Holding

Sections 14(1)(b) and 16(2) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 are constitutionally valid and do not violate Article 14, and the petitioners' challenges fail.

Summary

The petitioners challenged the constitutionality of sections 14(1)(b), 16(2) and 30(ii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, alleging that they were arbitrary, discriminatory and violated Article 14 of the Constitution. The case arose from an eviction order under section 14(1)(b) for demolition and reconstruction of a building occupied by the petitioner. The Supreme Court examined the legislative purpose of the provisions, the need to encourage demolition of dilapidated buildings and construction of new accommodation, and the classification between repair‑eviction and demolition‑eviction. It held that the provisions are a rational classification, serve a legitimate public purpose, and do not amount to invidious discrimination. Consequently, the writ petitions were dismissed and the eviction order upheld.

Issues considered

The validity of section 14(1)(b) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 on the ground of arbitrariness and violation of Article 14.
The constitutionality of section 16(2) which exempts a newly constructed building from the Act for five years.
The challenge to section 30(ii) of the Act as violative of Article 14 (already decided in Rattan Arya).
Whether the absence of a re‑induction right for tenants after reconstruction constitutes unreasonable classification.

Legislation cited

Tamil Nadu Buildings (Lease and Rent Control) Act, 1960s. 14(1)(b), s. 16(2), s. 30(ii)
Transfer of Property Act

Subjects

landlord-tenantevictiondemolitionreconstructionArticle 14equalityrent controlconstitutional validityTamil Nadu Rent Act

Judgment

PRABHAKARAN NAIR, ETC. A
v.
STATE OF TAMIL NADU AND ORS.
1
SEPTEMBER 3, 1987

[SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.) B

Landlord-Tenant matter-Tamil Nadu Buildings (Lease and
'.f·· Rent Control) Act, 1960--Sections 14(1)(b), 16(2) and 30(ii)-Vires
of-Challenged.

There was 'much ado about nothing' about these Writ Petitions C
under Article 32 of the Constitution. The petitions sought to challenge
the Vires of sections 14(l)(b), 16(2) and, incidentally, sec. 30(ii) of the
Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 on the
ground of being arbitrary, discriminatory and unreasonable. The diffe-
rent petitions had different facts, and it was considered appropriate to D
deal with the facts of the writ petition filed by Prabhakaran Nair (Writ
Petition No. 506 of 1986) as a typical case to appreciate the points in
issue.

In that case, the respondents-landlords, after purchasing the
-{ premises in dispute from the erstwhile owner, filed an application for E
the eviction of the petitioner from the said premises on the grounds of
non-payment of rent under section 10(2)(1), unlawful sub-letting under

-- section 10(2}(ii)(a), causing damages to the premises under section
10(2)(iii) and demolition and reconstruction of the premises under
section 14(1)(b) of the Tamil Nadu Rent Act. The Trial Court ordered
eviction only under section 14(1)(b) of the Act for demolition and re- F
construction, rejecting the other grounds. The appellate court dismis-
sed the appeal of the petitioner. The High court also dismissed the civil
revision petition of the petitioner. The petitioner then filed a petition for
Special Leave in this Court against the judgment and order of the High
Court. In the meanwhile, the City Civil Court, on January 29, 1983,
granted interim injunction, restraining the respondents-landlords from G
demolishing the building till the disposal of an application filed by the ·
petitioner in the suit, against the erstwhile owner and the present land-
lords for specific performance of an agreement to sell the premises to
the petitioner. The injunction was stated to have been confirmed and
was still continuing as the said application for specific performance was
still pending in the City Civil Court. H
2 SUPREME COURT REPORTS [ 1988] I S.C.R.

A This Court dismissed the petition for special leave, observing that
the petitioner would be at liberty to file, if so advised, a writ petition
under Article 32 of the Constitution,. challenging the validity of section
14(l)(b) of the Act. The petitioner filed this writ petition, challenging
the validity of sections 14(l)(b) and 16(2) of the Tamil Nadu Rent Act as
being arbitrary, discriminatory, unreasonable and unconstitutional,
B and contending consequently that the eviction order passed against him
under section 14(1)(b) was illegal. Several of the other writ petitions
were on this issue. -..(

Dismissing the Writ Petitions, the Court,

C HELD: In this case, the Court was not concerned with clause
(ii) of section 30 of the Tamil Nadu Act, a challenge to the validity
of which had been accepted by the Court in Rattan Arya and others
v. State of Tamil Nadu and another, [1986] 3 S.C.C. 385 and the
section 30(ii) had been struck down as violative of Article 14 of the
Constitution. [IOEJ
D
Under section 14(l)(b) of the Act, a landlord could make an appli-
cation to the Rent Controller for possession of a building, and the Rent
Controller, if satisfied that the building was bona fide required by the
landlord for the immediate purpose of demolition and such demolition
was for the purpose of erecting a new building on the site of the building
E sought to be demolished, might pass an order, directing the tenant to
deliver possession of the building to the landlord before a specified date.
Under the provisions of the Act, the landlord has to commence the work
of demolition not later than one month and the entire demolition work
shall be completed before the expiry of three months from the date he
recovers possession of the entire building, and in the case of massive
-
F buildings, demolition can take six months or even a year, in which case,
for reasons to be recorded in writing, the controller may allow further
period. During that period a tenant was bound to have found some
other suitable alternative accommodation. In the case of a building
vacated for repairs under section 14(l)(a) of the Act, a tenant may
arrange for a temporary accommodation for a few months and then
G return to the building. It was not practicable and would be anomalous
to expect a landlord to take back a tenant for a re-constructed building
after a long lapse of time during which the tenant must necessarily have
found some other suitable accommodation. This was the true purpose
behind section 14(l)(b) read with section 14(2)(b). In that view of the
matter, the Court was unable to accept the submission that in providing
H for the re-induction of the tenant in the case of repairs and not in the
P. NAIR v. STATE OFT. NADU 3

case of re-construction, there was any unreasonable and irrational A
classification without any basis. The absence of the provision for re-
induction does not ipso facto make the provisions of the Act unfair or
' make the Act self-defeating. [UG, 12A-C,D-G, lSE]

As regards the submission that in most of the Rent Acts, there was
a provision for re-induction of the tenant after re-construction, but in B
the case of the Tamil Nadu Act, there was no such provision and this
was violative of Article 14 of the Constitution, Article 14 of the Con-
y stitntion does not authorise the striking down of a law of one State on

-- x~
the gronnd that in contrast with a law of another State on the same
subjects, its provisions are discriminatory, and nor does it contemplate
a law of the centre or of the State dealing with similar subjects being
held to be unconstitutional by a process of comparative study of the
c
provisions of two enactments; the source of authority for the two sta-
\ totes being different, Article 14 could have no application, as observed
by a Constitution Bench of this Court in the State of Madhya Pradesh v.
I
G.C. Mandawar, [1955] 1S.C.R.599. [12G, 13A-C]
D
The Act sought to restore the balance in the scale which is otherwise
weighted in favour of the stronger party which had larger bargaining
power. The Act balances the scales and regulates the rights of the
parties fairly and cannot be construed only in favour of the tenant, The
main provision of section 14(1)(b) enables a landlord to make an appli-
.-{ cation to the rent controller for possession of the building for demolition E
for re-construction of-a new building in its place. 1f the Rent Controller
is satisfied with the bona fide need of the landlord, he may pass an

- order, directing the tenant to deliver possession of the building to the
landlord before a specified date. There must be a bona fide need of the
landlord. It contd not be said that section 14(1)(b) was arbitrary and
that excessive powers had been given to the landlords. [16G-H, 17D-E] F
;:',
The provisions of the Act imposed restrictions on the landlord's
right under the common law or the Transfer of Property Act to evict the
tenant after the termination of his tenancy. The nature, the form and
the extent of the restrictions to be imposed on the landlord's right and
consequent extent of the protection to be given to the tenants is a matter G
of legislative policy and judgment. It is inevitably bound to vary from
one State to another according to the local, peculiar conditions prevail-
ing in each State. When the Courts are confronted with the problem of a
-<' legislation being violative of Article 14, the Courts are not concerned
with the nnwisdom of the legislation. "In short, unconstitutionality and
not nnwisdom of a legislation is the narrow area of judicial review" H
4 SUPREME COURT REPORTS [ 1988] 1 S.C.R.

