Supreme Court of India
S. KANDASWAMY CHETTIARversusSTATE OF TAMIL NADU AND ANR.
- Citation
- 1984 INSC 233
- Decided
- 12 December 1984
- Disposal
- Dismissed
- Bench
- V D TULZAPURKAR
Holding
Section 29 and the 1976 exemption notification are valid as the classification is reasonable, has nexus with the Act's purpose, and total exemption is not excessive.
Summary
The tenants of several buildings owned by Hindu, Christian and Muslim religious public trusts and public charitable trusts challenged a 1976 Government of Tamil Nadu notification that exempted all such buildings from the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. They argued that Section 29 of the Act delegated excessive legislative power, that the total exemption violated the equal protection clause of Article 14, and that a partial exemption would have sufficed. The State argued that the exemption was necessary to allow trustees to recover market rent and to avoid undue hardship and abuse of the Act's provisions. The Supreme Court, relying on the earlier decision in P. J. Irani v. State of Madras, held that Section 29 and the notification were constitutionally valid because the classification was based on intelligible differentia and had a clear nexus with the Act's purpose. It further held that total exemption was not excessive, as the objectives of rent control and preventing unreasonable eviction are interrelated and the exemption was required to give trustees effective rights to evict for non‑payment of market rent. Consequently, the challenge to the notification failed and the writ petitions and civil appeals were dismissed.
Issues considered
- The constitutionality of Section 29 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 regarding excessive delegation of legislative power
- Whether the total exemption granted to buildings of religious public trusts and charitable trusts violates Article 14's equal protection clause
- Whether a total exemption is excessive or unwarranted when a partial exemption could achieve the legislative purpose
Legislation cited
Subjects
rent controlexemptionArticle 14excessive delegationpublic religious trustscharitable trustsclassificationlandlord-tenantmarket rentevictionconstitutional law
Judgment
393
A
S. KANDASWAMY CHETTIAR
v.
STATE OF TAMIL NADU AND ANR.
B I 2th December, 1984
(V. D. TuLZAPURKAR, R. S. PATHAK AND SABYASACHI MUKHARJI, JJ.)
c Tamil Nodu Buildings (Lease and Rent Control) Act, 1960 (Tamil Nadu
Act 18 of 1960), Section 29-Notl/icatlon Issued thereunder granting total
exemption to all buildings owned by the Hindu, Christian and Muslim religious
Public Trusts and Public Charitable Trusts from all the pro,fslons of the Act-
Whether suffers from the vice of excessive delegation of fegislative powers, and
therefore, violative of Article 14 of the Constitution-Whether the total exemp- ..e
tfan is excessive unwarranted and unsupportable In as much as a partial exemp·
D tion would ha-1e sufficed.
Io exercise of the powers conferred by section 29 of the Tamil Nadu
Buildings (Lease and Rent Control) Act, 1960 the Government of Tamil
Nadu issued a Notification G.O. Ms. lOOQ (Home Department) dated 16th
August, 1976 exempting all the buildings owned by the Hindu, Christian
and Muslim religious public trusts and public charitable trusts from all the
E
provisions of the Act. The tenants challenged the Notification granting
total exemption through the said Notification on three grounds namely; (a)
that section 29 of the Act suffers from the vice of excessive delegation of
legislative powers in as much as it vests in the State Government unguided
and uncontrolled discretion in the matter of granting exemptions and is,
therefore, violative of Article 14 of the Constitution; (b)tbat the Not.ification
dated 16th August, 1976 deprives the tenants of all such buildings (belonging
to HinduJ Christian and Muslim religious public trusts 3.nd public chantable
F
trusts) of the equal protection of the beneficial provisions of the Act which
is available to the te.nants of other buildings and as such the same is
discriminatory offending against the equal protection clause of Article 14;
and (c) that io any event the total exemption from all the provisions of the
Act granted to such buildings, where partial exemption would have sufficed •
is excessive~ unwarranted and unsupportable.
G
The State Government and the respondent landlords have refuted all
the grounds on which the exemption has been challenged and further sought
to justify the grant of total exemption mainly on the basis that the freedom
(right) to recover the reasonable market rent would be ineffective without
the freedom to evict the tenant. ~. •
H Dismissing the writ petitions and the civfl appeals the Court,
S.K. CHBTTIAR v. TAMiL NADU 399
HELD : 1.1 In view of the decision of the Supreme Court io I'. J. A
Irani v. The State of Madras, [t962] 2 SCR t~9 dealing with an identical
provision contained in the earlier Madras enactment the challengo to tho
Constitutional validity of section 29 cannot be sustained. [4 '5A•B]
"l', P. J, Irani v. S1a1e of Madras, [1962] 2 SCR 169; State of Madhya
Pradesh v. Kanhalyalal, 1970 (15) M.P.L.U. SC 973 relied on.
