, as amended by Act No. 52 of 1988-Sec-
tion 3(crTerm "rent''-Whether to be construed as "standard rent''-Held,
Nrr-ft was exact amount of monthly rent that was being paid on relevant date
i.e. 1.12.198fr-No precondition offixation of standard rent before applicfllion
of provisions of Section 3(c). F
The Delhi Rent Control Act, as amended by Act No 52 of 1988 came
into effect from 1.12.1988. Section 3(c) of the amended Act provided that
the provisions of the Delhi Rent Control Act will not apply to any premises
whose monthly rent exceeded Rs. 3500. The Appellant filed a writ petition
in the Delhi High Court challenging the validity of Section 3(c) of the Act. G
The writ petition was dismissed, and it was held that section 3(c) was a
valid piece of legislation and did not contravene aoy of the provisions of
the Constitution oflndia. It was also held that section 3(c) was prospective
and did not affect the cases that were pending on the date it came into
operation. H
539
540 SUPREME COURT REPORTS [1994) SUPP. 4 S.C.R.
A These appeals were filed against the judgment of the Delhi High
Court. The main contention of the appellant was that the provision of
Section 3(c) of the Act was ultra vires Article 14 of the Constitution. It was
submitted that the classification of properties on the basis of rent was
arbitrary and discriminatory. In any event, the cut off point at Rs. 3,500
for the purpose of exclusion from the benefit of the Rent Control Legisla-
B
tion was fixed arbitrarily. It was also contended that provisions of Section
3(c) were prospective and would not apply to premises which were already
tenanted on the date on which the Amending Act came into force.
Dismissing the appeals, this Court
c
HELD : 1.1. In order to strike a balance between the interests of the
landlords and the tenants and for giving a boost to house building activity,
the Iegislatnre in its wisdom has decided to restrict the protection of the
Delhi Rent Control Act only to those premises for which rent is payable
D upto Rs. 3500 per month and has decided not to extend this statutory
protection to the premises codstructed on or after the date of coming into
operation of the Amending Act for a period of ten years. This is a matter
of Legislative policy. [551-D]
1.2. It is for the legislature to decide what should be the cut-olTpoint
E for the purpose of classification and Legislature of necessity must have a
lot of latitude in this regard. The safeguard provided by Article 14 of the
Constitntion can only be invoked, if the classification is made on the
grounds which were totally irrelevant to the object of the statute. But, if
there is some nexus between the objects sought to be achieved and the
F classification, the Legislature is presnmed to have acted in proper exercise
of its constitutional power. The classification in practice may result in
some hardship. But, a statutory discrimination can not be set aside, if
there are facts on the basis of which the statntory discrimination can be
justified. It is for the legislature to decide whether or not any section of
the people shonld be protected in any way by law. For this pnrpose, the
G Legislatnre can identify the section of the people who needs protection and
decision how the classification will be done or what will be the cnt-olT point
for the purpose of making such classification. The classification may be
· done on income basis or rental basis or some other basis. The court can
only consider whether the classification has been done on an nnder-
H standable basis having regard to the object to the statnte. The Court will
D.C. BHATIA v. U.0.1. 541
not question its validity on the gronnd of lack of legislative wisdom. A
Moreover, the classification cannot be .\one with mathematical precision.
The legislature must have considerable latitude for making the classifica-
tion having regard to the surrounding circumstances and decide whether
cut-off point for the classification on the basis of monthly rent should be
Rs. 3500 or more. If the classification is totally irrational and has no nexus B
with the object sought to be achieved by the statute, then only will the court
strike down such classification. [551-F-G, 561-D-F]
1.3. So far as the ceiling limit of Rs. 3500 is concerned, it is well
settled that a provision initially valid can in the long run tum out to have
become discriminatory. An exemption with the passage of time may not C
have any nexus with the objects sought to be achieved by the statute. It is
for the legislature to decide which particular section of people require
protection at any given point of time. This is a matter of legislative policy.
[557-C]
In the facts of this case, this Court is not persuaded to bold that D
impugned Section 3(c) of the Delhi Rent Control Act violates Article 14 of
the Constitution in any manner.
Hamam Singh and Ors. v. Regi.onal Transport Authority, <alcutta and
Ors., [1954] SCR 371; City of New orleans v. Dukes, 427 U.S. 297 (1976] E
and Delhi Cloth and General Mills Ltd. v.S. Paramjeet Singh, (1940] 4 SCC
723, relied on.
Rattan Arya v. State df Tamil Nadu and Anr. , [1986] 2 SCR 596 and
Motor General Traders v. State of AP, [1984] 1 SCC 222, distinguished.
F
2. The provisions of the repealed statute cannot be relied upon after
it has been repealed. But what bas been acquired under the Repealed Act
cannot be disturbed. But, if any new or further step is needed to be taken
under the Act, that cannot be taken after the Act is repealed. In the instant
case, the legislature bas decided to curtail or take away the protection of G
the Delhi Rent Control Act from a section of the tenants. The tenants bad
not acquired any vested right under the Delhi Rent Control Act, but bad
a right to take advantage of the provisions of the repealed Act so long as
that law remained in force. The provisions of Section 3(c) will also apply
to the premises which had already been let out at the monthly rent in excess
of Rs. 3500 when the 1988 amendment came into force. (563-B.F, 564-F] H
542 SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A Kay v. G9odwin [1830] 6 King 576, 582 : Kewal Singh v. Smt. Lajwanti,
[1981] I SCC 290 and Mohinder Kumar and Ors. v. State of Haryana and
Anr. [1985] 4 i;cc 221, relied on.
3. The term 'rent" cannot be construed as "standard rent" but has to
be construed as the rent which is actually being paid. The Legislature has
B not used the expression "standard rent" in Section 3(c). Words normally
should be understood in the ordinary dictionary meaning. Section 3(c) was
introduced with a view to take away the benefit of the protection of the Act
from the tenants who could afford to pay more than Rs. 3500 per month
as rent. Only thing that has to be seen for the purpose of deciding the class
c of tenants, who were being excluded from the ambit of the Rent Act, was
the exact amount of monthly rent that was being paid on the relevant date
i.e. 1.12.1988. There is no pre-condition of fixation of standard rent before
application of the provisions of Section 3 (CJ of the Act. (564-G, 565-A-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4265 of
D 1991 etc. etc.
(Under Article 32 of the Constitution of India.)
Ashok H. Desai, Soli J Sorabjee, Dr. Shankar Ghose, K. Parasaran,
K.N. Bhat, K.K. Venugopal, Ashwani Kumar, A.K. Ganguli, D.V.Sehgal,
E M.L. Verma, Har Dev Singh, V.B. Patel, A.B. Rohtagi, V.C. Mahajan, N.N.