A observations of Krishna Iyer, J, in Murthy Match Works, etc., v. Asstt.
Collector of Central Excise, etc., [1974] 3 S.C.R. 121, may be seen in t-
this connection, [ISF-H, 19G]

The pnrpose underlying section 14(1)(h) read with section 16(2) of
the Act is to remove or mitigate the disinclination on the part of the
B landlords to expend moneys for demolition of the dilapidated buildings
and reconstruct new bnildings in their places. It is a matter of which
jndicial notice can be taken that the return from the old and dilapidated
bnildings is very meagre, and in several cases, such buildings ,prove
uneconomic for the landlords, resulting in the deterioration of the con-
dition of the buildings, and there are even collapses of such buildings. It
C is for this purpose that the landlord is given by section 14(l)(b), read
with section 16, an incentive in the form of exemption from the provi-
sions of the Act for five years in respect of the reconstructed bnilding.
The principle underlying such exemption is not discriminatory against
the tenants, nor is it against the policy of the Act. It only serves as an
incentive to the landlord for creation of additional accommodation to
D meet the growing housing needs. These provisions providing for exemp-
tion of the new bnildings from the provisions of the Rent Act for a
period of five years or ten years were npheld vide the decision of this
Court in Punjab Tin Supply Co., Chandigarh and Ors. v. The Central
Govt. & Ors., [1984] 1 S.C.C. 206 at 216, 217. [20C-G]

E The Court was unable to accept the submission that the absence
of the right of induction of the tenants .in the reconstructed premises

-
was either arbitrary or nnreasonable. The Act mnst be so construed
that it harmonises the rights of the landlords and at the same time
protects the tenants and also serves best the purpose of the Act, and
one of the purposes of the Act is to solve the acute shortage of accommo-
F dation by making rational basis for eviction and encouraging building
and re-building which is at the root of all causes of shortage of accommo-
dation. [23D; 24E-F] '

0 BITER: There is an acute shortage of housing. The laws relat-
ing to letting and landlord and tenant in the different States have from
G different States' angles tried to grapple with the problem. Yet, in view
of the magnitude of the problem, the problem has become insoluble and
the litigations abonnd and people suffer. More honses, therefore, must
be built and more accommodation mnst be made available for the >-
people to live in. The laws of the landlord and tenant must be made
rational, hnmane, certain and capable of being quickly implemented.
H The landlords having premises in their control sbonld be induced and
P. NAIR v. STATE OFT. NADU 5

encouraged to part with the available accommodation on certain safe- A
guards which will strictly ensure their recovery when wanted. Men with
money should be given proper and meaningful incentives, as in some
European countries, to build houses. Tax holidays for new houses can
be enconraged. The tenants should also be given prot~ction and se~urity
and certain amount of reasonableness in the rent. Escalation of prices in
the urban properties, land, materials and houses must be rationably B
checked. The country very vitally and urgently requires a National
Housing Policy if we want to prevent a major breakdown of law and
gradual disillusionment of the people. After all shelter is one of our
fundamental rights. The New National Housing Policy must attract new
buildings, rationalise the rent structure and the rent provisions and
bring certain amount of uniformity, leaving scope for sufficient flexibi·
lity amongst the States to adjust such legislation according to their
c
Deeds. This Conrt and the High Courts should also be relieved of the
heavy burden of the rent litigations. Tier of appeals should be cnrtailed.
Laws mnst be simple, rational and clear. Litigation must come to an
end quickly. Snch New Housing Policy mnst comprehend the present
and anticipate the future. The idea of a National Rent Tribnnal on an D
All India basis should be examined. This has become an urgent impera-
tive of today's revolution. A fast changing society cannot operate with
unchanging law and preconceived judicial attitude. [25B-H]

Rattan Arya and others v. State of Tamil Nadu and another,
[1986] 3 SCC 385; State of Madhya Pradesh v. G.C. Mandawar, [1955] E
1 SCR 599; S. Kannappa Pillai and another v. B. Venkatarathnam, 18
Law Weekly 363; P.J. Irani v. State of Madras, [1962] 2 SCR 169; S.

- Kandaswamy Chettiar v. State of Tamil Nadu and another, [1985] 2
SCR 398; Raval & Co. v. K.C. Ramachandran & Ors., [1974] 2 SCR
629; Murlidhar Agarwal and another v. State of U.P. and others, [1975]
1 SCR 575; Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. F
Subbash Chandra Yograj Sinha, [1962] 2 S.C.R. 159; Metalware &
Co., etc. v. Bansilal Sharma and Ors., etc., [1979] 3 S.C.R. IJ07; Meta
Ram v. Jiwan Lal, [1962] Suppl. 2 S.C.R. 623; Murthy Match Works,
etc. etc. v. Asstt. Collector of Central Excise, etc., [1974] 3 S.C.R. 121;
In re: The Special Courts Bill, 1978, [1979] 2 S.C.R. 476; Punjab Tin
Supply Co. Chandigarh & Ors. v. The Central Govt. & Ors., [1984] l G
S.C.C. 206 at 216, 217; Mohinder Kumar v. State of Haryana and Anr.,
[1985] 4 SCC 221at226, 227; Mehsin Bhai v. Hale and Company G. T.
Madras, [1964] 2 Madras Law Journal 147; Metalware Co. etc. v.
Bansilal Sharma and others, etc., [1979] 3 S.C.R. 1107 at 1117, 1118
Punjab Tin Supply Co., Chandigarh etc. etc. v. The Central Govt. and
Ors., (1984] l SCR 428; Motor General Traders and Anr. etc. etc. v. H
6 SUPREME COURT REPORTS [1988] 1 S.C.R.

A State of Andhra Pradesh and Ors. etc. etc., [1984] 1 SCR 594 at 605; 1-.
A tam Prakash v. State of Haryana and Ors., [1986] 2 S.C.R. 249;
Panchamal Narayan Shenoy v. Basthi Venkatesha Shenoy, [1970] 3
SCR 134;Jiwanlal & Co. and Ors. v. Manoi and Co., Ltd., 64 Calcutta
Weekly Notes, 932 at 937 and Mis. Patel Road-ways Private Limited,
Madras v. State of Tamil Nadu and Ors., A.I.R. 1985 Madras 115,
B referred to.

ORIGINAL JURISDICTION: Writ Petition No. 506 of 1986 --"r!
etc.