B
1.2. The rationale behind the conferal of such power to grant
exemptions or to make exceptions is that an inflexible application or the
provisions of the A ct may under some circumstances result in unnecessary
hardship eat irely disproportionate to the good which will result from a
literal enrorcement of the Act and also the practical impossibility of
anticipating in advance such hardship to such e1ceptional cases; In the c
matter of bencficia11egis1ations also there are bound to be cases in which an
in fte;x:ible application of the provisions of the enactment may result in
unnecessary and undue hardship not contemplated by the Jcgisla(ure. The
power to grant exemption under section 29 of the Act, therefore, has been
conferred not for making any discrimination between ter;tants and tenants but
to avoid undue hardship or abuse of the beneficial provisions that may
result from uniform application of such provisions to cases which dcservo D
different treatment. Of course, the power to grant exemption has to be
exercised in accordance with the policy and object of the enactment
gatherable from the prearr,ble as well as its operative provisions without
subverting the general purpose of the enactment. [406G-H, 407A-B]
P. J. Irani v. State of Madras, [1962] 2 SCR 169 relied oo.
E
Gorleb v. Fox, [1926] 71 Lawyers Edition at Dage 1230 quoted with
approval.
2. That Tamil Nadu Act is a piece of beneficial legislation intended to
remedy the two evils of rackrenting (exaction of exhorbitant rents) a.ad
unreasonable eviction generated by a large scale of influx of population to big F
cities and urban areas in the post Second World War period creating acute
shortage of accommodation in such areas and the enactment avowedly protects
the rights of tenants in occupation of buildings in such areas from being
charged unreasonable rents and from being unreasonably evicted therefrom.
The Legislature itself has made a rational classification of buildings
belonging to government and buildings belonging to religious, cbaritableJ
educational and other public institutions and the different treatment accorded
G
to such buildings under section 10(3) (b) of the Act, which obviously
•. proceeds on the well-founded assumption that the government as well as the
landlords of such buildings are not expected to .and would not indulge in
rack~reoting or unreasonable eviction. This and similar other provisions
crystalize ,the policy and the purposes of the Act and furnish the requisite
guidance which can legitimately govern the exercise of power conferred on
the State Government under section 29 of the Act. The power to grant
exemptions or make exceptions could be legitimately exercised by the State
H
Qoverq~ent iq area~ or ;ases wqere H~e miscl)ief soq~bt to be reQ!&edied by
400 SUPREME COURT REPORTS [1985] 2 s.c.R.
A the Act is neither prevalent nor apprehended as also in cases (individual or
class of cases) where a uniform or inflexible application of the law is 1ikcly
to result in unnecessary or undue hardship (here the landlords) or in cases
where the beneficial provision is likely to be or is being a.bused by persons ( r·
for whom it is intended (here the tenants). [407D-B, 408F·H, 409A]
3.1. Public religious and charitable endowments or trusts constitute
B a well recognised distinct group in as much as they not only serve pub1ic
purposes but the disbursement of their income is governed by the objects
with which they are created and buildings belonging to such pub! ic religious
and charitable endowments or trusts clearly fall into a distinct class different
from buildings owned by private landlords. Therefore, their classification
into. one group done by the State Government while issuing the impugned
notification must be regarded as having been based on an intcl1igiblc
c differentia. [409F·G]
3.2. In view of the counter affidavit filed by the State Government
dated 10-2-1981 and the supplementry counter affidavit dated 24th
September, 1983 to tho effect that the government was satisfied that "in
all these cases, the rent paid by the tenants was very low, meagre and that
D the provisions of fixation of fair rent under the Act would not meet the
ends of justice and the situation will still continue in which the tenant will
be exploiting the situation and the helplessness of the public religious trusts
and charitable institutions and hence they decided to withdraw the protec-
tion given under the Act to the tenants of such buildings", not having been
challenged by way of rejoinder affidavits by the petitioners/appellants, it is
clear that buildings belonging to such public religious and charitable
endowments or trusts clearly fe11 into a class where undue hardship and
E
injustice relating to them from the uniform application or the beneficial
provisions of the Act needed to be relieved and the exemption granted will
have to be reaarded as bein& germane to the policy and purposes of the Act.
In other words, the classification m tde hds a clear nexas with the object
with which the power to grant exemption bas been conferred upon the State
Government under section 29 of the Act. [41 lC, 412B-G)
F
State of Rajasthan v. Mukanchana and Others, [1964] 6 SCR 903; held
inapplicable.
,I
3.3. Granting total exemption cannot be regarded as exce,sive or
unwarranted. The two objectives of the enactment, namely, to control rents 7-
and to prevent unreasonable eviction are interrelated and the provisions
G which subserve these objectives 5upplement each other. It is obvious that if
the trustees of the public religious trusts and public charities are to be given
'
freedom to charge the normal market rent then to make that freedom
effective it will be necessary to arm the trustees with the right to evict the
tenants for non-payment of such market rent. The State Government on
materials before it came to the conclusion that the 'fair rent' fixed under •
the Act was unjust in -case of such buildings and it was necessary to permit
the trustees of such buildings to recover from their tenants reaso11able
market rent and if that be so non-eviction when reasonable market rent is ~. '
not paid would be unreasonaQh~ aqd if the 01ar~et rent is ?1id bf the;
S.B:. CHEITIAR V. TAMiL NADU 401
tenants no trustee is going to evict them. Port.her, it is conceivable that A
trustees of buildings belonging to such public rclia:ious institutions or public
, - charities may desire eviction of their tenants for the purpose of carrying Olli
major or substantial repairs or for the purpose of aemolition and recons-
} truction and the State Government may have felt that tho trustees of such
f buildings should be able to effect evictions without being·requirod to fulfil
other onerous conditions which must ho complied with by private landlords
when they seek eviction] for •uch purpose. [413D-E, 4I4C-O] B
3.4. The manner Jn which exemption from rent control proviiions
should be granted, whether it could be partial or total and if iO on what
terms and conditions would be matters for each State Government to decide
in the light of the scheme and provisions of the concerned enactment and
the facts and circumstances touching the classification made. And if the
Statci .of Madras has thought fit to grant the exemption in a particular
c
manner by the impugned notification it cannot be faulted. if the exemption
so granted is not illegal or unconstitutional. [4 ISA-B]
ORIGINAL JURISDICTION: W.P. Nos. 4433, 4642-57/78, 337-339,
757-58, 943, 291 and 1351 of 79, 4103 and 6271 /80, 731 and 1943/81,
:~
~ 8274 and 9879/83 and C.A. Nos. 3108-3109/81 with W.P. Nos. 7941 D
and 7883/81.
