Holding

The notification exempting premises with rent above Rs.1500 is ultra vires Section 3 of the Act and must be struck down.

Summary

The appellants, tenants in Chandigarh, challenged a 7 November 2002 notification issued by the Administrator under Section 3 of the East Punjab Urban Rent Restriction Act, 1949, which exempted buildings and rented land with monthly rent exceeding Rs.1500 from the Act's provisions. The High Court had upheld the notification, but the Supreme Court examined whether the Administrator had the authority to make a permanent exemption that effectively altered the essential features of the legislation. The Court distinguished conditional legislation from delegated legislation and held that essential legislative functions, such as repealing or substantially amending a statute, cannot be delegated to an executive authority. It found that the notification was based on the National Housing Policy rather than the legislative policy of the Act, and that the Administrator failed to apply his mind to relevant facts, making the exemption ultra vires. Consequently, the Supreme Court set aside the notification and allowed the appeals, striking down the exemption. No costs were awarded.

Issues considered

The Administrator's notification under Section 3 of the East Punjab Urban Rent Restriction Act, 1949, exceeds the delegated authority and is ultra vires.
Whether Section 3 creates conditional legislation or delegated legislation and the scope of judicial review applicable.
Whether essential legislative functions, including altering the basic features of the Act, can be delegated to the Administrator.
Whether reliance on the National Housing Policy justifies the exemption without legislative amendment.

Legislation cited

Constitution of Indias. 12, s. 239, s. 245, s. 246
East Punjab Urban Rent Restriction Act, 1949s. 3
General Clauses Act
Punjab Reorganisation Act, 1966
Transfer of Property Act, 1882s. 106

Subjects

rent controldelegated legislationconditional legislationlegislative policyultra viresadministrative lawSection 3National Housing PolicyArticle 14Article 245Article 246

Judgment

VASU DEV SINGH AND ORS. A
v.
UNION OF INDIA AND ORS.

NOVEMBER 7, 2006

[S.B. SINHA AND P.P. NAOLEKAR, JJ.] B

East Punjab Urban Rent Restriction Act, 1949-Section 3-Notification
under, by Administrator-Directing that provisions of Act not applicable to
buildings and rented land whose monthly rental exceeded Rs. 1500-Validity C
of-Held: Delegation of essential legislative function is impermissible-
Administrator has no jurisdiction to issue a Notification which would have
a permanent impact-It cannot change the basic features of the law or act
contrary to the legislative policy-It could exercise power under section 3
only in terms of legislative policy-Administrator cannot repeal provisions
of the main Act-Change of legislative policy with the aid of the National f>
Housing Policy was not within the domain of the Administrator-It was the
sole prerogative of the legislature-Thus, Notification violative of legislative
policy-East Punjab Urban Rent Restriction (Extension to Chandigarh) Act,
1974-Constitution of India, 1950-Artic/es 245 and 246.

Administrative law: E
Conditional legislation and delegated legislation-Distinction
· between-Explained

Delegated legislation-Judicial review, scope of-Held: Is permissible
though the scope is limited. F
Legislation: Legislative policy-Ascertainment of-Held: Can be
gathered fi·om the preamble of a statute, statement of object and reasons and
the provisions therein.

Prior to coming into force of Punjab Re-organisation Act, 1966, Union G
Territory of Chandigarh was part of State of Punjab. East Punjab Urban Rent
Restriction Act, 1949 was enacted to restrict the increase of rent of certain
premises situated within the limits of urban areas and eviction of tenants
therefrom. Provisions of 1949 Act were extended to Union Territory of
535 H
536 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.
I

A Chandigarh by Notification. Appellants-tenants in the premises within Union
Territory of Chandigarh were protected in terms of 1949 Act. High Court
struck down the Notification since Chandigarh was not declared an urban
area. In 1972, Chandigarh was declared an urban area. Thereafter, East Punjab
Urban Rent Restriction (Extension to Chandigarh) Act, 1974 was enacted in
terms whereof provisions of 1949 Act were extended to Union Territory of
B Chandigarh. The Administrator of Chandigarh in exercise of his power
conferred upon him under section 3 of 1949 Act, issued Notification dated
07.11.2002 directing that the provisions of the Act would not apply to the
buildings and rented land whose monthly rental exceeded Rs. 1500/-. Appellant
filed writ petition challenging the vires of Section 3 of 1949 as also vali~ity
C of the Notification. Administrator filed additional affidavit before the High
Court assigning reasons for issuing the said notification. Reference was made
to the National Housing Policy adopted by the Central Government, Model
Rent Law suggested by Government of India as also various correspondences
entered into by and between Central Government and the Union Territory
culminating in issuance of the said Notification. High Court dismissed the
D writ petitions holding that the Notification was not ultra vires the provisions
of the 1949 Act. Hence the present appeals.

Allowing the appeals, the Court

HELD: 1. The order of High Court that the Notification dated 07.11.2002
E issued by Administrator of Chandigarh in exercise of his power conferred
upon him under section 3 of the East Punjab Urban Rent Restriction Act,
1949 directing that the provisions of the Act would not apply to the buildings
and rented land whose monthly rental exceeded Rs.1500/-, was not ultravires
the provisions of the 1949 Act, cannot be sustained. (546-E-FJ
F
2.1. The distinction between conditional legislation and delegated
legislation is clear and unambiguous. In a conditional legislation the delegatee
has to apply the law to an area or to determine the time and manner of carrying
it into effect or at such time, as it decides or to understand the rule of
legislation, it would be a conditional legislation. The legislature in such a
G case makes the law, which is complete in all respects but the same is not
brought into operation immediately. The enforcement of the law would depend
upon the fulfilment of a condition and what is delegated to the executive is the
authority to determine by exercising its own judgment as to whether such
conditions have been fulfilled and/or the time has come when such legislation
H should be brought in force. Therefore, the taking effect of a legislation, is
VASUDEVSINGHv. U.0.1. 537

made dependent upon the determination of such fact or condition by the A
executive organ of the Government. Delegated legislation, however, involves
delegation of rule making power of legislation and authorises an executive
authority to bring in force such an area by reason thereof. The discretion
conferred on the executive by way of delegated legislation is much wider. Such
power to make rules or regulations, however, must be exercised within the
four corners of the Act. Thus, delegated legislation is a device which has been .J3
fashioned by the legislature to be exercised in the manner laid down in the
legislation itself. (553-B-F]