C (Under Article 32 of the Constitution oflndia).
':i•
J. Ramamurthi, V. Shanker, B. Parthasarthi, Raju Rama-
chandran, S. Srinivasan, M.C. Verma, C.S. Vaidyanathan, K.R.R.
-I
Pillai, E.C. Aggarwala, V. Balachandran, N.K. Sharma, M.N.
D Krishnamani, Diwan Balakram, A.T.M. Sampath, Mukul Mudgal,
V. Balachandran, V. Shekhar, K. Parasaran, Attorney General,
Soli J. Sorabjee, Shanti Bhushan, A.K. Verma, D.N. Mishra,
A.V. Rangam, P.N. Ramalingam and M. Raghuraman, for appearing
parties.

E
The Judgment of the Court was delivered by

F
SABYASACHI MUKHARJI, J. There is 'much ado about
nothing' about these cases. These petitions seek to challenge the vires
of section 14( l)(b) and section 16(2) as well as incidentally section
30(ii) of the Tamil Nadti Buildings (Lease and Rent Control) Act, 1960
-
(hereinafter called 'the Tamil Nadu Rent Act') on the ground of being
arbitrary, discriminatory and unreasonable. Different petitions deal
with different facts. It is not necessary to set these out exhaustively but
it would be appropriate to deal with the facts of Writ Petition No. 506
of 1986 as a typical one in order to appreciate the points in issue. In
G Writ Petition No. 506 of 1986, the respondent-landlord on or about
21st of March, 1978 after purchasing the premises No. 95, Thyagaraja
Road, T. Nagar, Madras from the erstwhile owner, filed an eviction
petition in the court of Small Causes, Madras for eviction of the
petitioner herein from the premises where the petitioner had been
)-
carrying on a hotel business serving meals etc. for four decades. The
H grounds in the eviction petition were non-payment of rent under sec-
P. NAIR v, STATE OF.T. NADU [MUKHARJI, J.J 7

tion.10(2)(1) of the Tamil Nadu Rent Act, unlawful sub-letting under
,...-t /\
section 10(2)(ii)(a), causin$. damages to the. premises under section
' 10(2)(iii) and also for the purposes of demolition and reconstructiol)
under section 14(1)(b).

The learned Judge of the trial court ordered eviction under sec-
tion 14(1)(b) of the Tamil Nadu Rent Act only for demolition and B
reconstruction and.dismissed the other grounds, and that is the only
ground with which we are concerned in this appeal. On 25th of
t· February, 1981 the Appellate Court qismissed the petitioner's appeal

- by saying that the landlords were rich people and capable of demoli-
tion and reconstruction in order to put the premises t() a more profit-
able use by putting up their own showroom. On September 30, 1982
the High Court dismissed the civil revision petition of the petitioher c
.!'\. and granted time ti\13 lst of January, 1983 for the petitioner to vacate
the premises in question. The petitioner thereafter filed a special leave
petition ag&inst the judgment' and order of the High Court in this
Court. This Court iniµally ordered show cause notjce and also granted
ad interim ex-parte stay of dispossession. On 29th January, 1983 the D
City Civil Court, Madras granted interim in junction restraining the
respondents from demolishing the building till the disposal of the
application in the suit filed by the petitioner against the erstwhile
owner and the present landlords for specific performance of an agree-
ment to sell the premises to the petitioner. According to the petitioner
.,-{ the injunction was cqnfirmed and was still continuing and the said suit E
for specific performance was also pending in the City Civil Court,
Madras.

-- On 17th. of February, 1986 this Court dismissed the special leave
petition after .notice but directed that .the decree for eviction would not
be executed till 17.11.86. It was observed by this Court that the F
_)_ petitioner would be at liberty to file a writ petition under Article 32
of the Constitntion, if so advised, challenging the validity of section
14(1)(b) of the Tamil Nadu Rent Act as mentioned on behalf of the
petitioner. The petitioner filed this writ petition challenging the vali-
dity.of section 14(1)(b) and section 16(2) of the Tamil Nadu Rent Act
on the groUl)d that these were arbitrary, discriminatory, unreasonable G
and unconstitutional. The petitioner contends in this writ petition that ·
c9nsequently the eviction order passed under section 14(1)(b) and
confirmed in appeal is also illegal. The aforesaid several of the writ
-\
petitions are on this issue.

The main ground of attack on this aspect seems to 'be that while H
8 SUPREME COURT REPORTS [1988] I S.C.R.

A other Rent Acts in case of eviction for demolition permit and direct I
that after reconstruction the tenant should be inducted as tenant or hi
given the opportunity to have the same space in the reconstructed
building, in the instant Act no such option is given and no such obliga-
tion imposed upon the landlord and as such the impugned provision is
illegal as being discriminatory against the tenant. In order to examine
B the various aspects on this contention, it will be necessary to examine
in detail the relevant provisions of the Act. It should be borne in mind,
however, that this was an Act passed to amend and consolidate the law
relating to the regulation of the letting of residential and non-resi-
dential buildings and the control of rents of such buildings and the
prevention of unreasonable eviction of tenants in the State of Tamil
C Nadu. Section 14 of the Tamil Nadu Rent Act states as follows:-

"14. Recovery of possession by landlord for repairs or for
-
reconstruction.-(1) Notwithstanding anything contained
in this Act, but subject to the provisions of sections 12 and
13, on an application made by a landlord, the Controller
D shall, if he is satisfied-

(a) that the building is bona fide required by the
landlord for carrying out repairs which cannot be carried
out without the building being vacated; or

E (b) that the building is bona fide required by the
landlord for the immediate purpose of demolishing it and
such demolition is to be made for the purpose of erecting a
new building on the site of the building sought to be
demolished, pass an order directing the tenant to deliver
possession of the building to the landlord before a specified
date.

(2) No order directing the tenant to deliver posses- /
sion of the building under this section shall be passed-

(a) on the ground specified in clause (a) of sub-
G section (1), unless the landlord gives an undertaking that
the building shall, on completion of the repairs, be offered
to the tenant, who delivered possession in pursuance of an
order under sub-section (1) for his re-occupation before the
expiry of three months from the date of recovery of posses-
sion by the landlord, or before the expiry of such further
H p~riod as the Controller may, for reasons to be recorded in
writing, allow; or
P. NAIR v. STATE OF T. NADU (MUKHARJI, J.) 9

,..,--\
(b) on the ground specified in clause (b) of sub- A
section (1), unless the landlord gives an undertaking that
--J. the work of demolishing any material portion of the build-
ing shall be substantially commenced by him not later than
one month and shall be completed before the expiry of
three months from the date he recovers possession of the
entire building or before the expiry of such further period B
as the Controller may, for reasons to be recorded in writ-
ing, allow.
y

- }
(3) Nothing contained in this section shall entitle the
landlord who has recovered possession of the building for
repairs to convert a residential building into a non-resi-
dential building or a non-residential building intv a residen-
c
tial building unless such conversion is permitted by the
). Controller at the time of passing an order under sub-
section (1).

(4) Notwithstanding an order passed by the Control- D
ler under clause (a) of sub-section (1) directing the tenant
to deliver possession of the building, such tenant shall be
deemed to continue to be the tenant, but the landlord shall
not be entitled to any rent for the period commencing on
the date of delivery of possession of the building by the
tenant to the landlord and ending with the date on which E
the building is offered to the tenant by the landlord in
pursuance of the undertaking under clause (a) of sub-

- section (2).

(5) Nothing in this section shall entitle any landlord
of a building in respect of which the Government shall be F
,,\ deemed to be the tenant to make any application under this
section."