N. Natesan, A· T. M. Sampath and P. N. Rama/ingam for the
petitioners in W.P. Nos. 4642-57 and 4433 of 1978.
E
Dr. YS. Chita/e, A.1'.M. Sampath, S.A. Rajan and P.N.
Rama/ingam for the petitioners in W.P. Nos. 337-339 of 1979.
M. Natesan, and Raghuraman for the petitioner in W.P. No.
1943 of 1981.
A.TM. Sampath and P.N. Rama/ingam for the petitioners in F
W.P. Nos. 757-58 of 1979.
S. Srinivasan for the petitioner in W.P. No. 943 of 1979.
P.R. Ramasesh for the petitioner in W.P. No. 73 l of 1982.
A.T.M. Sampatb and P.N. Ramalingam for the petitioner in G
W .P. No. 7941 and 7883 of 82.
A.T.M. Sampath and P.N. Ramallngam for the petitioner in
W.P. Nos. 1351 of 79.
P. Sinha for the petitioner in W.P. No. 8274 of 83.
P.N. Rama/ingam for appellants in C.A. Nos. 3108·09 of 81, 11
402 SUPllllll! OOUlT llEPOllTS [1985] 2 S.CR.
A R.S. Ramamurthy, P. Govindan Nair, M.K.D. Namboodry, S.
Balakrishnan and E.C. Agarwa/a for the respondents in W.P. Nos.
6271/80 and 4642-57 and 4433 of 78.
T.S. Krishnamoorthy, Mrs. S. Gopa/akrishnan and Gopal \
S!:'bramanian for the respondents is W.P. No. 4103/80.
B
Shanker Ghosh, and D.N. Gupta for the respondents in W.P.
No. 943/79.
~·
A
S.T. Desai, T.S. Krishnamurthy, A.V. Rangam, K. Ramamurthy
and S. Balakrishnan for the respondents in W.P. No. 731/82.
c
Mohan Pandey and Ali Ahmed for the interveners in W.P. Nos.
4642-57 of 78.
K. Ram Kumar for the respondent in C.A. Nos. 3108-3109/81
and W.P. Nos. 7941 and 7883/82.
D
The Judgment of the Court was delivered by
TutZAPURICAR, J. In these writ petitions and civil appeals by
special leave the petitioners and appellants, who are tenants of
several buildings belonging to the Hindu, Christian and Muslim
religious public trusts as also to public charitable trusts in the State
E of Tamil Nadu, have challenged the legality and or validity of the
total exemption granted to all such buildings from all the provisions 1ot,
of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960
(Tamil Act 18 of 1960) (for short 'the Act') in exercise of the
powers conferred upon •he State Govt. under s. 29 of the Act.
F Section 29 of the Act runs thus :
"22. Exemptions-Notwithstanding anything contained
in this Act, the Government may, subject to such condition J
as they deem fit, by notification, exempt any buildings
or class of buildings from all or any of the provisions of
G this Act."
It appears that initially by G. 0. Ms. No. 1998 (Home) dated
12th August, 1974, the State Government had, in exercise of its
powers under s. 29 exempted all the buildings owned by the Hindu
Christian and Muslim religious trusts and charitable institutions
from all the provisions of the Act; in other words the exemption
was availa hie to buildings of private religious trusts as also privat~
H charitable trusts. But 1".ter on hv II fresh G. O. Ms. No. 4000
~.ii:. C!IE"iTIAR v. TAMJL NADU (Tulzapurkar, J.)
(Home) dated 16th August, 1976, the State Government, in &uper- A
session of the earlier Notification dated 12th August, 1974, confined
the exemption to all buildings owned by the Hindu, Christian and
Muslim religious public trusts and public charitable trusts. The
relevant Notification which is being impugned herein runs thus:
I
"G. 0. Ms. No. 2000, Home, 16th August, 1976) B
No. II (2)/H0/4520/76.-In exercise of the powers confer-
red by section 29 of the Tamil Nadu Buildings (Lease and
Rent Control) Act, 1960 (Tamil Nadu Act 18 of 1960), and
in supersession of the Home Department Notification No. II
(2)/H0/3811/74, dated the 12th August, 1974, published at
page 444 of Part II -section 2 of the Tamil Nadu Govern- c;
ment Gazette, dated the 12th August, 1974, the Governor
of Tamil Nadu hereby exempts all the buildings owned by
the Hindu, Christian and Muslim religious public trusts and
public charitable trusts from all the provisions of the said
Act."