Goswami, U~. Bachawat, Arnn Mohan, Yogesh K. Jain, K.K. Luthra,
Gobind Mukboty, K. Madhava Reddy, R. Venugopal Reddy, S. Ganesh,
P. VenugopaJ, K. J. John, Dr. Roxna Swamy, Manoj Wad, Bharat Sangal,
Rajiv Mehta, Kailash Vasdev, Ms. Radha Rangaswmi, S. Sukumaran,
p Rahn! P. Dave, Arnn Kathapalia, R. Ayyam Perumal, Iqbal Butt, K.C.
Dua, Ratan Lal, Y.P. Mahajan, Sanjay Kishan Kaul, R.N. Seswani, Ms. B.
Sunita Rao, S.M. Sarin, P.N. Puri, S.L. Kakker, Divender Singh, S.
Sukumaran, Ranjit Kumar, Ravi Kher, J.K. Seth, H.K. Puri, S.K. Puri, Arun
K. Sinah, Ms. Pinki Anand, Ms. Gita Luthra, D.N. Goburdhan, V.J. Fran-
cis, V. Subramanian, Rishi Kesh, Madan Lokur, Subodh Markandeya, Ms.
G Chitra Markandeya, Ajay Singh, H.P. Sharma, Ms. Madho Moolchandani,
Sanjay Kaput, M.K. Michael, Ratan Lal, S.A. Shroff, Kailash Vasdev, V.K.
Verma, Promod B. Aggarwala, Raju Rama Chandran, Shri Narain, V.
Shekhar, P.H. Parekh, Ms. Lalita Kaushik, Sudhir Kr. Gupta, S.K.C. Pasi,
Ranjan Mukherjee, Ms. Vijay Lakshmi Menon, M.P. Shorawala, T.V.S.N.
H Chari, M.C. Dhingra, P.N. Gupta, Arnn Kumr Sharma, A.K. Srivastav, R.S.
D.C. BHATIA v. U.0.1. [SEN, J.] 543
Rana, Ms. Sushma Suri, L.C. Agarwala, Indra Makwana, Rajeev Sharma A
Ms. Chitra Mehendale, S. Parekh, T.C. Sharma, Ms. Neelam Sharma, P.K.
Jain, M.A. Khan, D.N. Goburdhun, V. Shekhar, Atul K. Bandhu, Vinod
Kumar, Rajiv Bahl, V.N. Koura, Ashok Grover, R. Mbhan, Nedumarau,
Ratan Lal, S.B. Upadhyay, Prashant Bhushan, V.K. Verma, R.N. Kapur,
A.S. Bhasme, V.B. Saharya, for Saharaya & Co. Mrs. Lalita Kaushik, B.
Dewan, P.N. Gupta, A.M. Khanwilkar, C.V.S. Rao, Ms. S. Janani Ms.
B
Naresh Bakshi R.P. Sharma, S.P. Pandey, Ms. A. Subhashin~ V.K Verma,
T.V.S.N. Chari, G. Prabhakar, M. Vijay Bhaskar, Nikhil Nayyar, A.T. Rao,
A. Subba Rao, S.K. Kulkarni, M.T. George, Narashimha P.S., P.K. Pillai,
P. Chowdhary, M. Veerappa, Ms. Indu Malhotra, Ms. Meenakshi Arora,
M.C. Dhingra, Kailash Vasdev, S. Ganesh, for JBD/A. V. Rangam, Bharat C
Sangal, R.P. Kapur, A.M. Khanwilkar, Ms. Madhu Sikri and S.K. Mehta
for the the appearing parties.
The Judgment of the Court was delivered by
SEN, J. This appeal has been heard along with a number of other
D
appeals, special leave petitions and writ petitions. Common questions of
law have arisen in all these matters relating to interpretation and constitu-
tional validity_ of Section 3(c) of the Rent Control Act, 1958.
The Delhi Rent Control Act,as amended by Act No. 52 of 1988 came E
into effect from 1.12.88. Section 3( c) of the amended Act provided that the
provisions of the Delhi Rent Control Act will not apply to any premises
whose monthly rent exceeded Rs. 3,500.
The appellant thereon filed a writ petition in the Delhi High Court F
challenging the validity of the newly inserted section 3(c)'of the Act. The
appellant's writ petition was heard along with a batch of other writ peti-
tions. By a judgment dated February 11, 1991, the Delhi High Court held
that Section 3(c) was a valid piece of legislation and did not contravene
any of the provisions of the Constitution. Following its judgment in Civil
Revision No. 470 of 1981 Ninnaljit Arora v. Bharat Steel Tubes, it also held G
that Section 3(c) was prospective and did not affect the cases that were
pending on the date it came into operation.
The present batch of appeals are directed against the judgment of
the Delhi High Court dated 11th February, 1991. H
544 SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A Section 3 of the Act lays down :
"3. A~t not to apply to certain premises. - Nothing ll). this Act shall
apply,
(a) to any premises belonging to the Government;
B
(b) to any tenancy or other like relationship created by a grant
from Government in respect of the premises taken on lease,
pr requisitioned, by the Government :
Ptovided that where any premises belonging to Government
c have been or are lawfully let by any person by virtue of an
agre~ment with the Government or otherwise, then, notwithstand-
ing any judgment, decree or order of any court or other authority,
the provisions of this Act shall apply to such tenancy.
(c) ,to any premises, whether residential or not, whose monthly
D rent exceeds three thousand and five hundred rupees; or
(d) to any premises constructed on or after the commencement
of the Delhi Rent Control (Amendment) Act, 1988, for a
E
period of ten years from the date of completion ~f such
construction."
I
The ml!in contention of the appellant is that the provisions of sub-
section (c) of Section 3 is ultra vires Article 14 of the Constitution. It has
been contended that the legislature has not appreciated the present day
realities of lilndlord-tenant relationship. If landlords are given a free hand
F to raise the ~ent of the premises then they will abuse this freedom and will
demand unreasonable and exhorbitant rents. The classification of proper-
ties on the r~ntal basis was arbitrary and discriminatory. In any event, the
cut-off point of Rs. 3,500 for the purpose of exclusion from the benefit of
the Rent Control legislation was fJXed arbitrarily. Lastly, it was contended
G that provisicf>ns of Section 3(c) are prospective and will not apply to
premises which were already tenanted on the date on which the Amend-
ment Act came into force.
Before dealing with the various contentions raised specifically, it will
be useful tO'note certain facts leading to the insertion of sub-section (c) in
H Section 3 of the Delhi Rent Control Act.