Section 15 empowers the tenant to re-occupy after repairs. There
' is no such provision in case of eviction on the ground of bona fide need
for demolition and reconstruction. This is one of the grounds of G
challenge.

...4 Section 16 deals with the right of the tenant to occupy the build-
ing if it is not demolished. Sub-section (2) which was amended and
introduced by Act 23 of 1973 dealing with the reconstructed building
reads as follows: H
10 SUPREME COURT REPORTS [1988] 1 S.C.R.

"16(2) Where in pursuance of an order passed by the Con-
A
troller under clause (b) of sub-section (I) of section 14, any
biiilding is totally demolished and a new building is erected
in its place, all the provisions of this Act shall cease to
apply to such new building for a period of five years from
the date on which the construction of such new building is
B completed and notified to the local authority concerned."

In this connection section 30 which exempts certain buildings --y'
may be referred to and sub-section (i) is important. It reads as follows:

c
"30. Exemption in the case of certain buildings-Nothing
contained in this Act shall apply to-
'i
-
(i) any building for a period of five years from the _('
date on which the construction is completed and notified to
local authority concerned; or

D (ii) any residential building or part thereof occupied
by any one tenant if the monthly rent paid by him in respect
of that building or part exceeds (four hundred rupees)."

In this appeal we are not concerned with clause (ii) of section 30
the challenge tod whhose va 1idity ~as bee n acdcepted by this C[ ou r t in \-._
E R attan Arya an ot ers v. 5 tate o1 Tami1 Na u and another, 1986] 3
S.C.C. 385. Section 30(ii) of the Tamil Nadu Rent Act has been struck
down as violative of Article 14.

Various submissions were urged in support of the several writ
petitions. Sree Raju Ramachandran contended that in most of the
-
F Indian statutes dealing with eviction of tenants, there are provisions of
re-induction of the tenant where the eviction is obtained on the ground >--..
of reconstruction after the premises in question is reconstructed. It was
submitted that in those statutes, there is obligation on the landlord to
reconstruct within a certain period and the corresponding right on the
tenant evicted to be re-inducted at the market rate to be fixed by the
G Rent Controller or by such authority as the Court may direct.

Our attention was drawn to several statutes, namely, Maharash-
tra, Y1rnataka, Kerala, West Bengal and numerous others where }-
there are provisions for re-induction of the tenants in the premises
after reconstruction. Most of the provisions of other statutes provide
H for such induction while the Tamil N adu Rent Act does not. On this
P. !'-AIR v. STATE OFT. NADU [MUKHARJI. J.J 11

ground it was submitted, that firstly, that this is violative of Article 14 A
of the Constitution. It was further submitted that section 16(2) of the
Tamil Nadu Rent Act says that where in pursuance of an order of
eviction passed by the Rent Controller under section 14(1)(b) any
building is totally demolished and a new building is erected in its place,
all the provisions of the Act shall cease to apply to such new building
for a period of five years. It was submitted that neither the old tenant B
nor any new tenant was thus entitled to protection of the Rent Control
Act after reconstruction. The old tenant cannot also get into the new
building as of right. This discrimination against the tenants in Tamil
Nadu is invidious and violates Article 14 of the Constitution.
Secondly, it was submitted that if in case of repairs which also dis-
lodges the tenants for limited period, the tenants have a right to get
into the premises after repairs under the Tamil Nadu Rent Act, it is C
unreasonable that tenants should not have the same right in case of
)/. reconstruction. It was urged that once the building is ready for occupa-
tion it should make no difference whether the readiness is after repairs
or after construction. It was urged that in both cases the tenants go out
during the period of building work, and they should equally come back D
into the building after repairs or reconstruction. It was submitted on
this ground also that not enjoining re-inauction of the evicted tenant
after reconstruction is discriminatory and unconstitutional. The
classification of buildings reconstructed differently from the buildings
repaired is not valid, as it has no relation to the object or purpose of
the Act. Furthermore, that all the ten3nts belong to one class and they E
could not be treated differently. On this aspect it was further submit-
ted that the provisions of re-induction in most of the Rent Acts re-
presented the standard of reasonableness in the landlord and the
tenant law and the philosophy of Rent Control Legislation. It re-
presented the national consensus of reasonable standard. Therefore,
any provision which according to learned counsel appearing for the F
different parties in the writ petitions, was in variance with that
standard was unreasonable and as such violative of Article 14 of the
Constitution. In aid of this submission various contentions were urged.
We are, however, unable to accept this submission.

Learned Attorney General appearing for the respondents sub- G
milted before us that the main provision of section 14(1)(b) enables a
landlord to make an application to the Rent Controller and the Rent
Controller, if he was satisfied that the building was bona fide required
by the landlord for the immediate purpose of demolishing it for the
purpose of erecting a new building on the site of the building sought to
be demolished might pass an order directing the tenant to deliver H
12 SUPREME COURT REPORTS [1988] 1 S.C.R.

A possession of the building to the landlord before a specified date. In
the case of an application under section 14(1)(a) of the Tamil Nadu 1--
Rent Act namely bona fide requirement for carrying out repairs it
cannot be carried out without the building being vacated and it has to
be done within three months to enable the tenant to re-occupy the
building. It has further to be borne in mind that in the case of demoli-
B tion and re-construction, the landlord has to undertake that the work
of demolishing any material portion of the building shall be substan-
tially commenced by him not later than one month and the entire
·-Y
demolition work shall be completed before the expiry of three months
from the date he recovers possession of the entire building. See in this
connection the provisions of section 16 of the said Act. The demolition
therefore to be completed within three months. In the case of
c has
massive buildings demolition can overtake six months or even a year
'i
and hence the provision that for reasons to be recorded in writing, the
Controller may allow such further period. r
It has further to be borne in mind that after such demolition the
D re-construction of a new building on the same site is bound to take
time and such time depends upon the nature of the building to be
erected and it might take years it was argued. During that period a
tenant was bound to have found some other suitable alternative
accommodation; on the other hand in the case of a building for repairs,
a tenant may arrange for temporary accommodation for a few months
E and return back to the building. Therefore provision for reinduction in
,_
the case of repairs and absence of such a provision in the case of
demolition and reconstruction is quite understandable and rational.

F
It has to be borne in mind that it is not practicable and would be
anamolous to expect a landlord to take back a tenant after a long lapse
of time during which time the tenant must necessarily have found some
-
suitable accommodation elsewhere. This is the true purpose behind
section 14( l)(b) read with section 14(2)(b). In the aforesaid view of
the matter, we are unable to accept the submission that in providing
for re-induction of the tenant in case of repairs and not providing for
"
such re-induction in case of reconstruction, there is any unreasonable
G and irrational classification without any basis.

The other submission as noted above was that in most of the
Rent Acts, there was provision for re-induction of the tenants but }-
there was no such provision in case of reconstruction in the Tamil
Nadu Rent Act. In The State of Madhya Pradesh v. G.C. Mandawar,
H [ 1955] 1 S.C.R. 599, a Constitution Bench of this Court observed that
P. NAIR v. STATE OFT. NADU [MUKHARJI, J.) 13

Article 14 of the Constitution does not authorise the striking down of a A
law of one State on the ground that in contrast with a law of another
State on the same subject its provisions are discriminatory. Nor does it
contemplate a law of the Centre or of the State dealing with similar
subjects being held to be unconstitutional by a process of comparative
study of the provisions of two enactments. The source of authority for
the two statutes being different, Article 14 can have no application' it B
was observed.
y It is necessary now to deal with the submission that the section is
unreasonable. For this, one has to bear in mind the public purpose
behind the legislation. The Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960 was passed in 1960. A similar enactment which was
in operation from 1949 to 1960 did not contain any provision like C
sections 14 to 16 providing for eviction of the tenant on the ground of
demolition and reconstruction.