D
The tenants have challenged the aforesaid Notification granting
total exemption to all buildings belonging to the Hindu, Chris-
stian and Muslim religious public trusts and public charitable trusts
from all the provisions of the Act on three grounds-fa) that s. 29
of the Act suffers from the vice of excessive delegation of legis- E
lative powers in as much as it vests in the State Government
unguided and uncontrolled discretion in the matter of granting
exemptions and is, therefore, violative of Art. 14 of the Constitution,
(b) that the Notification dated 16th August, 1976 deprives the
tenants of all such buildings (buildingsr belonging to Hindu, Christian
and Mnslim religious public trusts and public charitable trusts) of F
the equal protection of the beneficial provisions of the Act which is
available to the tenants of other buildings and as such the same i&
discriminatory offending against the equal protection clause of Art.
14 and (c) that in any event the total exemption from all the provi-
sions of the Act grantee to such buildings, where partial exemption
would have sufficed, is excessive, unwarranted and unsupportable. G
On the other hand, the State Govt. and the respondent land-
lords have Tefuted all the grounds on which the exemption has been
challenged. Tt is denied that unguided and uncontrolled discretion
has been conferred upon the State Govt. by s. 29 of the Act and
it is contended that enough guidance is afforded by the Preamble
and the operative provisions of the Act for the exercise of the H
4il4 SUPREME COURT REPORTS !1985] 2 s.c.ll.
A discretionary power vested in the State Govt. It is pointed out
that in P. J. Irani v. The State of Madras(') an identical provision •
contained in the earlier enactment, namely, the Madras Buildings /f"'
(Lease and Rent Control) Act, 1949 was upheld in the context of ~
Art. 14 of the Constitution by this Court on the basis that the I
Preamble and the operative provisions of that Act gave sufficient \
B guidance for the exercise of the discretionary power vested in the
State Govt., namely, that the said power was to be exercised in cases
where the protection given by the Act caused great hardship to the ..,. .
landlord or was the subject of abuse by the tenant; and it is urged ,
that similar guidance is afforded hy the Preamble and the operative
provisions of the instant Act ands. 29 cannot be said to be violative
c of Art.14. The respondents have further contended that even the
point regarding the constitutional validity of granting exemption to
buildings belonging to charities, religious or secular in the context of
the equal protection clause of Art.14 could be said to have been
concluded against the tenants of such buildings by the observations
of this Court in P.J.Jrani's case (supra); it is pointed out that though_),/
D in that case this Court was dealing with a Notification granting ex-
emption in favour of a particular individual building, the Court has
made observations which clearly indicate that where it is a case of
granting exemption in favour of a class of buildings all that is requir-
ed is that the classification must be based on rational grounds i.e.
grounds germane to carry out the policy or the purpose of the Act
and by way of illustration the Court has in terms stated that if such fl
E exemption were to be granted in favour of all buildings belonging to
charities, religious or secular, such classification would be reasonable
and proper, being based on intelllgible differentia having nexus to
the object sought to be achieved by the exercise of power of exemp-
tion. Even otherwise, the State Govt. in their counter-affidavit
dated 10th February, 1981 and supplementary counter-affidavit dated
F 24th September, 1983 have furnished material on the basis of which
it has sought to justify the said exemption and it has been urged that ,i
the same conforms to and falls within the guidelines indicated in that
decision governing the exercise of the power. The respondents have •
further sought to justify the grant of total exemption mainly on the
basis that the freedom (right) to recover the reasonable market rent
G
would be ineffective without the freedom to evict the tenant.
As regards the attack directed against s.29 of the Act itself we
would like to observe at the outset that though the challenge to the
H (I) (1962)2SCR 169.
I
s.i:. cailtTIAR v. TAMiL NADU (Tu/zapurkar, J.) 40S
section under Art. \ 4 has been made in the petitions and the appeals A
Counsel appearing for the petitioners and the appellants fairly stated
before us, and in our view rightly, that in view of the decision of
the Constitution Bench of this Court in P. J. !rani's case (supra)
dealing with an identical provision contained in the earlier Madras
enactment (Madras Act XXV of 1949) the challenge cannot be sus-
tained. Section 13 of the Madras Act XXV of 1949 with which this B
Court was concerned in that case ran thus :
"Notwithstanding anything contained in this Act the
State Government may by a notification in the Fort
St. George Gazette exempt any building or class of buildings
from all or any of the provisions of this Act." c
This Court upheld the constitutional validity of that provision
in the context of the challenge thereto under Art. 14 on the basis
that sufficient guidance was afforded by the Preamble and the ope-
rative provisions of the Act for the exercise of the discretionary
power vested in the Government in the matter of granting exemp- D
tions to a building or class of buildings from all or any of the
provisions of the Act. It may be stated that following the said
decision this Court in the case of State of Madhya Pradesh v.