D.C. BHATIA v. U.0.1. [SEN, J.] 545
Various representations had been received by the Government about A
the hardship and injustice caused by the provisions of the Rent Act. An
Economic Administration Reforms Commission set up under the Chair-
manship of Shri L.K. Jha went into this question and its Report No. 11
presented to the Government in September, 1982, suggested a number of
changes in the rent control law. The commission pointed out that the
B
freezing of rentals at old historic levels, the excessive protection of tenancy
rights and the extreme difficulty of recovering possession of the accom-
modation even for the owner's own used had (a) hit hard the house-owner
of modest means; (h) depressed property values and affected adversely the
revenues of municipal bodies and the state and Central Governments; (c)
imposed onerous burdens on the administration and the judiciary and led c
to large number of pending cases; (d) rendered investment in housing for
rental unattractive, inhibited the letting out of available accommodation,
brought about a deterioration of the existing stock of housing through the
neglect of maintenance, and thus had aggravated the acute scarcity of
accommodation for hire; (e) encourage various malpractices and abuses D
such as on-money (pugree), partial receipts for rent, capital consideration
(in black money) for tenancy transfers, etc.; and (t) in general, tended to
protect the haves against the have-nots, i.e., the tenant (even if affluent) as
against the landlord (even if not so .affluent) and the sitting tenant as
against the prospective tenant who was looking for accommodation on rent
E
The Commission in the background of the aforesaid findings made
inter alia, the following recommendations :
(i) There is a case for confining rent control to the relatively
modest premises occupied by the less affluent though it is F
difficult to draw a suitable dividing line for the purpose. We
would urged the State Governments to consider this pos-
sibility.
(ii) Considering the urgent need for new housing, and as an
incentive for the construction of houses, there should be an G
exemption from rent control on all the new construction for
a period of five years from the date of completion."
The National Commission of Urbanisation also made a report in
which the following points were made : H
546 SUPREME COURT REPORTS [1994) SUPP. 4 S.C.R.
A "(i) Housing has been recognised as the basic need, ranked next
only to food and clothing. But resources allocated and
,policies pursued have not yielded the expected results. Forty
'million people (about 25 per cent of India's total urban
population) live in slums and under conditions of multiple
deprivation - illegal land tenure, deficient environment and
B kutcha shelter. In addition, a significant number live in inner-
city neighbourhood with decaying buildings and deficient
services. The supply of new shelter units is not adequate to
meet incremental needs - leave aside the backlog. This may
lead to a double ing of slum population - 75 million by 2001.
c Nearly sixty per cent of households cannot afford a conven-
tional pucca house and the lowest 10-15 per cent cannot even
afford a serviced site. Furthermore, given the resource con-
straints, it is not possible to provide new pucca houses for all
in the near future. The emphasis of housing policy therefore,
has to be on increasing shelter supply, improving and upgrad-
D
ing slums and conserving the existing housing stock.
(ii) There are always some households which are either not
interested in owning a house or just cannot afford to own one.
For such households rental housing is the only option. In 1981,
E 56.80 per cent of urban households were living in rented
premises. The main factors inhibiting investment in rental
housing and in the maintenance of rental stock are the various
rent control laws. The Commission had made extensive
recommendations concerning reforming rent laws in its Inter-
im Report, which have been reiterated here. "
F
The Committee of the secretaries recommended, inter alia, :
"The Committee endorsed the view that there was need basically
to ~nfine the protection of rent control law to the weak tenant
G and by and large exclude accommodations which were either
no11-residential in nature or were being used by better-off tenants.
It was agreed that large residential premises with a rental value
hi!!iher than a prescribed limit should be taken outside the purview
of the Rent Control Act, since these are used by the relatively
H affluent tenants. In such cases higher rental incomes derived from
D.C. BHATIAv. U.0.1. [SEN, J.) 547
the property would be subject to various taxes, and there was no A
need to artificially depress these incomes by application of Rent
Control Act."
Subsequently the recommendations made by the Secretaries' Com-
mittee were examined by the Ministry and thereafter the decision was taken
to amend the Delhi Rent Control Act. B
In the Statement of Objects and Reasons, the purpose of the amend-
ment by the Delhi Rent Control (Amendment) Act, 1988 was stated as
under:
"The Delhi Rent Control Act, 1958 (59 of 1958) which came into
c
effect on 9th February, 1959, provides for control of Rents and
lodging houses and for the lease of vacant premises to the Govern-
ment within tlk Union Territory of Delhi.
.J.. For quite sometime, there have been demands from the D
Associations of house owners as well as tenants for amendment of
Delhi Rent Control Act, 1958. The Committee on Petitions of
Rajya Sabha, The Economic Administration Reforms Commission,
Secretaries Committee and National Commission on Urbanisation
have also recommended amendment of certain provisions of the
Act. Considering these demands/recommendations as also the fact .E
that with the passage of time, the circumstances have also
changed, necessitating a fresh look at the tenant-landlord relation-
ship, the amendment of Delhi Rent Control Act, 1958 has been
proposed with the following objects :
F
(a) To rationalise the present rent control law by bringing about
a balance between the interests of landlords and tenants.
(b) To give a boost to house building activity and maintain the
existing housing stock in a reasonable state of repairs.
G
(c) To reduce litigation between landlords and tenants and to
ensure expeditious disposal of disputes between them.
3. The Bill seeks to achieve the above objects."
The original proposal in the Bill was to exempt from the purview of H
548 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A the Rent Act those premises whose monthly rent exceeded Rs. 1,500. The
Legislature, however, after considering various factors, drew the dividing
line at Rs. 3,500.
On behalf of the appellants it has been contended that under the Act
the premises have been divided into two categories - (a) premises in
B respect of 'which rent payable per month is more than Rs. 3,500 and {b)
the other premises in respect of which rent is Rs. 3,500 or less per month.
This classification, according to the appellants, is unrealistic and without
any reasonable basis. Having regard to the rent at which flats are let out
in Delhi, Qne cannot possibly get any reasonable accommodation for less
C than Rs. 3,500. This means practically everybody in Delhi is being taken
out of the protection of the Rent Control Act.
It has further been contended that the figure of Rs. 3,500 is a static
and non escalating figure. In the case of Rattan Arya v. State of Tamil Nadu,
(1986] 2 $CR 596, it was clearly held that if the cut-off figure is static and
D non- esclllating, then the same is arbitrary and invalid.
Moreover, by introducing a figure of Rs. 3,500 for the all tenancies
irrespectjve of the vital differences in respect of the same, the Legislature
has treated unequals equally and therefore the provision is contrary to
E Article 14 of the Constitution of India and therefore, invalid. The Legisla-
ture has failed to take into account relevant factors such as the locality
were the premises are situated, the number of persons inhibiting the
premises, the size of the premises and the period of tenancy.
It was further contended that Section 3{d) applies to new buildings
F constructed after the Amending Act of 1988, came into force and its object
is to give a boost to building activity. This has genuine nexus with the policy
of the Act; but if Section 3{c) is retrospective, in the sense that it·would
apply to existing premises, then it cannot obviously give a boost to building
activity and the introduction of such a provision will have no nexus to the
G object '1Jf the Act.
Various other arguments were made to establish that the classifica-
tion of premises on the rental basis of Rs. 3,500 was wrong and un-
reasonable. It was argued that premises being used for commercial
purposes could not be equated to premises being used for residential
H purposes only. It was argued that a businessmen may initially start his
D.C. BHATIA v. U.0.1. (SEN, J.] 549
business in a locality in a small way and thereafter develop the business A
step by step. The locality, accessibility of the business place to the cus-
tomers, goodwill are important factors for commercial establishments. If
a landlord is given a free hand to evict a commercial establishment from
his premises then it will be very difficult for the tenant to set up another
commercial establishment in a new part of the city. This may in the long
B
run lead to closure of the business altogether.