In 1949, however, the enactment contained a provmon
empowering the Government to exempt any building or class of build- D
ings from all or any of the provisions of the Act. When the landlords
desired to evict tenants on the ground of demolition and re-cons-
truction, they resorted to the remedy of moving the Government by
an application for exemption under section 13 of the 1949 Act. The
Government by notification used to exempt any building or class of
. -4 buildings from all or any of the provisions of the Act. In this connec- E
tion reference may be made to the decision in S. Kannappa Pillai and
another v. B. Venkatarathnam, (78 Law Weekly 363). The Govern-
ment in that case when passing the order of exemption used to impose
condition that the landlord should complete the re-construction within
four months from the date on which the premises were vacated by the
tenants and that he should take back the old tenants into the recons- f
tructed building at the rate demanded by the landlord subject to the
fixation of fair rent. However, in view of the tenants' conduct in resor-
ting to writ proceedings challenging the order of exemption and in
filing suits and having delayed the process of demolition and recons-
truction, the Court in the exercise of discretion refused to extend "the
benefit of the condition as to re-induction in favour of the tenants. The G
further remedy was by writ proceedings before the High Court by the
landlord or the tenant who felt aggrieved as the case may be.

It was submitted on behalf of the respondents by the learned
Attorney General that the Legislature in view of the experience gained
from 1949 to 1960 enacted sections 14 to 16 of the Act and which were H
introduced in the Act of 1960.
14 SUPREME COURT REPORTS (1988) I S.C.R.

A It was urged that the 1960 Act had improved the position. It had .,._
provided as a ground of eviction of the tenant the requirement of the
landlord for demolition and re-construction of the building leaving it
to a judicial authority viz. Rent Controller to decide the matter with
one statutory right of appeal and a further right of revision to the
District Court or the High Court as the case may be. It was on this
B ground urged that leaving the matter to judicial adjudication as to the
ground for eviction, it cannot be held to be arbitrary, unreasonable or
unjust. This point has to be judged keeping in view the main purpose
~
of the Act in question and the relevant submissions on this aspect.

It may be borne in mind that historically the constitutionality of
section 13 of the Act of 1949 was upheld on the touchstone of Article
c 14 both by the Madras High Court and on appeal by this Court in P.J.
'i
Irani v. The State of Madras, [1962), 2 S.C.R. 169. It was held that
section 13 of the Act did not violate Article 14 and was not unconstitu-
tional. Enough guidance, according to the judgment of the majority of
learned judges, was afforded by the preamble and the operative provi-
D sions of the Act for the exercise of the discretionary power vested in
the government. It was observed that the power under section 13 of
1
the Act was to be exercised in cases where the protection given by the
Act caused great hardship to the landlord or was the subject of abuse
by the tenants. It was held by Sinha, C.J., Ayyangar and Mudholkar,
JJ. that section 13 was ultra vires and void. An order made under
\
E section 13 was subject to judicial review on the grounds that (a) it was
discriminatory, (b) it was made on grounds which were not germane or
relevant to the policy and purpose of the Act, and (c) it was made on
grounds which were malafide. While S.K. Das and A.K. Sarkar, JJ.
emphasised that the order passed by the government under section 13
was a competent and legal order. All that the court had to see was
F whether the power had been used for any extraneous purpose, i.e. not

"'
for achieving the object for which the power was granted.

The Act of 1960 contains a corresponding provision for exemp-
tion in section 29 of the Act which corresponds to section 13 of the Act
of 1949 was also upheld by this Court in S. Kandaswamy Chettiar v.
G State of Tamil Nadu and another, [1985) 2 SCR 398. Dealing with
section 29 of the Act this Court observed that the rationale behind the
conferral of such power to grant exemptions or to make exceptions was
that an inflexible application of the provisions of the Act might under
some circumstances result in unnecessary hardship entirely dispro-
J
portionate to the good which will result from a literal enforcement of
H the Act and also the practical impossibility of anticipating in advance
P. NAIR v. STATE OFT. NADU (MUKHARJI, J.] 15

,....-\ such hardship to such exceptional cases. In the matter of beneficial A
legislations also there were bound to be cases in which an inflexible
application of the provisions of the enactment might result in unneces-
sary and undue hardship not contemplated by the legislature. The
. power to grant exemption under section 29 of the Act, therefore, has
been conferred not for making any discrimination between tenants and
tenants but to avoid undue hardship or abuse of the beneficial provi- B
sions that might result from uniform application of such provisions to
cases which deserve different treatment. The decision reiterated that
' I the Tamil Nadu Rent Act was a piece of beneficial legislation intended

-- to remedy the two evils of rackrenting (exaction of exorbitant rents)
and unreasonable eviction generated by a large scale of influx of popu-
lation to big cities and urban areas in the post Second World War
c
' period creating acute shortage of accommodation in such areas and the
-'
.f
~-
enactment avowedly protects the rights of tenants in occupation of
buildings in such areas from being charged unreasonable rents and
from being unreasonably evicted therefrom. In that view of the matter
it had made a rational classification of buildings belonging to govern-
ment and buildings belonging to religious, charitable, educational and D
other public institutions and the different treatment accorded to such
buildings under section 10(3)(b) of the Act.

The scope of this Act was discussed by this Court in Raval and
Co. v. K.C. Ramachandran & Ors., [1974] 2 S.C.R. 629, where the
majority of the court at pages 635 to 636 observed:- E

"All these show that the Madras Legislature had applied its

- mind to the problem of 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 F
landlord as well as the tenant. Apparently it realised that
the pegging of the rents at the 1940 rates had discouraged
building construction activity which ultimately is likely to
affect every body and therefore in order to encourage new
constructions exempted them altogether from the provi-
sions of the Act. It did not proceed on the basis that all G
tenants belonged to the weaker section of the community
and needed protection and that all landlords belonged to
- ...,, the better off classes. It confined the protection of the Act
to the weaker section paying rents below Rs.250. It is clear,
therefore, that the Madras Legislature deliberately pro-
ceeded on the basis that fair rent was to be fixed which was H

•
16 SUPREME COURT REPORTS [1988] l S.C.R.