2.2. It cannot be said that the impugned Notification is in effect and
substance a conditional legislation and not a delegated legislation. By reason C
of section 3 of the 1949 Act, Administrator, however, has been empowered to
issue a notification whereby and whereunder, an exemption is granted for
application of the Act itself. (553-F-G]

Hamdard Dawakhana (Wakj) Lal Kuan, Delhi & Anr. v. Union ofIndia
& Ors., (1960) 2 SCR 671; MP. High Court Bar Association v. Union ofIndia D
& Ors., (2004) 11 SCC 766; State of Tamil Nadu, represented by Secretary,
Housing Deptt., Madras v. K. Sabanayagam & Anr., [1998] 1 SCC 318 and
Orient Paper and Industries Ltd & Anr. v. State of Orissa & Ors., (1991) Supp.
1 sec 81, relied on.

3. While considering the validity of dele~ated legislation, the scope of E
judicial review is limited but the scope and effect thereof have to be considered
having regard to the nature and object thereof. The nature of delegated
legislation can be broadly classified as the rule-making power; and grant of
exemption from the operation of a statute. In the latter category, the scope of
judicial review would be wider as the statutory authority while exercising its F
statutory power must show that the same had not only been done within the
four corners thereof but otherwise fulfills the criteria laid down therefor.
Therefore, the law which is laid down is that if by a Notification, the Act itself
stands effaced; the Notification may be struck down. But that may not be the
only factor. [554-E-G; 557-A-B]

P.J. Irani v. State of Madras and Anr., (1962) 2 SCR 169, relied on.

Clariant International ltd. and Anr. v. Securities & Exchange Board of
India, (2004) 8 SCC 524; State of Rajasthan and Ors. v. Basant Nahata,
(2005) 12 sec 77: AIR (2005) SC 3401; B.K. Industries and Ors. v. Union
of India and Ors., [1993) Supp. 3 sec 621; Hindustan lever and Ors. v. ·H.
538 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Hindustan Lever Mazdoor Sabha and Ors., [1994] Supp. 1 SCC l; Nedurimilli
Janardhana Reddy v. Progressive Democratic Student Union and Ors., [1994]
6 SCC 506; Agricultural Market Committee v. Shalimar Chemical Works Ltd,
[1997] 5 SCC 516; Additional District Magistrate (Rev.) Delhi Admn. etc. v.
Siri Ram etc., [2000] 5 SCC 451; ITW Signode India Ltd v. Collector of
Central Excise, (2004] 3 SCC 48; Secretary, Ministry of Chemicals and
B Fertilizers, Government of India v. Cipla Ltd and Ors., [2003) 7 SCC l;
Maharashtra State Board ofSecondary and Higher Secondary Education and
Anr. etc. v. Paritosh Bhupeshkumar Sheth and Ors., [1984) 4 SCC 27; Indian
Express Newspapers (Bombay) Pvt. Ltd and Ors. etc. v. Union of India and
Ors. etc., (1985] 1 SCC 641; Khoday Distilleries Ltd and Ors. v. State of
C Karnataka and Ors., [1996) 10 SCC 304; Dai-ichi Karkaria Ltd v. Union of
India and Ors., [2000) 4 SCC 57 and Bombay Dyeing and Mfg. Co. Ltd (3)
v. Bombay Environmental Action Group and Ors., [2006] 3 SCC 434; Kera/a
Samsthana Chetu Thozhilali Union v. State of Kera/a and Ors., (2006[ 4 SCC
327, referred to.

D Principles ofStatutory Interpretation by G.P. Singh, Tenth Edition p 916
and Craies on Statute Law, 7th Edition, referred to.

4.1. The legal history can be taken into consideration for construction
of a statute. Chandigarh, admittedly, is a new town. It was meant to be used as
a Union Territory in terms of the provisions of the Punjab Resettlement Act.
E It enjoys a unique feature which no other town in India does, namely, capital
of two States as also being an Union Territory in itself. Although it is a capital
of two States, the essential functions of a legislative authority as also power
of administrations are in the hands of the Central Government in terms of
Article 239 of the Constitution oflndia. It is the Parliament alone which would
F legislate on its behalf. The Central Government extended the beneficial
legislation of rent control in the Union Territory. [581-A-C)

Dr. Harkishan Singh v. Union of India and Ors., AIR (1975) P&H 160:
(1975) PLR 163, referred to.
. .
4.2. The 1949 Act was conceived as a measure to overcome shortage of
G rental accommodation in the wake of Second World War and the influx of
refugees following partition. The Union of India also accepts that the object
of the State Act to provide for control and regulation of the rental housing
market, determination of fair rent, protection of tenants against indiscriminate
eviction at the hands of landlords and the rights of the landlords for recovery
H of tenanted premises in specific cases. (589-B-D)
VASU DEV SINGH v. U.O.I. 539
4.3. The reasons for which the impugned notification was issued was A
stated to be that the social objective of the Rent Control Act had not been
realised and it had various other adverse effects including simulation of
investment in rental housing especially from the lower and middle income
groups. A model Rent Control legislation was circulated in the year 1992
wherein proposal was made to give exemption to residential non-residential
premises carrying more than specified rental of Rs. 1500/- per month. The
B,
Government of India had been advocating urban section reforms and had
introduced an urban reforms incentive scheme whereunder funds are to be
provided by it and to urban sector reforms such reform was to be carried out
for removing the rental laws. Therefore, wnat was contemplated, was
amendment of the existing legislation by the legislature so as to achieve partial C
repeal of the Act. The National Housing Policy or the Central Government
did not and could not recommend that what can be done only by the legislature,
can be achieved through the route of Notification issued by the Administration
under section 3 of the Act. 1589-D-H; 590-AJ