Taking this argument one step further it has been contended on
behalf of the State Bank of India, Union Bank of India, Indian Banks'
Association and other Banks that the Act has not made any distinction
between public sector banks and other tenants. It was argued that if a C
public sector bank as to shift its place of business, then it will have to shift
the entire banking services from one area to another. Banking services
include setting up of vaults, and providing lockers to customers apart from
usual merchant banking activities. Banks are opened only at sites approved
by the Reserve Bank of India. The Banks have set up large number of D
branches in tenanted premises all over Delhi with the approval of Reserve
Bank of India. The Banks did not try to purchase or build their own houses
because of the security provided by the existing rent laws. It was, therefore,
submitted that a classification on the rental basis regardless of all these
factors make the classification arbitrary and violative of Article 14 of the
Constitution and should be struck down. E
It was contended on behalf of National Textile Corporation that it
has been set up solely for the purpose of reviving sick textile mills. It could
not be subjected to the same treatment as any other commercial estab-
lishment. The Government Companies have to discharge public duties and F
their activities have to abide by the provisions of Part-III of the Constitu-
tion. The distinction between commercial activities of Government com-
panies and commercial activities of private corporate bodies has been
ignored in the impugned legislation. This was also the argument of the
Bihar State Electricity Board.
G
We are unable to uphold any of these contentions. The Rent Acts
were enacted originally as temporary measures in order to protect the
tenants from eviction and also from arbitrary enhancem~nts of rent. Before
these Rent Acts were passed rights and obligations of landlords and
tenants were regulated by the provisions of the Transfer of Property Act, H
550 SUPREME COURT REPORTS (1994) SUPP. 4 S.C.R.
A which was enacted in 1882. The Rent laws which were passed by various
State Legislatures drastically curtailed the landlord's power to enhance
rent and etjct the tenant.
The question whether these restrictions were justified in law or not,
was raised in a large number of cases before this Court and the High
B Courts. The challanges were turned down by the Courts on the ground that
these restriction of the Country at that time.
It was observed by Sarkaria, J., in the case of Naginda Ramdas v.
Dalpatnn lGhharam, [1974] 1 SCC 242 :
c "Tlie strain of the last World War, Industrial Revolution, the large
scale exodus of the working people to the urban areas and the
srn;ial and political changes brought in their wake social problems
of considerable magnitude and complexity and their concomitant
evils. The country was faced with spiralling inflation, soaring cost
D of living, increasing urban population and scarcity of accommoda-
tion. Rack renting and large scale eviction of tenants under the
guise of the ordinary law, exacerbated those conditions making the
economic life of the community unstable and insecure. To tackle
these problems and curb these evils, the legislatures of the states
in India enacted Rent Control legislations. "
E
The Rent Control Laws are now in force in Delhi for more than 50
years. New Delhi House Rent Control Order, 1939 was issued under Rule
21 of the ,Defence of India Rules. This was followed by a number of
legislation$ like Punjab Urban Rent Restriction Act, 1941 which was
F extended to Delhi, Delhi Control Ordinance 1944, Delhi and Ajmer,
Bhilwara Control Act, Delhi Tenants (Temporary Protection) Act, 1956.
The present law i.e. Delhi Rent Control Act, 1958 was the last of a long
line of legislations which were passed to control the rents and to restrict
eviction of tenants except on the special grounds stated in the statute.
G As a result of these legislations a host of problems have cropped up.
These proplems have been stated in the various Committee Reports set out
earlier in the judgment. Representations were also made by the landlords
highlighting these problems. Jn order to tackle the problems created by the
Rent Act, the Delhi Rent Control Act was amended in 1988 by Delhi Rent
H Control A,mending Act, 1988 (Act 57 of 1988).
D.C. BHATIA v. U.O.l. [SEN, J.] 551
The objects of the Amending Act are quite different from the objects A
of the parent Act. One of the objects of Amending Act was to rationalise
the Rent Control Law by bringing about a balance between the interest of
landlords and tenants. The object was not merely to protect the weaker
section of the community. In fact, the representations made by the
landlords' association and the reports of various committees indicated, the B
laws were being very often abused by the rich tenants against poor or
middle class landlords. The Rent Act had brought to a halt house-building
activity for letting out. Many people with accommodation to spare did not
let out such accommodation for the fear of losing the accommodation
altogether. As a result of all there, these was acute shortage of accommoda-
tion which caused hardship to the rich and the poor alike. In the light of C
this experience, the Amending Act of 1988 was passed.
In order to strike a balance between the interests of the landlords
and also the tenants and for giving a boost to house building activity, the
Legislature in its wisdom has decided to restrict the protection of the Rent D
Act only to those premises for which rent is payable upto the sum of Rs.
3,500 per month and has decided not to extend this statutory protection to
the premises constructed on or after the date of coming into operation of
the Amending Act for a period of ten years. This is a matter of legislative
policy. The Legislature could have repealed the Rent Act altogether. It can
also repeal it step by step. It has decided to confine the statutory protection E
to the existing tenancies whose monthly rent did not exceed Rs. 3,500.
In our view, it is for the legislature to decide what should be the
cut-off point for the purpose of classification and the legislature of neces-
sity must have a lot of latitude in this regard. It is well settled that the F
safeguard provided by Article 14 of the Constitution can only be invoked,
if the classification is made on the grounds which are totally irrelevant to
the object of the statute. But, if there is some nexus between the objects
sought to be achieved and the classification, the Legislature is presumed
to have acted in proper exercise of its constitutional power. The classifica-
tion in practice may result in some hardship. But, a statutory discrimination G
cannot be set aside, if there are facts on the basis of which this statutory
discrimination can be justified.
In the case of Harman Sing/1 and others v. Regional Transport
Authority, Calcutta and others, [1954] SCR 371, a Bench consisting of five H
552 SUPREME COURT REPORTS (1994) SUPP. 4 S.C.R.
A judges of this Court upheld a notification issued by the Regional Transport
Authority, Calcutta Region, flXing lower tariff for smaller taxis. The benefit
of this lower fare was given to "small motor taxi cabs of not below 10 H.P.
and not above 19 H.P.'. Mahajan, J., speaking for the Couri observed :
'The only point for consideration in the appeal is whether the issue
B of licences to small taxi cabs between 10 and 19 H.P. to ply in the
streets of Calcutta and the fixation of lower rates of tariff for this
cla&s of taxis than that prescribed for taxis between 22 and 30 H.P.
vioiittes the fundamental rights of the appellants who are owners
of taxi cabs between 22 and 30 H.P., under articles 14 and 19{1)
c (g} of the Constitution. In our judgment, this question can be
answered only in the negative. It has been repeatedly pointed out
by !his Court that in construing article 14 the courts should not
addpt a doctrinaire approach which might well choke all beneficial
legislation and that legislation which is based on a rational clas-
sification is permissible. A law applying to a class is constitutional
D if there is sufficient basis of reason for it. In other words, a statutory
dis¢rimination cannot be set aside as the denial of equal protection
of the laws if any state of facts may reasonably be conceived to
justify it."