Kanhaiyalal(l) did not find any infirmity in s. 3(2) of the Madhya
Pradesh Accommodation Control Act, 1961 (Act 41 of 1961) which
ran thus : E
~.I'\ "The Government may, by notification exempt from
all or any of the provisions of this Act any accommodation
which is owned by any educational, religions or charitable
institution or by any nursing or maternity home, the whole
of the income derived from which is utilised for that insti-
tution or nursing home or maternity home." F
The challenge to s. 29 of the instant Act, which 1
:-vas not
pressed, has therefore to be rejected. '
•
Even so, since the Notification dated 16th August 1976 issued
Wlder s. 29 has been challenged the guidance afforded by the Pre-
amble and the operative provisions of the Act will have a bearing on G
the question whether this particular exercise of the power conforms
to such guidance or not and, therefore, it will be useful to advert
briefly to the guidance so afforded. At the outset we would like
to point out that the rationablc behind the conferal of such power to
1
( ) [1970] IS M.P.L.J. 973
H
406 SUPRm.iB COURT REPORTS [11185) 2 s.C.ll.
A grant exemptions or to make exceptions has been very succinetly
elucidated by the American Supreme Court in the leading case of
Gorieb v. Fox. (1 ) In that case the Court was concerned with an
Ordinance which related to the establishment of a building line on
public streets but it contained a reservation· of power in the City
Council to make exceptions and permit the erection of buildings
B closer to the street. It was contended that this reservation rendered
the Ordinance invalid as denying the equal protection of the laws, 'f-
N egativing the contention Sutherland J. speaking for the court, •
observed thus :
"The proviso under which the Council acted also is
c attacked as violating the equal protection clause on the
ground that such proviso enables the Council unfairly to
discriminate between lot-owners by fixing unequal distances
from the street for the erection of buildings of the same
character under like circumstances ...... The proviso evidently
D proceeds upon the consideration that an inflexible appli·
cation of the Ordinance may under some circumstances
result in unnecessary hardship. In laying down a general
rule, such as the one with which we are here concerned, the
practical impossibility of anticipating in advance and provi-
ding in specific terms for every exceptional case which may
E arise, is apparent. And yet the inclusion of such cases may
well result in great and needless hardship, entirely dispro-
portionate to the good which will result from a literal
enforcement of the general rule. Hence the wisdom and
necessity here of reserving the authority to determine
whether, in specific cases of need, exceptions may be made
without subverting the general purposes of the ordinance.
F We think it entirely plain that the reservation of authority
in the present ordinance to deal in a special manner with
such exceptional cases is unassailable on constitutional
grounds."
Jn our view tho same rationale must apply to the conferal of
G such power on the State Government to grant exemptions or to make
exceptions even in cases of beneficial legislations like the present
enactment- In the matter of beneficial legislations also there are
bound to be cases in which an inflexible application of the provi-
sions of the enactment may result in unnecessary and undue hard-)- ,
H {1) [1928] 71 Las Ed. 1228 at 1230.
I
~.K. CltE'fTIA\t v. TAMiL NADU (Tulzapurkar, i.) 401
ship not contemplated by the legislature. Obviously the power to A
• 1 grant exemptions under s. 29 of the Act has been conferred not for
making any discrimination between tenants and tenants bnt to avoid
undue hardship or abuse of the beneficial provisions that may result
from uniform application of such provisions to cases which deserve
different treatment. Of course, as observed by this Court in P. J, B
Iran;'s case (supra) the power has to be exercised in accordance with
the policy and object of the enactment gatherable from the preamble
as well as its operative provisions or as said in the American decision
without subverting the general purposes of the enactment.
As the preamble of the instant Act shows the three purposes, to C
achieve which it has been enacted are the same as those under the
earlier enactment, the Madras Act XXV of 1949, namely, (I) the
regulation of letting of residential and non-residential buildings, (2)
the control of rents of such buildings, and (3) the prevention of
unreasonable eviction of tenants from such buildings, except that
the enactment is of a comprehensive nature by way of amending and D
consolidating the rent-control law obtaining in the State till then.
Unquestionably it is a piece of beneficial legislation intended to
remedy the two evils of rack-renting (exaction of cxhorbitant rents)
and unreasonable eviction generated by large scale of influx of
population to big cities and urban areas in the post Second World
War period creating acute shortage of accommodation in such areas E
and the enactment avowedly protects the rights of tenants in occupa·
lion of buildings in such areas from being charged unreasonable rents
and from being unreasonably evicted therefrom; it further protects
their possession even after the determination of their comractual
tenancies by enlarging the definition of a 'tenant' so as to include
persons who have held over after such determination. Sections 3 F
and 3-A deal with the regulation of letting while ss.4 to 8 effectuate
the objective of controlling the rents and ss.JO and 14 to 16 confine
eviction of a tenant to stated grounds subject to pertain terms, quali-
fications and/or reservations thereby preventing unreasonable eviction
In other words a landlord's freedom of contract to charge even the
market rent (if it is in excess of 'fair rent' as defined) and his freedom
to evict a tenant on several grounds available to him either under his
lease-deed or the Transfer of Property Act have been curtailed to a
large aod substantial extent. At the same time the enactment con·
tains other significant provisions which indicate that the legislature
itself felt that there might be areas and cases where the two evils
wore neither prevalent nor apprehended and as •uch t)le landlord's H
SUPREME COURT REPORTS t19ssj 2 s.c.il.