4.4. The legislature itself, provided for speedy relief to a section of D
landlords. The provisions have been enacted for the purpose of protection of
tenants of certain sections. (588-H, 589-A)

4.5. The words "certain premises", for the purpose of ascertaining the
legislative policy must be construed having regard to the definition of E
"building" only. The words "certain premises", having regard to their
applicability in the urban areas, would also mean that the premises situated
in the urban area and not in rural area. 1589-A-B]

5.1. Legislative Policy of a State can be gathered from the Preamble of
the Statute, the Statement of Objects and Reasons and the core provisions F
contained therein. In construing.a statute, preamble may not have a role to
play unless the meaning thereof is obscure or if plain meaning is to be given,
the same would lead to an absurdity, but, the preamble being a part of the
statute can be read along with other portions of the Act to give clear meaning
to the provisions and to decide whether they are clear or ambiguous, the G
preamble in itself is not an enacting provision as other relevant enacting words
have to be found elsewhere in the Act, and the utility of the preamble diminishes
if the statutory provisions are themselves capable of being given a literal
meaning. Once, however the words used in statute have a plain meaning, the
courts should not busy themselves to find out the supposed intention or the
poliey underlying statute. 1582-H; 583-A-B-F-GJ H
540 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Union of India v. Elphinstone Spg. and Wvg. Co. Ltd. and Ors., [200 l)
4 SCC 139 and Sardar Gurmej Singh v. Sardar Partap Singh Kairon, [1960]
1 SCR 909, relied on.

State of Rajasthan and Ors. v. Basant Nahata, (2005] 12 SCC 77: AIR
(2005) SC 3401; Vasantlal Maganbhai Sanjanwala v. State of Bombay and
B Ors., (1961) 1 SCR341 andLachmiNarainandOrs. v. Union ofIndia& Ors.,
(1976) 2 sec 953, referred to.

5.2. The Rent Act was a beneficent legislation which sought to protect
a category of the tenants occupying rented buildings specified therein not
C _only from--eghancement of rent, but also from unreasonable eviction.
Furthermore, the Act provides for protection of the tenants from unreasonable
harassment at the hands of the landlords. (582-A-B]
5.3. Section 3 although is a part of the Act, but the same cannot be said
to contain an in-built policy so as to empower the Administrator to do all such
things which can be done by the legislature itself. By taking recourse to the
D preamble, it cannot be said that the power to exclude the tenanted premises
can be exercised without taking into consideration the legislative policy and
the object of the Act. It may be true that by reason of Section 3 of the Act, no
arbitrary power as such has been conferred in view of the fact that the Act
applies only to certain classes of lands and buildings but the same would not
E mean that the Administrator is free to take any action in any manner he likes.
The action of the Administrator is indisputably subject to judicial review.
[594-F-H; 595-A)
6.1. The executive government can exercise its power of exemption where
such exemption had been granted only for a limited period; in respect of new
F buildings, government buildings, buildings belonging to the local-self
government and other public sector undertakings; areas belonging to the
Cantonment Board which was outside the purview of the applicability of the
original Act being governed by separate Act, like Cantonment Acts; where
the same would come within the purview of the delegated legislation; where
the tenants or tenanted premises form a distinct and separate class; where
G having regard to the constitutional scheme that any State within the meaning
of Article 12 of the Constitution would not treat its tenants in an unfair and
arbitrary manner despite the rent control laws being not applicable in their
case as they would be treated to be forming a separate class. (585-D-H]
6.2. The Administrator will have no jurisdiction to issue a notification
_H which would have a permanent impact. The Administrator cannot change the
VASU DEV SINGH v. U.0.1. 541
basic features of the law or Act contrary to the legislative policy. A delegate A
must act within the four corners of the Act, the guidelines wherefor must be
provided for in the Act itself. The legislature, on the other hand, can not only
repeal the statute, it can change the basic features of the law. The only
limitation on the part of the legislature is that ordinarily it cannot take away
a vested right. 1586-A-B)
B,
6.3. With regard to the validity of the impugned Notification one of the
grounds for invalidating the notification would be if irrelevant factors have
been taken into consideration. Agother test which can be applied is as to
whether the notification is otherwise ma/afide in the sense that the same has
been used for unauthorised purpose. 1586-D-E] C
P.J. Irani v. State of Madras and Anr., (1962) 2 SCR 169, relied on.

6.4. A statute can be amended, partially repealed or wholly repealed by
the legislature only. The philosophy underlying a statute or the legislative
policy, with the passage of time, may be altered but therefor only the legislature D
has the requisite power and not the executive. The delegated legislation must
-I be exercised within the parameters of essential legislative policy. The question
must be considered from another angle. Delegation of essential legislative
function is impermissible. It is essential for the legislature to declare its
legislative policy which can be gathered from the express words used in the
· statute or by necessary implication, having regard to the attending E
circumstances. The legislature cannot delegate its power to repeal the law or
modify its essential features. 1587-B-E]

().5. The Administrator is said to have taken into consideration the
National Housing Policy circulated in the year 1992. Such a bahmcing
procedure was recommended to be done by way of legislation and not by F
executive action. The National Housing Policy recommended for step by step
repeal of the Act and substituted the same by a new permanent Act By reason
thereof the fact that most of the States had enacted temporary Acts which had
been extended from time to time, was, thus, taken into consideration. Only
because some exemption notifications had been issued under the Punjab Act G
by itself may not be a ground to follow the same blindly inasmuch as the
Punjab Act applies to the entire State. There may not be any town in the said
State which may be as important as Chandigarh and where the rental of the
tenanted premises would be as high as in the said town. The Administrator
himself has described the status of Chandigarh. Despite the same, he equated
H
542 SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.