E The Supreme Court of United States of America has also repeatedly
stated that \he constitutional guarantee of equality is offended only if the
classification rests on grounds wholly irrelevant to the achievement of the
State's objective. In the case of City of New Orleans v. Dukes, 427 U.S. 297
(1976), the Court had to deal with an ordinance that banned all pushcart
vendors fro~ the French Quarter, except those in continuous operations
F
for more th;m eight years. It was held :
''When local economic regulation is challenged solely as violating
the Equal Protection Clause, this Court consistently defers to
leglslative determinations as to the desirability of particular
G statutory discriminations ...... Unless a classification trammels fun-
damental personal rights or is drawn upon inherently suspect
distinctions such as race, religion, or alienage, our decisions
presume the constitutionality of the statutory discriminations and
re<lliire only that the classification challenged be rationally related
H to a legitimate state interest. States are accorded wide latitude in
D.C. BHATIAv. U.0.1. [SEN, J.] 553
the regulation of their local economies under their police powers, A
and rational distinctions may be made with substantially less than
mathematical· exactitude. Legislatures may implement their
programme step-by-step...... in such economic areas, adopting
regulations that only partially ameliorate a perceived evil and
deferring complete elimination of the evil to future regulations..... B
In short, the judiciary may not sit as a super- legislature to judge
the wisdom or undesirability of legislative policy determinations
made .in areas that neither affect fundamental rights nor proceed
along-suspect lines ... ; in the local economic sphere, it is "only the
invidious discrimination, the wholly arbitrary act, which cannot
stand consistently with the Fourteenth Amendment." C
We were referred to a number of cases in course of the arguments.
In the case of Raval & Co. v. K.C Ramachandran & Ors., (1974] 2 SCR
629, the landlords had purchased a tenanted property in 1962 and made
an application under Section 4 of the Madras (now Tamil Nadu) Buildings D
{Lease and Rent Control) Act, 1960 for fixation of fair rent. The tenants
filed a writ petition seeking to restrain the landlords from proceedings with
this petition, on the ground that the application was misconceived. The
points raised in the writ petition were ultimately referred to a Full Bench
of the Madras High Court, which held that the Tamil Nadu Act controlled
both contractual tenancies and statutory tenancies, it was a complete Code E
in itself and enabled both landlords and tenants to seek the benefits of
fixation of fair rent. Ultimately, the matter came to this Court and was
heard by a Bench of Five Judges. Justice Alagiriswami, who delivered the
majority judgment, analysed the Tamil Nadu Act and after referring to the
earlier legislations relating to rent control, observed : F
"The 1960 Act which replaced the 1949 Act adopted a c<\mpletely
new scheme of its own. It provided for the fixation of a fair rent
on the basis of the cost of construction and the cost of land and
after allowing for depreciation provided for a return of 6 per cent
in the case of residential buildings and 9 per cent in the case of G
non-residential buildings. It also provided for increase in rent for
such factors as locality, nearness to railway station, market, hospi-
tal, school etc. Another significant fact is that all new buildings
constructed after 1960 were exempt from the scope of the Act.
Still another departure was that the Act applies, in the case of H
554 SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A residential buildings, only if the monthly rent does not exceed Rs.
250. The Act also provides for fixation of fair rent under the new
provisions even though fair rent for the building might have been
fixe~ under the earlier repealed enactments. All these show that
the Madras Legislature had applied its mind to the problem of
B housing and control of rents and provided a scheme of its own. It
did not proceed on the basis that the legislation regarding rent
control was only for the benefit of the tenants. It wanted it to be
fair both to the landlord as well as the tenant. Apparently it realised
that (he pegging of the rents at the 1940 rates had discouraged building
construction activity which ultimately is likely to affect every body
c and !therefore, in order to encourage new constructions exempted
them a/together from the provisions of the Act. It did not proceed on
the basis that all tenants belonged to the weaker section of the
community and needed protection and that all landlords belonged
to the batter off classes. It confined the protection of the Act to the
D weaker section paying rents below Rs. 250. It is clear, therefore, that
the Madras Legislature deliberately proceeded on the basis that
fair ~ent was to be fixed which was to be fair both to the landlords
as w¢ll as to the tenants and that only the poorer classes of tenants
needed protection. The facile assumption on the basis of which an
E argument was advanced before this Court that all Rent Acts are
intended for the protection of tenants and, therefore, this Act also
should be held to be intended only for the protection of tenants
breaks down whom the provisions of the Act are examined in
detai). The provision that both the tenant as well as the landlord
can ~pply for fixation of a fair rent would become meaningless if
F fixati9n of fair rent can only be downwards from the contracted
rent and the contract rent was not to be increased. Of course, it
has happened over the last few years that rents have increased
enormously and that is why it is argued on behalf of the tenants
that the contract rent should not be changed. If we could con-
G template a situation where rents and prices are coming down this
argm11ent will break down. It is a realisation of the fact that prices
and rents have enormously increased and therefore, if rents are
pegg¢d at 1940 rates there would be no new construction and the
community as a whole would suffer that led the Madras Legislature
H to exempt new buildings from the scope of the Act. It realised
D.C. BHATIA v. U.0.1. [SEN, J.] 555
apparently how dangerous was the feeling that only fools build A
houses for wise men to live in'."
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 came up
for considerations before this Court once again in the case of Ratta11 Arya
v. State of Tamil Nadu & A11r., (1986) 2 SCR 596. In that case, vires of
Section 30(ii) of the Act was challenged. This provision exempted from the B
operation of the Act 'any residential building or part thereof occupied by
anyone tenant if the monthly rent paid by him in respect of that building
or part exceeds for hundred rupees'. It was held :
"As a result of this provision while the tenant of a non-residential C
building is protected whether the rent is Rs. 50, Rs. 500 or Rs.
5000 per month, a tenant of a residential building is protected if
the rent is Rs. 50 but not if it is Rs. 500 or Rs. 5000 per month.
D
The counter-affidavit does not explain why any distinction
should be made between residential and non-residential buildings
in the matter of affording the protection of the provisions of the
Act."
The counter-affidavit was set out ill extenso in the judgment to show E
that it did not state the reason for giving pr.eferential treatment to the
non-residential premises having regard to the object of the 'statute ie.
protection of the weaker section of the community.
The Court ultimately held :
F
"As we pointed out earlier, the argument based on protection of
the weaker sections of the community is entirely inconsistent with
the protection given to tenants of non-residential buildings who
are in a position to pay much higher rents than the rents which
those who are in occupation of residential buildings can ever pay. G
We are, therefore, satisfied that section 30(ii) of the Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960 has to be struck
down as violative of Article 14 of the Constitution. A writ will issue
declaring Section 30(ii) as unconstitutional".