to be fair both to the landlords as well as to the tenants and
A h..
that only the poorer classes of tenants needed protection.
The facile assumption on the basis of which an argument
was advanced before this Court that all Rent Acts are in-
tended for the protection of tenants and, therefore, this
Act also should be held to be intended only for the protec-
B tion of tenants breaks down when the provisions of the Act
are examined in detail. The provision that both the tenant
as well as the landlord can apply for fixation of a fair rent
would become meaningless if fixation 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 enorm-
c ously and that is why it is argued on behalf of the tenants
-~
that the contract rents should not be changed. If we could
contemplate a situation where rents and prices are coming . _(
down this argument will break down. It is a realisation of
the fact that prices and rents have enormously increased
D and therefore if the rents are pegged at 1940 rates there
would be no new construction and the community as a
whole would suffer that led the Madras Legislature to
exempt new buildings from the scope of the Act. It realised
apparently how dangerous was the feeling that only "fools
build houses for wise men to live in". At the time the 1960
E Act was passed the Madras Legislature had before it the
precedent of the Madras Cultivating Tenants (Payment of
Fair Rent) Act, 1956. That Act provides for fixation of fair
rent. It also provides that the contract rent, if lower, will be
payable during the contract period. Even if the contract
rent is higher only the fair rent will be payable. After the
-
contract period is over only the fair rent is payable. The
Madras Legislature having this Act in mind still made only '
_,...._
the fair rent payable and not the contract rent if it happens
to be lower. It is clear, therefore, that the fair rent under
the present Act is payable during the contract period as
well as after the expiry of the contract period."
G
The Act sought to restore the balance in the scale which is
otherwise weighted in favour of the stronger paity which had larger
bargaining power. The Act balances the scales and regulates the rights f"-- ··
of the parties fairly and cannot be construed only in favour of the
~ tenant.
P. NAIR v. STATE OFT. NADU (MUKHARJI, J.) 17

In MurlidharAgarwal and another v. State of U.P. and others,
,,_.<,I A
[ 1975] 1 S.C.R. 575 this Court had occasion to deal with this matter. In
that case, powers of H;igh Court to interfere with revisional orders
passed by State Government under section 7F of U .P. Temporary
Control of Rent and Eviction Act, 1947 were challenged. The Court
was of the view that if a provision was enacted for the benefit of a
person or class of persons, there was nothing which precluded him or B
them from contracting to waive the benefit, provided that no question
of public policy was involved. In doing so, the question arose what was
1 the 'public policy' involved in the said Rent Act. There can be no
doubt about the policy of the law, namely, the protection of a weaker
" class in the community from harassment of frivolous suits. But the
question is, is there a public policy behind it which precludes a tenant
c
~: from waiving it? Mathew, J. reiterated that public policy does not
remain static in any given community. It may vary from generation to
-.\ generation and even in the same generation. Public policy would be
almost useless if it were to remain in fixed moulds for all time. The
Rent Act, however, balances both the sides, the landlord and the
tenant. D

The main provision of Section 14(1)(b) enables a landlord to
make an application to the Rent Controller and the Rent Controller, if
he is satisfied that the building is bona fide required by the landlord for
the immediate purpose of demolishing it for the purpose of erecting a
--1 new building on the site of the building sought to be demolished may E
pass an order directing the tenant to deliver possession of the building
to the landlord before a specified date.

Section 16 provides for the tenant to occupy the building if it is
not demolished in certain contingencies. The scheme of the section
was very carefully analysed in Shah Bhojraj Kuverji Oil Mills and F
A- Ginning Factory v. Subbash Chandra Yograj Sinha, [1962] 2 S.C.R.
159.

In Metalware and Co. etc. v. Bansilal Sharma and Ors. etc.,
[1979] 3 S.C.R. 1107 this Court emphasised that the phrase used in
section 14(1)(b) of the Act was "the building was bona fide required by G
the landlord" for the immediate purpose of demolition and reconstruc-
tion and the same clearly referred to the bona fide requirement of the
landlord. This Court emphasised that the requirement in terms was not
-\ that the building should need immediate demolition and reconstruc'
tion. The state or condition of the building and the extent to which it
could stand without immediate demolition and reconstruction in H
18 SUPREME COURT REPORTS [ 1988] l S.C.R.

future would not be a totally irrelevant factor while determining "the
A .h
bona fide requirement of the landlord." This Court emphasised that if
the Rent Controller had to be satisfied about .the bona fide require-
ment of the landlord which meant genuineness of his claim in that
behalf the Rent Controller would have to take into account all the
surrounding circumstances including not merely the factors of the
B landlord being possessed of sufficient means or funds to undertake the
project and steps taken by him in that regard but also the existing
condition of the building, its age and situation and possibility or
otherwise of its being put to a more profitable use after reconstruction. ··Y
All these factors being relevant must enter the verdict of the Rent
Controller on the question of the bona fide requirement of the land-
lord under section 14{1)(b). The fact that a landlord being possessed of
'
c sufficient
·~
means to undertake the project of demolition and recons-
!ruction by itself might not be sufficient to establish his bona fide
requirement if the building happened to be a very recent construction
in a perfectly sound condition and its situation might prevent its being
+.
put to a more profitable use after reconstruction. The Rent Controller
D has thus to take into account the totality of the circumstances and the
factors referred to in the judgment by lesser or greater significance
depending upon whether in the scheme of the concerned enactment
there is or there is not a provision for re-induction of the evicted tenant
into the new construction. Reference was made to the decision of this
Court in Neta Ram v. Jiwan Lal, [1962] Suppl. 2 S.C.R. 623. There
E must be bona fide need of the landlord on all the conditions required to ...
be fulfilled. That being the scheme of the section, it cannot be said, in
our opinion, that the section was arbitrary and excessive powers were
given to the landlords. Absence of provision for re-induction does not
ipso facto make the provisions of the Act unfair or make the Act self ...
defeating. I

F
It has been borne in mind that the provisions of the Act imposed '
restrictions on the landlord's right under the common law or th¢ !'-
Transfer of Property Act to evict the tenant after termination of his
tenancy. The rationale of these restrictions on the landlord's rights is
the acute shortage of accommodation and the consequent need to give
G protection to the tenants against unrestricted eviction. The nature, the
form and the extent of the restrictions to be imposed on the landlord's
right and the consequent extent of protection to be given to tl)e tenants
is a matter of legislative policy and judgment. It is inevitably bound to
)-
vary from one State to another depending on local and peculiar condi-
lions prevailing in the State and the individual State's appreciation of
H the needs and problems of its people. When we are confronted with
P. NAIR v. STATE OFT. NADU [MUKHARJJ, J.J 19

the problem of a legislation being violative of Article 14, we ar_e. not /;;.
,...J, concerned with the wisdQill or lack of legislative enactment but we are
concerned with the illegality of the legislation. There may be more
than one view about the appropriateness or effectiveness or extent of
the restrictions. There may be also more than one view about the
relaxation of the restrictions on the landlord's right of eviction. This
fact is reflected in the different provisions made in different Acts about B
the grounds for eviction. For example, in case of Assam, Meghalaya,
Andhra Pradesh, Delhi, Haryana, Orissa, Tripura, East Punjab,
y- Madhya Pradesh, Tamil Nadu, Kerala, My~ore, Himachal Pradesh
and Pondicherry, no particular duration for arrears of rent is
prescribed, which would entitle a landlord to maintain an action for
"' ejectment of his tenant. However, in other cases a certain period is
prescribed. For instance, two months in Bihar, West Bengal and
c
,~ Jammu and Kashmir, three months in Goa and Tripura, fqur months
-1 in Uttar Pradesh, six months in Bombay and Rajasthan. Again some
Rent Acts require that before an action for ejectment on the ground of
arrears is instituted, a notice demanding rent should be served on the
tenant-for example-Bombay, Delhi, Kerala, Tripura, Jarnmu and D
Kashmir, Madhya Pradesh and U .P. Rent Acts. In such cases the
tenant is given one chance to pay up the arrears. Again different Rent
Acts provide different facts and circumstances on the basis of which
premises could be recovered on the ground of bona fide personal re-
quirement. Generally the bona fide requirement extends both to resi-
--i dential as well as commercial premises. However, the Delhi Rent E
Control Act restricts the right on account of the bona fide need of the
landlord's right to premises let for residential use only. Further, Bihar,

- Bombay, Goa, Jarnmu and Kashmir, Kamataka, Tamil Nadu, U.P.
and West Bengal Rent i\cts provide for partial eviction, But there is
no such provision in the other Acts. It is obvious from the above that
there can be no fixed and inflexible criteria or grounds governing F
imposition of restrictions ort the landlord's right or for relaxation of
A. those restrictions in certain cases. Ultimately it is a matter of legisla-
tive policy and judgment.