A Chandigarh with other towns ofthe State of Punjab. (586-E-H)
6.6. The Administrator in issuing the notification has missed the
relevance of the distinction between the National Housing Policy and the
legislative policy. The power of exemption could be exercised having regard
to the legislative intent and policy whereas the National Housing Policy could
B be given effect to by the legislature in modifying, varying or altogether doing
away with the existing legislative policy and laying down a new policy therefor.
Change of legislative policy with the aid of the National Housing Policy was
not within the domain of the Administrator. It was the sole prerogaiive of the
legislature. (587-A-B]
c 6.7. Section 3 of the Act is constitutionally valid. However, it provides
for an enabling provision. The Central Government, by reason of the said
provision, has been empowered to direct that all or any of the said provisions
would not apply to any of the buildings or rented buildings or any class of
buildings or any rented lands. (587-E-F]
D
6.8. The classification as regards the premises occupied and possessed
by the State, the Local Self Government or other public sectors, however, stand
on a different footing. It is now beyond any controversy that this Court treated
the houses stated to be belonging to the State or public sector undertaking
absolutely on a different footing on the pre-supposition that they would n.ot
E unreasonably enhance the rental of the premises and they would conduct
themselves in such a manner so as to make a tenant feel that they would not
be subjected to unreasonable eviction. [590-E-F)

Baburao Shantaram More v. Bombay Housing Board and Anr., (1954)
SCR 572: AIR (1954) SC 153 and Mis. Dwarkadas Marfatia and Sons v.
F Board of Trustees of the Port of Bombay, (1989) 3 SCC 293, referred to.

Jamshed Hormusji Wadia v. Board of Trustees, Port ofMumbai and Anr.,
(2004) 3 SCC 214 and Municipal Corpn., Chandigarh and Ors. v. Shantikunj
Investment (P) Ltd. and Ors., (2006) 4 SCC 109, relied on.
G 6.9. Even the criterion underlying the policy is required to be changed
by way of modification or variation in the standard of rent, object whereof
should have been achieved only by making suitable amendments in the Act
.·-
itself. The Administrator could not have tinkered with the provisions of the
Act. What should have been the criterion for fixing the quantum of rent so as
to render the classification constitutional and valid in law although would not
H
- VASU DEV SINGH v. U.0.1. 543
ordinarily fall for consideration of the court, but the question as to whether A
hy reason of fixation of such a rent which would render the Act inapplicable
to a large section of the tenants would come within the scope of judicial review.
The criterion which was required to be considered was not as to what rent a
building could have fetched in 1978 but what would have been a fair criterion
i,ts regards the quantum of rent when the notification was issued. For that B
purpose, no data has been collected nor has any study been made. As to how
the said criterion had been fixed is not known. Except stating that the rent of
Rs. 1500/- to Rs. 3500/- was made the criterion in terms of the National
Housing Policy, the Administrator did not assign any other reason.
[591-H; 592-A-B-D-E]
6.10. The Administrator while issuing the impugned notification C
misdirected himself in law insofar as he failed to take into consideration that
he could not have exercised any jurisdiction in terms thereof as the National
Housing Policy, inter alia, contains the guidelines for the State legislatures
for enactment of law and the same was not meant to be taken recourse to by
the Executive Government of the State. While exercising his jurisdiction under
Section 3 of the Act, the Administrator was required to apply his own mind to D
the relevant facts. Application of mind on the part of the Administrator was
also necessary having regard to the rate of inflation and other factors
including the prevalent rental in the neighbouring areas of the States of
Punjab and Haryana. It was necessary to collect relevant data. Rental of Rs.
1500/- could not have <been applied mechanically. He further failed to take E
into consideration that in terms of National Housing Policy, that quantum of
rent was made flexible. Only a broad guideline had been provided therefor.
What was necessary to be applied was the principle and not the minimum rent
specified therein. Furthermore, the lowest ceiling of Rs. 1500/- might have
been treated to be fair in the year 1992 but the same would have lost much
significance and relevance in the year 2002 in view of the passage of time. F
[592-F-H; 593-A-B-C]
D.C. Bhatia and Ors. v. Union ofIndia and Anr., (1995] 1 SCC 104 and
Prabhakaran Nair and Ors. v. State of Tamil Nadu and Ors., (1987) 4 SCC
238, referred to.

6.1 I. A new legislative policy was framed having regard to the new
G
economic policy of the Central Government as was formulated in the year
1991. However, by reason thereof only it cannot be said that the social justice
doctrine, as adumbrated in the preamble of the Constitution, need not be given
effect to under any situation. Social justice legislations and other legislations
beneficent to the weaker sections of the country are still on the statute book. H
544 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A The rent Acts would continue to control the terms and conditions of tenancy.
On some occasions, only the same can be interpreted differently having regard
-
to change in time. But, it was not for the executive government to do so. They
have not been repealed. Repealing of such Acts can be brought about by the
competent legislature. What would be the legislative policy in relation thereto
was within the exclusive domain of the Central Government. The Constitution
B of India, having regard to the provisions.of Articles 245 <and 246 of the
Constitution of India clearly demarcates the fields of legislation and, thus, it
would not be correct to contend that only because that the Central Government
has changed its economic policy, the same must be reflected in all the
legislative fields oceupied by the State legislature. [593-E-H]
c D.C. Bhatia and Ors. v. Union qflndia andAnr., [1995) 1SCC104 and
B.K. Industries & Ors. v. Union of India and Ors., [1993) Supp. 3 SCC 621,
referred to.