The main controversy in Rattan Arya's case was about the discrimina- H
556 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A tion between residential and non-residential buildings. Section 30(ii) of the
Tamil Nadu Jluildings Act, 1960 was struck down on the ground that the
argument based on protection of the weaker section of the community was
entirely inconsistent with the protection given to tenants of non-residential
premises.
B Some observations were also made in a passage in that judgment on
which strong elnphasis has been placed by the appellants :
"It certainly cannot be pretended that the provision is intended to
benefit, the weaker sections of the people only. We must also
observ~ here that whatever justification there may have been in
c 1973 when Section 30(ii) was amended by imposing a ceiling of
Rs. 400 on rent payable by tenants of residential buildings to entitle
them t¢ seek the protections of the Act the passage of time has
made the ceiling utterly unreal. We are entitled to take judicial
notice of the enormous multifold increase of rents through out the
D count'l!, particularly in urban areas. It is common knowledge today
that the accommcdation which one could have possibly got for Rs.
400 per month in 1973 will today cost at least five times More. In
these d~ys of universal, day to day escalation of rentals any ceiling
snch as that imposed by Section 30(ii) in 1973 can only be con-
sidered to be totally artificial and irrelevant today.'
E
.This obseitvation has to be understood in the context of the facts of
this case and also the provisions and the objects of the Tamil Nadn. Act
which were under consideration in that case. Reasonableness .of taking
away the prote~tion of the Act from residential premises whose rent
F exceeded Rs. 400 while continuing to give full protection to them non-
residential premises, was under challenge. The object of the Act, as was
emphasised in the judgment, was to give protection to the weaker. section
of the community and the various provisions of the Act were enacted to
prevent the unreasonable eviction of tenants in the State of Tamil Nadu. It
G was in that cont~xt observed that the ceiling of Rs. 400 imposed in 1973
had become unreal ·in 1986.
But the amendment made to Delhi Rent Control Act is for a dif-
ferent purpose ljitogether. The various objects, as set out earlier in the
judgment, include bringing about a balance between the interest of
H landlords and tenants and also giving a boost to honse building activity. For
D.C. BHATIA v. U.O.l. [SEN, J.] 557
this purpose, not only clause ( c) but clause ( d) also has been inserted in A
Section 3. Premises constructed on or after coming into operation of the
Delhi Rent Control {Amendment) Act, 1988 will be out of the purview of
the Act for a period of ten years. The existing premises, residential or
otherwise, whose monthly rent exceeded Rs. 3,500 will also be out of the
ambit of the Act.
B
So far the ceiling limit of Rs. 3,500 is concerned, it is well settled that
provision initially valid can in the long run turn out to have become
discriminatory. An exemption with the passage of time may not have any
nexus with the objects sought to be achieved by the statute. But, as of now,
it cannot be said that the persons, who are paying more than Rs. 42,000 C
per year as rent, belong to the weaker section of the community. It is for
the Legislature to decide which particular section of people require protec-
tion at any given point of time. This is a matter of legislative policy. The
argument that unless an escalating figure of ceiling limit of rent is fixed the
classification will become meaningless, pre-supposes that there will be
continuous high price rise in future. It also pre-supposes that in such a D
situation the legislature will not take any corrective step.
In the case of Motor General Traders v. State of Andhra Pradesh,
[1984] 1 SCC 222, Section 32{b) of the Andhra Pradesh Buildings {Lease,
Rent and Eviction) Control Act, 1960 was held invalid by this Court, E
becau3e it was per se discriminatory. It was pointed out that there were
some justification for exempting new buildings which were 5, 7 or 10 years
old when the Act came into force, in order to provide incentive to builders
to build buildings. But there could not be any justification for continuing
with this exemption indefinitely. A long period had elapsed after passing
of the Act and this was a crucial factor in deciding the question whether F
the impugned law had become discriminatory or not. This case was
decided on October 26, 1983. It is pointed out that the exemption had
continued to remain in force for more than 25 years.
In the case of Delhi Cloth & General .Mills Ltd. v. S. Paramjit Singh G
and another, [1990] 4 sec 723, the writ petitioners questioned the validity
of Section 1(3) of Jammu & Kashmir Houses and Shops Rent Control Act,
1966 which at the material time stood as under :
"1. (3) Notwithstanding anything contained in sub-section {2),
nothing in this Act shall apply to - H
558 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A (i) ,...
(ii) 9mitted
(iii) any tenancy in respect of any house or shop where the income
of the tenant, whether accruing within or outside the State,
B exceeds rupees 40,000 per annum;
Explanation : the word 'income' means 'net income."'
It was >tgued in that case that this clause was discriminatory and
arbitrary becaµse :
c
"It draws an artificial distinction between tenants on the basis of
their income. Those tenants earning net income below Rs. 40,000
per annum are fortunate enough to be protected by the beneficial
provisions of the Act, while a person like the appellant whose
D annual net income is undoubtedly in excess of the statutory limit
of Rs. 40,000 is unreasona!Jly and unfairly denied the protection
of the Act. This statutory discrimination, it is contended, places
persons like the appellant at the mercy of the landlords who can
easily1 evict them by recourse to the far less restrictive provisions
of the: Transfer of Property Act, 1882 and on the strength of their
E agree1fients of lease.
Counsel for the appellant submits that the impugned clause
does not take into account that nature of the building, but only
the income of the tenant. The income of the landlord himself is
F irrelevant. The protection of the Act is withheld or extended,
dependent solely on the financial capacity of the tenant and
without regard to the need of the landlord or the age or other
condi(ions of the building or any other factor. Treating tenants
differ¢ntly with reference to their annual income is not an intel-
ligible: classification, for the income of a tenant may vary from year
G to year, depending upon the nature of his business and other
factors. This variation in income may expose him to eviction in a
particular year when the business is prosperous but protects him
from eviction when the business declines and income falls. Fur-
thermore, counsel says, nincome11 is not a clear and precise concept.
H Limiting it to net income does not make it clearer. What are the
D.C.BHATIAv. U.O.t [SEN,J.) 559
permissible deductions to arrive at the "net", the Act does not say. A
The section is invalid because it is too broad or vague. Any
classification based on such vague differentia is unintelligible and,
therefore, violative of Article 14. In any view couusel submits, the
classification sought to be made between persons falling on either
side of the specified income has no reasonable relation to the B
object sought to be achieved by the statute. Counsel relies on the
observation of this Court in Rattan Arya v. State of Tamil Nadu,
[1986) 3 SCC 385, declaring Section 30(ii) of the Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960 as unconstitutional
Counsel also relied upon the decision of this Court in Motor
General Traders v. State of Andhra Pradesh, [1984) 1 SCC 222, C
declaring Section .32(b) of the A.P. Buildings (Lease, Rent and
Eviction) Control Act, 1960 as unconstitutional."
This argument was repelled by a Bench of three Judges of this.
Court. It was held : -
D
"In Rattan Arya, (1986] 3 SCC 385, this Court stated that a distinc-
tion between residential buildings leased on rent not exceeding Rs.