A freedom need not be curtailed at all, as also cases where attenuated
freedom could be allowed to the landlord and limited protection be
extended to the tenant. Fot instance, under s. l (2) (a) (i) of the Act
itself does not apply to the entire State but only to the city of Madras, I
.'
the city of Madurai and to all Municipalities (i.e Municipal areas)
which shows that non-urban areas or rural areas are excluded from
B the operation of the Act, presumably because in such areas the evils
of rack-renting and unreasonable eviclio.1 do not obtain; and under
the proviso there to power has been reserved to the Government to
withdraw the application of the Act to any municipal areas or to
the city of Madras or to the city of Madurai from such date as may
c be mentioned in the notification as also to reintroduce the Act in
such areas where it has ceased to apply by reason of the notification
issued under the proviso; similarly, s.I (2) (c) confers powers on the
Government to apply all or any of the provisions of the Act by notifi-
cation to any other area in the state to which it has not already been
made applicable by the Act itself and to cancel or modify any such
[) notification. Again by the proviso to s.10 (1) the restrictions impo-
sed by ss.10 and 14 to 16 (which enumerate the grounds and the
circumstances under which alone eviction can be sought under the
Act) have been made inapplicable to tenants in buildings of which
the landlord is the Government. Similarly, under s.10 (3) (b) a
much wider !attitude to evict a tenant is afforded to landlords of
religious, charitable, educational or other public institutions if
E possession is required for the purposes of such institutions, inas-
much as, unlike in the cases falling under s. 10 (J)(a) (i) (ii) and (iii),
there is no insistance that such landlords should not be occupying
any other building of his own in the city, town or village concerned. In
other words the legislature itself has made a rational classification of
buildings belonging to Government and buildings belonging to reli-
F i;ious, charitable, educational and other public institutions and the
different treatment accorded to such buildings obviously proceeds on
the well-founded assumption that the Government as well as the
landlords of such buildings are not expected to and would not
indulge in rack-renting or unreasonable eviction. These and simi-
G lar other provisons crystalize the policy and purposes of the Act and
furnish the rcquis;to guidance which can legitimately govern the
exercise of power cJnfered on the State Government under s.29 of
the Act. The gui<.Ltnce thus afforded may illustratively be indicated
by stating that the power to grant exemptions or make exceptions
be legitimately exercised by the State Government m areas or
couId h . .h
cases where the mischief sought to be remedied by t e Act 1s nett er
~J
U:. C!ll!rtiAR v. TAMIL NADU (tuizapurirar, i.l 4M
prevalent nor apprehended as also in cases (individual or class of A
cases) where a uniform or inflexible application of Jaw is likely to
result in unnecessary or undue hardship (here to landlords) or in
cases where the beneficial provison is likely to be or is being abused
by persons for whom it is intended (here the tenants). The question
is whether in issuing the Notification dated !6th August 1976 the
State Government has exercised the power in conformity with such B
guidance and the same is valid as not offending Art.14 of the Consti-
tution.
We have already stated that the respondents have contended
that the q11estion of constitutional validity of granting exemption to
buildings belonging to charities, religious or secular from rent control
c
legislation as offending the equal protection clause of Art.14 has been
concluded by the observations made by this Court in P J. !rani's
case (supra) while Counsel for the petitioners and the appellants on
the other hand have urged that it is not; according to Counsel for the
petitioners and the appellants all that the observations made by this D
Court in that case decide is that the classification of buildings belong-
ing to Hindu, Christian and Muslim religious public trusts as also to
public charitable trusts could be regarded· as a reasonable classifica-
tion based on intelligible differentia but that test of nexus which is
also required to be satisfied for purposes of Art.14 has not been pro-
nounced upon by this Court and this aspect is still open to argument. E
We shall proceed on the basis that the q11estion is res integra and
consider whether the respondents, particularly the State Government
have furnished proper material on the basis of which the exemption
granted can be justified. ·
It cannot be disputed that public religious and charitable F
endowments or trusts constitute a well recognised distnict group in~s
much as they not only serve public purposes but the disbursment of
their income is governed by the object with which they are created
and buildings belonging to such public religious and charitable
endowments or trusts clearly fall into a distinct class different from
build:ngs owned by private landlords and as such their classification G
into one group done by the State Government while issuing the
impugned notifiication must be regarded as having" been based on an
intelligible differentia. Counsel for the petitioners and the appel-
lants also fairly conceded that such classification would be a rational
one, more so in view of the observations made by this Court in that
behalf in P.J. !rani's case (supra). The question is whether the said
classification has any nexus with the .object with which the powers to H
SUPREME COURT REPORTS iJ9g5j i s.c.ii.
,
A grant exemptions has been conferred upon the State Government
under s. 29 of the Act. On this aspect of the matter before we go to
the material furnished by the State Goveremenfon the basis of
which such nexus is sought to be established it will be useful to refer I ".
to certain observations made by this Court in the case of State of
Madhya Pradesh v .Kanhaiya Lal (supra) which afford a clear indica-
B
tion as to what, kind of material would go to establish such nexus,
The facts of that caso were these. Respondent No. 4 in that case
was a public trust registered under the Madhya Pradesh Public Trusts
Act and it owned a house property, one portion whereof was
occupied by girls school, the rest being let out to tenants. Since the
rents issuing from the property were wholly utilised for the pur-
c poses of the schools respondent No. 4 became entitled to get exemp-
tion from the provisions of the M. P. Accommodation Control Act
under s. 3(2) thereof for that house.property. On an application
made in that behalf by respondent No. 4 the State Government grant-
ed the exemption by issuing a notification under that provision. The
notification was challenged on two grouds, (i) thats. 3 (2) was void
D on the ground of the excessive delegation of Legislative powers to
the State Government; (ii) that the notification itself was discrimina-
tory as the grant of exemption was not germane to the policy of the
Act. The High Court upheld the validity of s. 3 (2) but struck down
the notification as being discriminatory. This Court confirmed the
High Court's view on both the points. While holding the notification
E bad on the ground that the exemption granted was not germane to
the policy of the Act this Court observed thus :
"In this case there is no affidavit by any officer who had
anything to do with the order granting exemption. The
returns filed on behalf of the State Government do not throw
F any light on this question. It would appear that in grant-
ing the exemption the State applied merely a rule of thumb
and issued the notification on the basis of the assertion by
the trust that the entire rental income from the property
was being applied to meet the expenses of the trust. Such
a statement only allows an institution to apply for exemption.