6.12. Court's attention has been drawn to certain documents to show
D the effect of the said notification, i.e., immediately thereafter exorbitant rent
was claimed from the tenants by the landlords. Therefore, there is sufficient
material on record to hold that Rs. 1500/- could not have been fixed as the
quantum of rent for tbe purpose of extending the exemption provision under
Section 3 of the Act to the Administrator. [594-D-FJ

E Rattan Arya and Ors. v. State of Tamil Nadu G11d Anr., AIR (1986) SC
1444, referred to.

6.13. The term 'building' having regard to its definition would mean
tenanted building and, thus, the building fetching a rent to a prescribed extent
can form the base for determining criterion for the vurpose of classification
F but the same would not mean that the Administrator would be entitled to lay
down a criterion which wo~ld be applicable only to a large section of the
tenants. [595-A-B]

6.14. The Notification has not been issued for a limited period. Unlike
similar legislations enacted by other State Governments, the Act is not a
G temporary Act. It is indisputably in force for a period of more than 57 years.
Therefore, it will have a permanent effect It cannot be said that having regard
to the provisions of the General.Clauses Act, the same can be modified,
amended at any time and withdrawn, for more than one reason. Firstly,
respondent proceeded on the basis that the notification has been issued with
H a view to give effect to the National policy, i.e., amendments must be carried
.... VASUDEVSINGHv. U.O.I. 545

out until a new Rent Act is enacted. Whether the Act would be enacted or not A
is a matter of surmises and conjectures. It would be again a matter of
legislative policy which was not within the domain of the Administrator.
Secondly, the Administrator in following the National Policy proceeded on
the basis that the provisions of the Act must ultimately be repealed. When
steps are taken to repeal the Act either wholly or in part, the intention B
becomes clear i.e. the same is not meant to be given a temporary effect. When
the repealed provisions are sought to be brought back to the statute-book, it
has to be done by way of fresh legislation. In any event, the General Clauses
Act shall not apply to an executive action. Executive actions can be taken by
a person who is statutorily authorized therefor. He is required to apply his
own mind. What can be done in future by another authority cannot be a ground C
for upholding an executive act. 1595-B-FJ
Dr. Harikishan Singh v. Union ofIndia and Ors., AIR (1975) P&H 160;
Hari Prasad Gupta v. Jitender Kumar Kaushik, AIR (1982) P&H 165; Punjab
Tin Supply Co., Chandigarh and Ors. v. Central Government and Ors., 11984)
1 sq: 206; Mis. Kesho Ram and Co. and Ors. etc. v: Union of India and D
Ors., [1989! 3 SCC 151; Firm Amar Nath Basheshar Dass v. Tek Chand, 11972)
1SCC893; Sadhu Singh v. District Board, Gurdaspur and Anr., [1969) RCR
156; Tharumal and Anr. v. Masjid Hajum Pharosan Va Madrassa Talimul Islam,
Mirza lzsmail Road, Jaipur, [1994) 3 SCC 375; Mis. Buywell Corporation v.
Mahadevma!, (1988) APLJ-1-345; P.J Irani v. The State ofMadras and Anr.,
(1962) 2 SCR 169; Motor General Traders and Anr. v. State ofAndhra Pradesh E
and Ors., (1984) 1 SCC 222; R.MD. Chamarbaugwal!a and Anr. etc. v. Union
of India and Anr. etc., 11957) SCR 930; Parripati Chandrasekharrao and
Sons v. Alapati Jalaiah, [i995) 3 SCC 709; S. Kandaswamy Chettiar v. State
of Tamil Nadu and Anr., (1985) 1SCC290; D.C. Bhatia and Ors. v. Union of
India and Anr., (1995) I SCC 104; C.N. Rudramurthy v.K Barkathulla Khan F
and Ors., 11998) 8 SCC 275; Delhi Cloth & General Mills etc. v. S. Paramjit
Singh and Anr. etc., 11990) 4 SCC 723; Prabhakaran Nair and Ors: v. State
of Tamil Nadu arid Ors., 11987) 4 SCC 238 and S.M Mahendru and Co. and
Ors. v. Stat:J of Tamil Nadu and Anr., [1985) 1SCC395, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4688 of2006. G
From the Judgment and Order dated 9.11.2004 of High Court of Punjab
and Haryana at Chandigarh in C.W.P. No. 20221/2003.
WITH
C.A. Nos. 4689, 4691, 4690, 4692, 4693 and 4694/2006.
Ashok H. Desai, Anil B. Diwan, Dr. A.M. Singhvi, Amit Chadha, Alok H
546 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R. ......
A Agarwal, Vikas Jain, Sanjay Chabra, Susmita Lal, Ruby Singh Ahuja, Dinesh
Venna, Suresh Kumari, A.P. Mohanty, Sudershan Goel, Dhiraj, P.N. Puri, Amar
Vivek, Jasbir Singh, S.K. Sabharwal, R.K. Rathqre and M.K. Venna for the
Appellants.

G.E. Vahanvati, S.G., F.S. Nariman, K.K.Venugopal, V.R. Reddy, S.B.
B Sanyal, Naveen Prakash, V.K. Venna, Rupinder Singh Suri, Vinay K. Shailendra,
Subhash Shanna, Randeep Rai , Manmeet Arora, Ajay Dhaiya, Arvind Nigani,
C. Mukand, Ashok Kumar Jain, Pankaj Jain, Animesh Saha, Bijoy Kumar

C
Jain, Sudhir Walia, Mahinder Singh Dahiya, Kamini Jaiswal, Shomila Bakshi
and Sunita Diwedi for the Respondents.

Shareen Sethi, Bhavna Sethi and A. Guneshwar Sharma for the Applicant.
..
Asha Jain ~adan, P.C. Dhingra and Mukesh Jain for the Intervenor/
Applicant.

The Judgment of the Court was delivered by
D
S.B. SINHA , J : Leave granted.