400 per month and all other buildings - whether residential or
non:rd;idential - was an unreasonable classification. There was no
reason why non-residential buildings leased on rent of Rs. 400 per E
month or less should be treated differently from residential build-
ing of like rent or why in the case of residential buildings the limit
should have been limited to Rs. 400 per month. To so restrict the
protection of the Act was an unreasonable classification. In the
Motor General Trad,,s, [1984) 1 sec 222, this Court stated that to F
arbitrarily prescribe a cut off date, i.e. August 26, 1957, for denying
the protection of the Act, without regard to the age of the building
or to the extent of realisation of the investment by the owner was
an unreasonable classification. These decisions do not, in our view,
support the contentions of the appellant.
G
On the other hand; a classification with reference to economic
realities was upheld by this Court in Kera/a Hotel & Restaurant
Association v. State of Kera/a, (1990) 2 SCC 502. This Court stated
(SC p.517, para 31) "...... those who can afford the costlier cooked
food, being more affiuent, would find the burden lighter. This H
560 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A object cannot be faulted on principle and is, indeed, laudable.
Though that principle was stated in a different context, significantly
this Court accepted a classification based on finan,cial capacity."
It was observed in that judgment that "the Legislature in its wisdom
is presumed to understand and appreciate correctly the problems of the
B State and the needs of the people made manifest by experience ....... legis-
lative innovation by social and economic experimentation must be per-
mitted to continue without judicial interference." It was ultimately held :
"The legislative object is, therefore, to protect tenants who are
c economically weaker in comparison to those affluent tenants falling
outside the specified limit of income, and at the same time tel'
encourage construction of new buildings which will result in better
availability of accommodation, employment opportunity and
economic prosperity. This is reasonable classification which does
not suffer from the vice of being too vague or broad. Classification
D based on income is well known to law. Such Classification has
reasonable relation to the twin legislative objects m~ntioned above.
We see nothing unreasonable or irrational or unworkable or vague
or unfair or unjust in the classification adopted by the impugned
provision."
E
The issues involved in this judgment bear close similarity to the issues
raised in the instant case. In the case of Delhi Cloth & General Mills Ltd
v. S. Paramjit Singh, (supra), the classification had been made on the basis
of income of the tenant. Persons earning more than Rs. 40,000 per annum
were classified in one category and taken out of the ambit of the Act,
F
whereas tenants having income into Rs. 40,000 were allowed to continue
to enjoy the protection of the Rent Act.
In the instant case, the classification has been made on the basis of
the rent payable on the premises. A person, who can afford to pay more
G than Rs. 42,000 a year by way of rent will be, by any <~andard, an affluent
person in our society. He cannot be said to belong to the weaker section
of the community. The argument that the rent payable for any building in
Delhi is very high and therefore, Rs. 3,500 per month is comparatively a
low figure of rent, overlooks the fact that the Rent Act was passed initially
H to <ave the weaker section of the people from arbitrary and sudden
D.C.BHATIAv. U.0.1.(SEN,J.] 561
enhancement of rent and also from eviction. If the argument advance& on A
behalf of the appellants is to be upheld, then it will have to be held that
the people, who can afford to pay rent at the rate of more than Rs. 3,500
per month, belong to the economically weaker section of the community
and must also be protected. It was argued on behalf of the respondents
that if a men is paying more than Rs. 42,000 per year by way of rent, then B
his annual income should be at least Rs. 1,50,000 per annum. Having
regard to the average income of the people in India, such a person cannot
be treated as an economically handicapped person. There is considerable
force in this argument advanced on behalf of the respondents.
However, we need not go too deeply into this aspect of the controver- C
sy, as in our opinion, it is for the legislature' to decide whether or not any
section of the people should be protected in any way by law. For this
purpose, the Legislature can identify the section of the people who needs
protection and decide how the classification will be done or what will be
the cut-off point for the purpose of making such classification. The clas- D
sification may be done on income basis or rental basis or some other basis.
The Court can only consider whether the classification has been done on
an understandable basis having regard to the object of the statute. The.
Court will not question its validity on the gronnd of lack of legislative
wisdom. E
Moreover, the classification cannot be done with mathematical
precision. The Legislature must have considerable latitude for making the
classification having regard to the surronnding circumstances and facts.
The Court cannot act as a super-legislature and decide whether cnt-off F
point for the classification on the basis of monthly rent should be Rs. 3,500
or Rs. 4,000 or Rs. 5,000. If the classification is totally irrational and has
no nexus with the object sought to be achieved by the statute, then only
will the Court strike down such classification.
In the facts of this case, we are not persuaded to hold that the G
impugned Section 3(c) of the Delhi Rent Control Act violates Article 14
of the Constitution in any manner.
The next point relates to interpretation of section 3(c) of the Delhi
Rent Control Act. It was urged that the Delhi Rent Control (Amendment) H
562 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A Act came into force on 1.12.1988. The effect of Section 3(c) which was
introduced by the Amendment Act was to remove those premises whose
monthly rent exceeded Rs. 3,500 from the ambit of the Delhi Rent Control
Act. This amendment of the Rent Control Act would not apply to those
tenancies which were created prior to 1.12.1988. It was argued that the
B Amendment Act has not been specifically made retrospective. Therefore,
it could not effect the rights acquired by the tenants under the Rent
Control Act before its amendment in 1988. Under the existing law, the
tenants had acquired valuable property rights. The bndlord could neither
evict the tenant nor enhance the rent at will. A suit could not be brought
C against a tenant on the ground of expiry of the lease, whether a lease was
for a fJXed term, year to year or month to month, on the ground of
expiration of period of lease. Filing of such suit was barred by virtue of
Section 14 of the Rent Act. Some of the tenants who could afford to build
did not build houses of their own because of the p10tection provided by
the provisions of the Rent Act. Had these provisions not been there, these
D tenants or lessees might have built houses of their own or purchased
·properties elsewhere. These vested rights could not be disturbed unless the
Amendment Act contained specific provisions to that effect.
We are unable to uphold this contention for a number of reasons.
E Prior to the enactment of the Rent Control Act by the varions State
Legislatures, the legal relationship between the landlord and tenant was
governed by the provisions of the Transfer of Property Act. Delhi Rent
Control Act provided protection to the tenant from drastic enhancement
of rent by the landlord as well as eviction, except on certain specific
F grounds. The Legislature by the Amendment Act No. 57 of 1988 has
partially repealed the Delhi Rent Control Act. This is a case of express
repeal. By Amending Act the Legislature has withdrawn the protection
hitherto enjoyed. by the tenants who were paying Rs. 3,500 or above as
monthly rent. If the tenants were sought to be evicted prior to the amend-
ment of the Act, they could have taken advantage of the provisions of the
G Act to resist such eviction by the landlord. But this was nothing more than
a right to take advantage of the enactment The tenant enjoyed statutory
protection as long as the statute remained in force and was applicable· to
him. If the statute ceases to be operative, the tenant cannot claim to
continue to have the old statutory protection. It was observed.by Tindal,
H C.J., in the case of Kay v. Goodwin, (1836) 6 Ring 576, 582 : ·
D.C. BHATIA v. U.0.1. [SEN, J.] 563
"The effect of repealing a statute is to obliterate it as completely A
from the records of the Parliament as if it had never been passed;
and it must be considered as a law that never existed except for
the purpose of those actions which were commenced, prosecuted
and concluded whilst it was an existing law"
B
The provisions of a repealed statute cannot be relied upon after it
has been repealed. But, what has been acquired under the Repealed Act
cannot be disturbed. But, if any new or further step is needed to be taken
under the Act, that cannot be taken even after the Act is repealed.