G It was not the case of the trust that they wanted to evict the
tenants be:aus.; they wanted the whole of the accommodation
itself nor was it their plea that the income according to .•
them was very low compared to prevailing rates of rent and
that it was wholly inadequate for meeting the expenses of the
H trust. If frowzd• like these or other relevant grounds had
S.K. C!IETTi.AR v. TAMIL NADU (Tu/zapurkar, J.) 411
been al/er:ed it would have b.en open to the State Government A
to consider t/ze same and pass an order thereon. In our
view the State Government did not apply it1 mind which it
was required to do under the Act before issuing a notifica-
tion and the return does not disclose any ground which was
germane to the purposes of tho Act to support the claim for
B
exemption." (Emphasis supplied)
The above observations cloarly indicate what kind of material
the State Government is required to take into consideration which
would justify the grant of an exemption in favour of a particular
building or class of buildings. c
Coming to the material furnished by the State Government on
the basis of which the impugned exemption is sought to be justified
it may be stated that in paragraph 4 of its Counter Affidavit dated
10.2.1981 Shri H.J. Ramachandran, Joint Secretary, Homo Depart·
mcnt, has stated :
D
"The prime object behind the grant of exemption to
the buildings belonging to religious institutions is to enable
the institutions to get enhanced income by increasing their
rents. The bu;ldings were endowed to the public religious
and charitable trusts for carrying out certain religious or E
charitable purposes. With the escalation of prices, the reli-
gious and charitable trusts arc not in a position to carry out
the endowment, if the income of the property is not
increased suitably and this nullifies the specific purpose of
endowment."
F
In para 13 the deponent has further stated :
_ "As stated already, numerous representations were
made to the Government about the plight of the temples
and the public charities like poor feeding, etc. and the
ridiculous position which is prevailing. and the Government G
on a consideration of all the aspect; of the matter was fully
satisfied that the tenants are fully exploiting the situation
and the fixation of a fair rent under the Rent Control Act
is no criterion at all and that it would cause immense in-
justice and would be highly oppressive so far as temples and
·~. religious endowments and public charities are concerned.
~! is onlr in the context ()f s119h a serious predicament anc\
412 SUPREME COURT REPORTS [1985] 2 s.c.R.
A critical situation that th: Government intervened and issued
the notification under s. 29 of the Act to relieve the hard-
ihip and injustice."
It has also been pointed out that the procedure and machinery
indicated in s. 4 of the Act and the concerned Rules for fixing fair
B rent only yields on the total cost of the building together with the
market value of the site, a gross return of 9 per cent for residential
buildings and 12 per cent for non-residential buildings which is very
low as compared to the bank rate of interest and grossly inadequate
when compared to the reasonable rents at the market rate obtaining
in the locality or the neighbourhood (i.e., rent which a willing land-
c lord will charge to a willing tenant) and it was a case of tho tenants
of all such buildings exploiting the situation arising from the bene-
ficial provisions of the Act. In the supplementary counter affidavit
dated the 24th September 1983, Shri N. Srinivasan, Deputy Secretary,
Home Department, has categorically asserted that "in all these cases
the Government was satisfied that the rent paid by the tenants was
D very low, meagre and that the provisions of fixation of fair rent
under the Act would not meet the ends of justice and the situation
will still continue in which the tenant will be exploiting the situation
and the helplessness of the public religious trusts and charitable
institutions" and that, therefore, the Government felt that it was
necessary to withdraw the protection given under the Act to the
E
tenants of such buildings.
It may be 1tated that no rejoinder affidavit has been filed on
behalf of the writ petitioners or the appellants and as such the afore-
said material furnished by the two counter affidavits and the aver-
ments made therein have gone unchallenged. In our view, the afore-
F said material clearly shows that buildings belonging to such public
religious and charitable endowments or trusts clearly fell into a class
where undue hardship and injustice resulting to them from tb.e uni-
form application of the beneficial provisions of the Act needed to be
relieved and the exemption granted will have to be regarded as being
germane to the policy and purpose of the Act. In other words the
G
classification made has a clear nexus with the object with which the
power to grant exemption has been conferred upon the State Govern-
ment under s. 29 of the Act.
It may be stated that counsel for the petitioners and the appe~
lants during the course of the hearing placed reliance upon a deci-
sion of this Court in State of Rajasthan v. M~kanchand and 0fhers( )
1
)'- •
(1) [t964J 6 s.c.R. 903,
s K. CHETTIAR v. TAMIL NADU (Tulzapurkar, J.) 413
where the impugned part of s. 2(e) of the Jagirdar's Debt Reduction A
, ... i . Act (Rajasthan Act 9 of 1937) was held to be violative of Article 14
on the ground that the test of nexus between the classification made
and the object sought to be achieved by the statute in question had
not been satisfied. The ratio of the decision was that Jagirs having
been deprived of their lands were entitled to the benefits of the Act
providing for reduction of debts and it made no difference whether B
... the debts were owed to the Government or local authority or other
bodies mentioned in the impugned part of s. 2(e) of the Act and
inch debts due to the Government, local authority and other bodies
could not be excluded while granting the benefit of reduction of
debts. The ratio, in our view, is clearly inapplicable to the facts of
' the instant case inasmuch as we have come to the conclusion that c
the classification of buildings made in the impugned notification has
a clear nexus with the object with which the power to grant exemp-
tion has been conferred upon the State Government.