Background facts:

Appellants are tenants in the premises situated within the Union Territory
E of Chandigarh. They were protected in tenns of the East Punjab Urban Rent
Restriction Act, 1949 (for short, 'the 1949 Act'). The Administrator of
Chandigarh in exercise of his powc.r conferred upon him under Section 3 of
the 1949 Act issued a notification dated 07.11.2002 whereby and whereunder
it was directed that the provisions thereof would not apply to the buildings;
monthly rent whereof exceeded Rs. l ,500/-. Aggrieved by issuance of the said
F notification, Appellants filed writ petitions before the High Court of Punjab
and Haryana at Chandigarh, questioning the vires of Section 3 of the 1949
Act as also the validity of the said notification dated 07 .11.2002 on diverse
grounds. The said petitions have been dismissed. These appeals arise for
the said judgments and orders. Before adverting to the questions involved
G in these appeals, we may notice the iegislative history of the legislations in
question.

Rent Act:

Union Territory of Chandigarh was a part of the State of Punjab prior
H to coming into force of the Punjab Reorganization Act, 1966. The Central
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 547
, 'Government in exercise of its power conferred under Section 87 thereof issued A
a notification for extending the provisions of 'the Act' to the Union Territory
of Chandigarh. The 1949 Act is a pre-constitution Act.

The 1949 Act was enacted to restrict the increase of rent of certain
premises situated within the limits of urban areas and the eviction of tenants
therefrom. We may hereinafter notice a few provisions of the said Act. B
"Building" has been defined in Section 2(a) to mean "any building or
part of a building let for any purpose whether being actually used for that
purpose or not, including any land, go-downs, out-houses, or furniture let
therewit!i, but does not include a room in a hotel, hostel or boarding-house;" C
"Urban Area" has been defined in section 20) to include an area
comprised in the Union Territory of Chandigarh. Section 3 of the 1949 Act
provides for exemptions from the operation of the said Act, which is in the
following terms :

"Exemptions. - The Central Government may direct that all or any of D
the provisions of this Act shall not apply to any particular building
or rented land or any class of buildings or rented lands."

Sections 4 and 5 of the 1949 Act provide for prevention of unfair rent
and increase in fair rent in the cases admissible as prescribed thereunder.
E
Section 8 of the 1949 Act provides for recovery of the rent which
should have been paid. Section 9 provides for increase of rent on account .
of payment of rates of local authority but prohibits increase thereof on
account of payment of other taxes. Section 10 provides that the landlord
without just or sufficient cause cannot interfere with the amenities enjoyed p
by the tenant. Section 13 protects the tenants from eviction, envisaging that
unless one or more ground specified therein is satisfied, no tenant shall be
evicted from the tenanted premises save and except in execution of a decree
passed by the Rent Controller. s·ection 13A provides for right to recover
immediate possession of residential or scheduled building r) accrue to certain
persons. G
The operation of the said Act was extended to the Union Territory of
Chandigarh by a notification, in terms whereof it with certain modifications
came into force w.e.f. 04.11.1972. The said notification was struck down by
the High Court on the premise that it was not declared to be an urban area. H
548 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A Chandigarh was declared to be an urban area in 1972.
The Parliament thereafter enacted the East Punjab Urban Rent Restriction
(Extension to Chandigarh) Act, 1974 (for short "1974 Act"), the relevant
provisions whereof read as under:

B "l. This Act may be called the East Punjab Urban Rent Restriction
Act (Extension to Chandigarh) Act, 1974.

2. In this Act, "the Act" means the East Punjab Urban Rent
Restriction Act, 1949 as it extended to, and was in force, in certain
areas in the pre-reorganisation State of Punjab (being areas which
C were administered by municipal committees, cantonment boards, town
committee or notified area committee or areas notified as urban areas
for the purposes of that Act) immediately before the 1st day of
November, 1966.

3. Notwithstanding anything contained in any judgment, decree
D or order of any court, the. Act shall subject to the modifications
specified in the Schedule, be in force in, and be deemed to have been
in force with effect from the 4th day of November, 1972 in the Union
Territory of Chandigarh as if the provisions of the Act as so modified
had been included in and formed part of this section and as if this

E
section had been in force at all material times. •
4. (I) Notwithstanding anything contained in any judgment, decree
or order of any court, anything done or any action taken (including
any notification or direction issued or rents fixed or permission granted
or order made) or purported to have been done or taken under the Act
shall be deemed to be as valid and effective as if the provisions of
F
this Act had been in force at all material times when such thing was
done or such action was taken.

(2) Nothing in this Act shall render any person guilty of any
offence for any contravention of the provisions of the Act, which
occurred before the commencement of this Act."
G
Writ Proceedings :

Appellants herein filed separate writ petitions before the Punjab and
Haryana High Court questioning the validity of the said notification dated
H 7 .11.2002, wherein various contentions including the one relating to jurisdiction
VASU DEV SINGH v. U.O.I. [S.B. SINHA, J.] 549
of the Administrator in that behalf was raised. In the said writ petition it was A
furthermore contended that the impugned notification was beyond the rule
making power of the State Act.

The High Court, after hearing the matter on I I th March, 2004 at some
length and upon taking notice of the submissions made on behalf of the
parties considered it expedient to give opportunity to the Chandigarh B
Administration 'to have a rethinking in the light of the observations made
therein so that a balance could be maintained between the rights of the
tenants as well as those of the landlords'. Pursuant thereto an additional
affidavit was filed on 29th July; 2004 wherein, inter ala, reference was made
to the National Housing Policy adopted by the Central Government as also C
various correspondences entered into by and between it and Administration
of Union Territory of Chandigarh to which we would advert to later. The High
Court dismissed the said writ petitions holding that the said notification dated
7. I l .2002 was not 11/tra vires the provisions of the 1949 Act.