Courts are not concerned with the unwisdom of legislation. "In
short, unconstitutionality and not unwisdom of a legislation is the G
narrow area of judicial review.''. See in this connection the observa-
tions of Krishna Iyer, J. in Murthy Match Works, etc. etc. v. The Asstt.
Collector of Central Excise, etc., [1974] 3 S.C.R. 121. This Court
~ approved the above passage from the American JQrisprudence and
emphasised that in a classification for governmental purpo_ses ther_e
cannot be an exact exclusion or inclusion of persons and things. It ts H
20 SUPREME COURT REPORTS · [1988] 1 S.C.R. I
A important to bear in mind the constitutional command for a state to
afford equal protection of the law sets a goal not attainable by the
invention and application of a precise formula. Therefore, a large
latitude is allowed to the States for classification upon any reasonable
basis. See also in this connection the observations of this Court in Re
The Special Courts Bill, 1978, [1979] 2 S.C.R. 476 where Chandra-
B chud, C.J. speaking for the Court at pages 534 to 537 of the report laid
down the propositions guiding Article 14 and emphasised that the
classification need not be constituted by an exact or scientific exclusion
nor insist on delusive exactness or apply doctrinaire tests for determin-
ing the validity of classification in any given case. Classification there-
fore, is justified if it is not palpably arbitrary. We also in view of the
C different provisions we have discussed bear in mind the fact that there
is no such consensus among the different States about the right of
re-induction of tenant in case of eviction required for demolition. It
will depend on the particular State and, appreciation of the need and
problem at a particular point of time by that State concerned. The
purpose underlying section 14(1)(b) read with section 16(2) of the
D Tamil Nadu Rent Act is to remove or mitigate the disinclination on the
part of landlords to expend moneys for demolition of dilapidated
buildings and reconstruct new buildings in their places: It is a matter of
which judicial notice can be taken that the return from old and
dilapidated buildings is very meagre and in several cases such buildings
prove uneconomic for the landlords with the result that the condition
E of the building deteriorates and there are even collapses of such build-
ings. It is for this purpose that the landlord is given by section 14( l)(b)
read with section 16 an incentive in the form of exemption from the
provisions of the Rent Act in respect of reconstructed building for the
limited and short duration of five years. The policy under section
14(1)(b) read with section 16 is not in essence different from the policy
-
F adopted by different States of giving exemption for a limited duration
to newly constructed buildings. These provisions, namely, exemption
of new buildings from the provisions of the Rent Act for a period of
five years or ten years has been upheld as constitutional. See in this
connection the observations of this Court in the case of Punjab Tin
Supply Co., Chandigarh & Ors. v. The Central Govt. & Ors., [1984] 1
G SCC 206 at pages 216 and 217 and Mohinder Kumar v. State of
Haryana and Anr, [1985] 4 S.C.C. 221 at pages 226-227. There the
Court emphasised that it is entirely for the Legislature to decide
whether any measures, and if so, what measures are to be adopted for
remedying the situation and for ameliorating the hardship of tenants.
The Legislature may very well come to a conclusion that it is the
H shortage of buildings which has resulted in scarcity of accommodation
P. NAIR v. STATE OF T. NADU [MUKHARJI, J.J 21

.
' ' .•
,..A' '
'
.{
and has created a situation where the demand for accommodation is
far in excess of the requisite supply, and, it is because of such acute
A
scarcity of accommodation the landlords are in a position to exploit the
situation to the serious detriment of the tenants. The Court observed
at pages 226 to 227 of the report as under:

"The Legislature in its wisdom may properly consider B
thaP>. in effecting an improvement of the situation and for
mitigating the hardship of the tenanted class caused mainly
y- due to shortage of buildings, it will be proper to encourage
construction of new buildings, as construction of new build-
ings will provide more accommodation, easing the situation
to a large extent, and will ultimately result in benefiting the C
tenants. As in view of the rigours of Rent Control Legisla-
tion, persons with means may not be inclined to invest in
construction of new houses, the Legislature to attract
investment in construction of new houses may consider it
reasonable to provide for adequate incentives so that new
constructions may come up. It is an elementary law of D
economics that anybody who wants to invest his money in
any venture will expect a fair return on the investment
!Dade. As acute scarcity of accommodation is to an extent
responsible for the landlord and tenant problem, a measure
adopted by the Legislature for seeking to meet the situa-
tion by encouraging the construction of new buildings for E
the purpose of mitigating the hardship of tenants must be
considered to be a step in the right direction. The provision

- for exemption from the opyration of the Rent Control
Legislation by way of incentive to persons with means to
construct new houses has been made in Section 1(3) of the
Act by the Legislature in the legitimate hope that construe- F
tion of new buildings will ultimately result in mitigation of
the hardship of the tenants. Such incentive has a clear
nexus with the object to be achieved and cannot be con-
sidered to be unreasonable or arbitrary. Any such incentive
offered for the purpose of construction of new buildings
with the object of easing the situation of scarcity of accom- G
modation for ameliorating the conditions of the tenants,
cannot be said to be unreasonable, provided the nature and
character of the incentive and the measure of exemption
allowed are not otherwise unreasonable and arbitrary. The
exemption to be allowed mnst be for a reasonable and a
definite period. An exemption for an indefinite period or a H
\
22 SUPREME COURT REPORTS [1988] 1 S.C.R.

period which in the facts and circumstances of any particu-
A
lar case may be considered to be unduly long, may be held
to be arbitrary. The exemption must necessarily be effec-
tive from a particular date and must be with the object of
promoting new constructions. With the commencement of
the Act, the provisions of the Rent Act with all the restric-
B tions and rigours become effective. Buildings which have
been constructed before the commencement of the Act
were already there and the question of any kind of impetus
or incentive to such buildings does not arise. The Legisla-
ture, ti)erefore, very appropriately allowed the benefit of
the exemption to the buildings, the construction of which
commenced or was completed on or after the commence-
c ment of the Act. This exemption in respect of buildings
coming up or to come up on or after the date of commence-
ment of the Act is likely to serve the purpose of encourag-
ing new buildings to be constructed. There is therefore
nothing arbitrary or unreasonable in fixing the date of com-
D mencement of the Act from which the exemption is to be
operative.''