In the case of Kewal Singh v. Smt. Lajwanti, (1981) 1 SCC 290, vires C
of Section 25B of the Delhi Rent Control Act was challenged. Section 25B
wa; inserted to provide the landlord with a speedy remedy of eviction in
case of bona fide necessity of the landlord. A contention was raised on
behalf of the tenants that the provisions of section 25B violated Article 14
of the Constitution. Fazal Ali, J., speaking on behalf of the court, repelled D
this argument by observing :
"
"Thus any right that the tenant possessed after the expiry of the
lease was conferred on him only by virtue of the Rent Control Act.
It is, therefore, manifest that if the legislature considered in its E
wisdom to confer certain rights or facilities on the tenants, it could
due to changed circumstances curtail, modify, alter or even take
away such rights or the procedure enacted for the purpose of
eviction and leave the tenants to seek their remedy under the
common law.11 F
In the instant case, the Legislature has decided to curtail or take
away the protection of the Delhi Rent Control Act from a section of the
tenants. The tenants had not acquired any vested right under the Delhi
Rent Control Act, but had a right to take advantage of the provisions of
the repealed Act so long as that law remained in force. G
In the case of Mohinder Kumar and others v. State of Haryana and
another, (1985) 4 SCC 221, the validity of the Amending Act of 1978 by
which Haryana Urban (Control of Rent and Eviction) Act, 1973, was
challenged. The Amending Act by which a category of newly constructed H
564 SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.
A buildings were exempted from the provisions of the Act for a period of ten
years, was challenged, inter alia, on the ground that the provisions operated
retrospectively and sought to take away the vested rights of the tenants
under the Act. This contention was repelled by this Court in the following
words:-
B "The argument that the tenants have acquired a vested right under
the Act prior to its amendment is without any substance. Prior to
the amendment of Section 1(3) by the Amending Act of 1978, the
provision as it originally stood cannot be said to have conferred
any vested right on the tenants. The provision, as it originally stood
c prior to its amendment, might not have been constitutionally valid
as the exemption sought to be granted was for an indefinite period.
Th* does not necessarily imply that any vested right in any tenant
was thereby created. The right claimed is the right to be governed
by the Act prior to its amendment. If the Legislature had thought
D it fit to repeal the entire Act, could the tenant have claimed any
such right? Obviously, they could not have; the question of acquir-
ing any vested rights really does not arise."
In view of the aforesaid, we are unable to upheld to the contention
E that the tenants had acquired a vested right in the properties occupied by
them under the statute. We are of the view that the provisions of Section
3( c) will also apply to the premises which had already been let out at the
monthly reqt in excess of Rs. 3,500 when the amendment made in 1988
came into force.
F
The last contention was as to whether the term 'rent' is to be
construed a$ 'standard rent' and not as the rent which is actually being
paid. This argument is also not acceptable for a number of reasons. Firstly,
the legislatllre has not used the expression 'standard rent' in clause (c) of
Section 3. Words normally should be understood in the ordinary dictionary
G meaning.
'Stan<lard rent' has been defined in the definition Section 2(k) to
mean 'the s\andard rent referred to in Section 6 or where the standard rent
has been irlcreased under Section 7, such increased rent'. Section 3(c)
H applies to a,ny premises whose 'monthly rent exceeds three thousand and
I
D.C. BHATIA v. U.0.1. [SEN, J.] 565
five hundred rupees'. Clause (c) of Section 3 was introduced with a view A
to take away the benefit of the protection of the Act from the tenants who
could afford to pay more than Rs. 3,500 per month as rent..
It had been contended on behalf of the tenants that unless 'standard
- rent' was determined in accordance with the provisions of Section 6 of the B
Act, the provisions of Section 3(c) could not be made applicable. There is
nothing in the wording of Section 3( c) to support this contention. Section
3(c) speaks of premises 'whose monthly rent exceeds three thousand and
five hundred rupees'.
Moreover, the scheme and the purpose of the Act are clear. Tenants C
who could afford to pay niore than Rs. 3,500 per month by way of rent,
were being removed from the protective umbrella of the Rent Act. Only
thing that has to be seen for the purpose of deciding the class of tenants;
who were beii:tg excluded from the ambit of the Rent Act, was the exact
amount of monthly rent that was being paid on the relevant date i.e. D
1.12.1988. There is no pre-condition of fixation of standard rent before
application of the proVisions of Section 3(c) of the Act.
In the judgment under appeal, it has been held that the provisions
of Section 3(c) will not be applicable to the case which were pending before E
the court. No argument was advanced on this point by any of the parties.
We make it clear that we have not expressed any opinion on this controver-
sy.
In view of the aforesaid, the appeal fails and is dismissed. There will
be no order as to costs. F
Civil Appeals Nos. 4264, 4345, 4351, 4353, 4354, 4355, 4356, 4357,
4489, and 5080 of 1991, Civil Appeal No. 447 of 1992, Special Leave
Petitions (Civil) Nos. 11376, 12822, 13865, 14401and19250of1991,
Special Leave Petitions (Civil) Nos. 2024, 8272 and 13586 of 1992, G
Special Leave Petition (Civil) No. 142 of 1993, Special Leave
Petition (Civil) No ........... (CC 15210) of 1991, Writ petitions (Civil)
Nos. 383 and 1141of1989, Writ Petitions (Civil} Nos. 228 and 946
of 1990, Writ Petitions (Civil} Nos. 9, 843, 920 and 1134 of 1991,
Writ Petitions (Civil) Nos. 53, 166, 492, 529, 576, 665, 695, 697 698, H
566 SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.
A 752 and 951 of 1992, Writ Petitions (Civil) Nos. 16, 54 251, 257,
262, 306 and 358 of 1993, Special Leave Petition (Civil) No. 11069
of 1993, Writ Petition (Civil) No. 530of1991, Writ Petitions (Civil)
Nos. 51, 832, 889 and 895 of 1993 and Writ Petitions (Civil) Nos.
436 and 238 of 1994.
B Jn view of our judgment in Civil Appeal No. 4265 of 1991, the above
Appeals, Special Leave Petitions and Writ Petitions are also dismissed.
There will be no order as to costs.
A.G. Appeals and Petitions dismissed.
I
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Article 14"Sign in to search