High Court Judgment : D

The High Court upheld the validity of the said notification stating :

(a) The Administrator has not acted contrary to the legislat've policy
enshrined under the statute.
E
(b) While considering the legislative policy and object behind the
enactment of the 1949 Act, the court cannot overlook the fact
that in the original enactment, amendments had been carried out
by the legislature on at least on two different occasions.
(c) The Administrator having acted in furtherance of the power F
conferred upon him under Section 3 of the 1949 Act by the
legislature itself, exercise of such power was not contrary to the
legislative policy and/or preamble to the l 949 Act.

(d) By reason of the said notification exempting application of the
provisions of the Act in respect of the tenanted premi90S fetching G
monthly rent of Rs.1500/- or more would not amount to repeal of
the Act itself.

(e) The said notification having been issued pursuant to or in
furtherance of the National Housing Policy and in terms of the
Model Rent Law suggested by the Government of India, the H
550 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R. ..
A same is valid in law.
(t) As the protection to the tenant was given in terms of the provisions
of the Act read with the 1974 Act, the Administrator was fully
empowered to withdraw the said protection in respect of a class
of tenants.
B (g) Section 3 of the Act does not suffer from the vice of excessive
delegation as thereby no unguided or unfettered power has been
conferred upon the Administrator.

(h) As by reason of Section 3 of the Act, any particular building or

c rented land or class of buildings can be subject matter 'thereof,
the tenants who were paying monthly rent exceeding Rs. 1500
constituted a class by themselves.
(i) The classification made by the Administrator that the exemption
as regards application of the Act shall be granted in respect of
D those premises which fetch rent exceeding a sum ofRs.1500/- per
month was not arbitrary and, thus does not offend Article 14 of
the Constitution of India.
G) The notification would not be violative of Article 14 of the
Constitution of India only because it may not be applicable in
E respect of a part of the same building.

Contentions :

The contentions of Appellants before us, inter alia, are:

(i) The Administrator as a delegatee could exercise his power under
F Section 3 of the Act only in terms of the legislative policy
contained therein which would appear from the preamble, the
Statements of Objects and Reasons and the core provisions
thereof and not de' hors the same and, thus, the impugned
notification being violative of the legislative policy, is
G unsustainable in law;
(ii) As the Administrator in a representative democracy represents
the will of the people as a delegatee he was bound to act within
the four comers thereof;

(iii) A delegatee cannot transgress the basic features or essential
H policy of the Act;
VASU DEV SINGH v. U.0.1. (S.B. SINHA, J.] 551
(iv) As the power to lay down essential legislative functions vests A
in the Legislature, the same could not be delegated in favour of
the Administrator.
(v) By reason of such delegation, the delegatee cannot in effect and
substance repeal the provisions of the main Act so as to take
away the heart and soul of beneficent legislations like the Rent B
Act;

(vi) Before exercising the power of delegated legislation, the
Administrator was bound to take into consideration the relevant
factors and for the said purpose it was required of him to be
adequately informed as to how and to what extent the legislative C
policy may be given effect to;
(vii) The impugned notification being not restricted to particular
buildings or class of buildings, the classification sought to be
made on the basis of paying capacity of a tenant or the tenants
themselves is ultra vires Section 3 of the Act; D
(viii) The impugned notification is unconstitutional as it contravenes
the legal philosophy underlying a beneficent legislation insofar
as it has done away with the statutory limitations imposed upon
the landlords to evict the tenant except on the grounds
enumerated in Section 13 of the Act as also from enhancement E
of rent in an arbitrary manner.

The contentions of Respondents, on the other hand, are:

(i) Reasonable classification of 'tenants' and 'tenanted premises' is
permissible in terms of Article 14 of the Constitution of India. p
(ii) The Objects and Reasons of the 1974 Act, inter alia, was to
regulate rent of the premises situated within the urban areas and
there being no provision for enhancement of rent; by reason of
the said notification, the Administrator sought to achieve a balance
between the interests of the landlords and those of the tenants; G
(iii) The notification whereby the landlord's property had been taken
out of the rent control laws is in accordance with the policy of
the Government oflndia as is reflected from the model rent laws
"
circulated by the Ministry of Urban Development for the purpose
of stimulating private investment in rental housing, and by reason H
552 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A thereof the balance was tilted in favour of the tenants which was
causing deleterious, economic and social consequences;
(iv) The State having adopted a policy of allowing Foreign Direct
Investment in housing, the said notification, being in tune with
the current economic policy of the Government, the High Court
B rightly refrained from exercising its power of judicial review;
(v) In view of a large number of decisions of this Court it is now well
settled that Section 3 of the Act is intra vires the Constitution;
(vi) The impugned notification is a conditional legislation and not a
delegated legislation;
c (vii) Merely because the exemption granted by the impugned
notification is perpetual in nature, the same per se does not
offend the legislative policy particularly in view of the fact that
almost similar notifications have been upheld by this Court;
D (viii) Though the Rent Act confers right on the tenants against
exorbitant increase in rent and/or ma/a fide eviction; such statutQry
protection having caused great hardship to the landlords and
having been abused by the tenants, corrective measures could
be taken in terms of the said statute;
(ix) There being no provision for determination of a fair rent, Sections
E
4 and 5 of the Act cannot be implemented in case of a tenanted
premises situated in Chandigarh;
(x) Despite the fact that the value of the property has increased,
ma/a fide enhancement of rent and ma/a fide eviction of the
tenarits intended by the legislature acquire an ugly mood by the
F landlord at the hands of the tenants;
(XI) The court cannot overlook the fact, while considering the
legislative policy, that several amendments have been carried out
by the legislature to mitigate the hardships of the landlords and
as the delegatee has acted keeping in view the legislative history,
G no exception can be taken to the exercise of the power of delegated
legislation by the Administrator;
(xii) In view of the National Housing Scheme framed by the .
Government of India in the year 1991, the Administrator cannot
be said to have committed any illegality in issuing the said
H
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 553
notification as by reason thereof a balance has been sought to A
be maintained between the interests of the landlords and those
of the tenants, particularly,· in view of the fact that by reason
thereof the landlords were to be provided adequate return on
their investment and so as to see that the tenants do not enjoy
any unfair advantage over the landlords.
B
Conditional legislation and delegated legislation :