Section 14(1)(b) has sufficient inbuilt guidelines. The require-
ments to be satisfied before initiating action under this provision have
been judicially laid down by the Madras High Court by Anantanara-
E yanan, J. as he then was, in Mehsin Bhai v. Hale and company, G. T.
Madras, [1964] 2 Madras Law Journal 147. Anantanarayanan, J.
observed at page 147 as follows:

F
" What the section really required is that the landlord
must satisfy the Court that the building was bona fide re-
quired by him, for the immediate purpose of demolition. I
-
am totally unable to see how the present state of the build-
ing, and the extent to which it could stand without
immediate demolition and reconstruction, in the future,
are not relevant considerations in assessing the bona fides
of the landlord. On the one hand, landlords may bona fide
G require such buildings, particularly old buildings, in their
own interest, for demolition and reconstruction. On the
other hand, it is equally possible that the mere fact that the
building is old, is taken advantage of by the landlord to put
forward such pretext his real object being ulterior, and not
bona fide for the purpose of reconstruction. The Courts
H have to apply several criteria, and to judge upon the tota-
P. NAIR v. STATE OF T. NADU [MUKHARJI, J.] 23

lity of the facts. But the Courts cannot exclude the possi- A
bility that the ancient or relatively old character of the
building which may nevertheless be in quite a good and
sound condition, is being taken advantage of by a landlord
in order to make such an application with an ulterior
purpose, which purpose might be, for instance, to obtain
far more advantageous terms of rent in the future. What B
the section really contemplates is a bona fide requirement;
that necessarily implied that it is in the interests of the
landlord to demolish and reconstruct the building, and that
the fact that the building is old is not merely a pretext for
advancing the application, with the object of evicting the
tenant, and of obtaining higher rentals." C

This Court also emphasised this aspect in the decision of
Meta/ware & Co. etc. v. Bansilal Shanna and others etc., [1979] 3
S.C.R. 1107 at pages 1117-1118.

We are therefore unable to accept the submission that absence of D
the right of induction of tenants in reconstructed premises is either
arbitrary or unreasonable. The submission that section 16(2) which
provides that when a building is totally demolished and on which a new
building is erected shall be exempt from all the provisions of the Act
for a period of five years is bad is also unsustainable. See in this
connection the observations of this Court in Mis. Punjab Tin Supply E
Co., Chandigarh etc. etc. v. The Central Government and others,
[1984] l S.C.R. 428 and Motor General Traders and another etc. etc. v.
State of Andhra Pradesh and others etc. etc., [1984] 1 S.C.R. 594 at
page 605. It was submitted-that the fact that in these cases exemption
was after the first construction of the building and not after demolition
and re-construction but that would not make any difference to the F
principle applicable. The principle underlying such exemption for a
period of five years is not discriminatory against tenants, nor is it
against the policy of the Act. It only serves as an incentive to the
landlord for creation of additional housing accommodation to meet
the growing needs of persons who have no accommodation to reside or
to carry on business. It does not create a class of landlords who will G
forever be kept outside the scope of the Act as the provision balances
the interests of the landlords on the one hand and the tenants on the
other in a reasonable way. This Court in A tam Prakash v. State of
Haryana and others, [1986] 2 S.C.C. 249 also judged the rules of clas-
sification in dealing with the Punjab Pre-emption Act, 1913.
H
24 SUPREME COURT REPORTS [1988] 1 S.C.R.

This Court emphasised in Panchamal Narayan Shenoy v. Basthi (-...
A
Venkatesha Shenoy, (1970] 3 S.C.R. 734 that in considering the
reasonable and bona fide requirements of the landlord under this
clause, the desire of the landlord to put the property to a more profit-
able use after demolition and reconstruction is also a factor that may
be taken into account in favour of the landlord. It was also emphasised
B that it was not necessary that the landlord should go further and
establish under this clause that the condition of the building is such
that it requires immediate demolition. _,,,
Our attention was drawn to certain observations of Chatterjee,
J. of the Calcutta High Court in Jiwanlal & Co. and others v. Manoi
Co., Ltd., (64 Calcutta Weekly Notes 932 at page 937) that where
c and
the landlord had established a case of building and rebuilding the
tenants undoubtedly would suffer on ejectment. The learned Judge
--(_
was of the view that though the landlords required the premises for the -!
purpose of building and rebuilding, it was not desirable that the ten-
ants should be ejected. The learned Judge emphasised that the
D purpose of the Act was to protect the tenants as long as possible and to
eject them only when it was not otherwise possible. The landlords did
not require it for their own use and occupation. They wanted it for the
advantage of increased accommodation. The learned Judge was of the
view that if the tenants were ejected, then for the time being, far from
the problem being solved, it would create difficulties for the public as _..._
E well as for themselves. We are, however, unable to accept this princi-
pie. It is true that the Act must be so construed that it harmonises the
rights of the landlords and at the same time protects the tenants and
also serves best the purpose of the Act and one of the purposes of the
Act is to solve the acute shortage 'Of accommodation by making a
rational basis for eviction and to encourage building and rebuilding
F which is at the root of all causes of shortage of accommodation.
-
It was held by a learned single Judge of the Madras High Court
~
(one of us-Natarajan J.) in Mis. Patel Roadways Private Limited,
Madras v. State of Tamil Nadu and others, (A.LR. 1985 Madras 119)
that the provisions of the Tamil Nadu Act were not violative of Article
G 14 and Article 19( l}(f) of the Act. But that was in a slightly different
context.

Post war migration of human beings en bloc place to place, the )-
partition of the country and uprooting of the people from their \!earth
and home, explosion of population, are the various vital factors lead-
H ing to the present acute shortage of housing. It has to be borne in mind
P. NAIR v. STATE OFT. NADU [MUKHARJI, J.] 25

that the urge for land and yearning for hearth and home are as peren-
A
nial emotions as hunger and sex are, as Poet Rabindranath would say
meaning thereby, it is not wealth-I seek, it is not fame that I want, I
crave for a home expressing the eternal yearning of all living beings for
habitat.

It is common knowledge that there is acute shortage of housing, B
various factors have led to this problem. The laws relating to letting
and of landlord and tenant in different States have from different
States' angles tried to grapple the problem. Yet in view of the
magnitude of the problem, the problem has become insoluble and the
litigations abound and the people suffer. More houses must, therefore,
be built, more accommodation and more spaces made available for the
people to live in. The laws of landlord and tenant must be made c
rational, hnmane, certain and capable of being quickly implemented.
Those landlords who are having premises in their control should be
induced and encouraged to part with available accommodation for ..
limited periods on certain safeguards which will strictly ensure their
recovery when wanted. Men with money should be given proper and D
meaningful incentives as in some European countries to build houses,
tax holidays for new houses can be encouraged. The. tenants should
also be given protection and security and certain amount of reason-
ableness in the rent. Escalation of prices in the urban properties, land,
materials and houses must be rationally checked. This country very
vitally and very urgently requires a National Housing Policy if we want E
to prevent a major breakdown of law and order and gradual disillu-
sionment of people. After all shelter is one of our fundamental rights.
New rational housing policy must attract new buildings, encourage
new buildings, make available new spaces, rationalise the rent struc-
ture and rationalise the rent provisions and bring certain amount of
uniformity though leaving scope for sufficient flexibility among the F
States to adjust such legislation according to its needs. This Court and
the High Court should also be relieved of the heavy burdens of this
rent litigations. Tier of appeals should be curtailed. Laws must be
simple, rational and clear. Tenants are in all cases not the weaker
sections. There are those who are weak both among the landlords as
well as the tenants. Litigations must come to end quickly. Such new G
Housing Policy must comprehend the present and anticipate the
future. The idea of a National Rent Tribunal on an All India basis with
quicker procedure should be examined. This has become an urgent
imperative of today's revolution. A fast changing society cannot
operate with unchanging law and prec~nceived judicial attitude.
H

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26 SUPREME COURT REPORTS [1988] I S.C.R.

A For the reasons aforesaid the contentions urged in writ petitions
fail and are accordingly dismissed. In the facts and circumstances of
the case there will be no order as to costs. Interim orders if any are
vacated.

S.L. Petition dismissed.
B

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