It was next contended that 1f the main object of granting exemp- D
tion to buildings belonging to public religious institutions or public
charities was to enable these institutions to augment their income
by increasing pentals of their buildings such object could have b'een
achieved by granting exemption from these provisions of the Act
which deal with the controlling of rents (ss 4 to 8 and the Rules
made in that behalf) but a total exemption granted to them from all
the provisions of the Act particularly those which prevant unreason- E
able eviction of tenants must be regarded as excessive and unwarranted.
And in this behalf counsel for the petitioners and the appellants
referred to a Saurashtra Notification No. AB/15(17)/54-55 dated the
27th December, 1954 issued by the State Government under s.4(3) of
the Saurashtra Rent Control Act, 1954 whercunder partial exemption
F
from changing only the standard rent subject to certain conditions
. •
was granted to buildings belonging to public trusts for religious and
charitable purpose. It was pointed out that the Notification p1ovided
that the provisions of the Act except provisions in ss 23, 24 and 25
shall not, subject to conditions and terms specified in the schedule
• thereto apply to such buildings and term No. I in schedule A stated
that "no tenant of such premises to whom the same has been G
leased on or before 30th December, 1948 shall be evicted provided
such tenant agrees to increase the monthly rent paid by him
immediately before the said date by 50 per cent and does not allow,
except for valid reasons, the rent amount due at any time to run in
arrears for more than two consecutive months." In other words the
Saul'llslitra Notifjcation was relied upon as an ilh1stration wJierQ
"
414 SUPREME COURT REPORTS (1985] 2 s.c.R.
A
partial exemption from the provisions of the Rent Control enactment
subject to terms and conditions could be granted. Thus counsel urged
Iii.at similarly in the instant case the State Government of Tamil
Nadu could have given partial exemption to buildings belonging to
public religious institutions and public charities only in the matter
of 'fair rent' and need not have taken away the protection available
B
to the tenants under the provisions which prevented unreasonable
eviction.
In our view there is no substance in the contention. It cannot
be disputed that the two objectives of the enactment, namely, to
c control rents and to prevent unreasonable eviction are interrelated •
and the provisions which subserve these objectives supplement each
other. In P, J. !rani's case (supra), Sarkar, J., has also observed at
page 193 of the Report that "the purpose of the Act, quite clearly,
is to prevent unreasonable eviction and also to control rent. These
two purpose are intertwined." It is obvious that if the trustees of the
D public religious trusts and public charities are to be given freedom
to charge the normal market rent then to make that freedom effective
it will be necessary to arm the trustees with the right to evict the
tenants for non-payment of such market rent. The State Government
on material before it came to the conclusion that the 'fair 'rent' fixed
under the Act was unjust in case of such buildings and it was
F necessary to permit the trustees of such buildings to recover from
their tenants reasonable market rent and if that be so non-eviction
when r~asonable market rent is not paid would be unreasonable and
if the market rent is paid by the tenants no trustee is going to evict
them. It is, therefore, clear that granting total exemption cannot he
regarded as excessive or unwarranted.
E Apart from this aspect of the matter it is conceivable that trus-
tees of buildings belonging to such public religions institutions or
public charities may desire eviction of their tenants for the purpose
of carrying out major or substantial repairs or for the purpose of
G
demolition and reconstruction and the State Government may have
felt that the trustees of such buildings should be able to effect evic-
tions without being required to fulfil other onerous conditions which
must be complied with by private landlords when they seek evictions
for snch purpose. In onr view, therefore, the total exemption gran-
ted to such buildings under the impugned notification is perfectly
-
•
jmtified. .. •
The reliance on Saurashtra Notification, in our view, would be
of no avail to the petitioners or the appellants. The manner in
S.K. CHETTIAR v. TAMIL NADU tTulzapurkar, J,) 415
which exemption from rcn t control provisions shonld be granted, A
whether it could be partial or total and if so on what terms and
conditions would be matters for each State Government to decide in
the light of the scheme and provisions of the concerned enactment
and the facts and circumstances touching the classification made.
And if the State of Madras has thought fit to grant the exemption in
a particular mannor by the impugned notification it will be difficult n
to find fault with it if the exemption so granted is not illegal or un·
constitutior.al. It will be interesting to note that even under the
Saurashtra Notification the term or condition contained in Schedule
'A' thereto also makes the po;ition clear that eviction may follow if
the permitt<d enhanced rent is not paid or allowed to fall in arrears
for two consecutive months by the tenant of such buildings belong. c
ing to public religious or charitable trusts.
' .....
In the result the challenge to impugned notificatipn fails and
the writ petitions and the civil appeals are dismissed. All interim
orders, if any, are vacated. There will be no order as to costs.
ll
S. R. Petition and Appeals dismissed.
·';
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