We, at the outset, would like to express our disagreement to the
contentions raised before us by the learned counsel appearing on behalf of
Respondents that the impugned notification is in effect and _substance a
conditional legislation and not a delegated legislation. The distinction between C'
conditional legislation and delegated legislation is clear and unambiguous. In
a conditional legislation the delegatee has to apply the law to an area or to
determine the time and manner of carrying it into effect or at such time, as
it decides or to understand the rule of legislation, it would be a conditional
legislation. The legislature in such a case makes the law, which is complete D
in all respects but the same is not brought into operation immediately. The
enforcement of the law would depend upon the fulfilment of a condition and
what is delegated to the executive is the authority to determine by exercising
its own judgment as to whether such conditions have been fulfilled and/or
the time has come when such legislation should be brought in force. The
taking effect of a legislation, therefore, is made dependent upon the E
determination of such fact or condition by the executive organ of the
Government. Delegated legislation, however, involves delegation of rule
making power of legislation and authorises an executive authority to bring in
force such an area by reason thereof. The discretion conferred on the
executive by way of delegated legislation is much wider. Such power to make F
rules or regulations, however, must be exercised within the four comers of the
Act. Delegated legislation, thus, is a device which has been fashioned by
the legislature to be exercised in the manner laid down in the legislation itself.
By reason of Section 3 of the Act, Administrator, however, has been
empowered to issue a notification whereby and whercunder, an exemption is
granted for application of the Act itself. G
In Hamdard Dawakhana (Wakj) Lal Kuan, Delhi & Anr. v. Union of
India & Ors., [1960] 2 SCR 671, this Court stated:

"The distinction between conditional legislation and delegated
legislation is this that in the former the delegate's power is that of H
554 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A determining when a legislative declared rule of conduct shall become
effective; Hampton & Co. v. U.S., (276 U.S. 394) and the latter
involves delegation of rule making power which constitutionally may
be exercised by the administrative agent. This means that the
legislature having laid down the broad principles of its policy in the
legislation can then leave the details to be supplied by the
B administrative authority. In other words by delegated legislation the
delegate completes the legislation by supplying details within the
limits prescribed by the statute and in the case of conditional legislation
the power of legislation is exercised by the legislature conditionally
. le.aving to the discretion of an external authority the time and manner
c of carrying its legislation into. effect as also the determination of the
area to which it is to extend;"

(See also MP. High Court Bar Association v. Union of India & Ors.,
[2004] 11 SCC 766; State of Tamil Nadu, represented by Secretary, Housing
Dept!., Madras v. K. Sabanayagam & Anr., [1998J l SCC 318 and O~ient
D Paper and Industries Ltd & Anr. v. State of Orissa & Ors., [1991] Supp. l
sec 81.)
Judicial review of delegated legislation :

While considering the validity. of delegated legislation, the scope of
E judicial review is limited but the scope and effect thereof has to be considered
having regard to the nature and object thereof.

The nature of delegated legislation can be broadly classified as:

(i) the rule-making power;
F (ii) grant of exemption from the operation of.a statute.

In the latter category, the scope of judicial review would be wider as the
statutory authority while exercising its statutory power must show that the
same had not only been done within the four corners thereof but otherwise
fulfils the criteria laid down therefor as was held by this Court, inter a/ia, in
G P.J. Irani v. State of Madras & Anr., [1962] 2 SCR 169.

In Craies on Statute Law, 7th edition, it is stated at page 297:

"The initial difference between subordinate legislation (of the kind
dealt with in this chapter) and statute law lies in the fact that a
H
VASUDEVSINGHv. U.0.1. [S.B. SINHA,J.) 555
subordinate law-making body is bound by the terms of its delegated A
or derived authority, and that courts of law, as a general rule, will not
give effect to the rules, etc., thus made, unless satisfied that all the
conditions precedent to the validity of the rules have been fulfilled.
The validity of statutes cannot be canvassed by the courts, the
validity of delegated legislation as a general rule can be. The courts · B
therefore (I) will require due proof that the rules have been made and
promulgated in accordance with the statutory authority, unless the
statute directs them to be judicially noticed; (2) in the absence of
express statutory provision to the contrary, may inquire whether the
rule-making power has been exercised in accordance with the provisions
of the statute by which it is created, either with respect to the procedure C
adopted, the form or substance of the regulation, or the sanction, if
any, attached to the regulation : and it follows that the court may
reject as invalid and ultra vires a regulation which fails to comply with
the statutory essentials."

In G.P. Singh's Principles of Statutory Interpretation, Tenth Edition, it D ·
is stated at page 916:

"Grounds for judicial review-Delegated legislation is open to the
scrutiny of courts and may be declared invalid particularly on two
grounds: (a) Violation of the Constitution; and (b) Violation of the
enabling Act. The second ground includes within itself not only E
cases of violation of the substantive provisions of the enabling Act,
but also cases of violation of the mandatory procedure prescribed. It
may also be challenged on the ground that it is contrary to other
statutory provisions or that it is so arbitrary that it cannot be said to
be in conformity with the statute or Article 14 of the Constitution or F
that it has been exercised in bad faith. The limitations which apply '
to the exercise of administrative or quasi-judicial power conferred by
a statute except the requirement of natural justice also apply to the
exercise of power of delegated legislation. Rules made under the
Constitution do not qualify as legislation in true sense and are treated
as subordinate legislation and can be challenged in judicial review like G.
delegated legislation. Compliance with the laying requirement or even
approval by a resolution of Parliament does not confer any immunity
to the delegated legislation but it may be a circumstance to be taken
into account along with other factors to uphold its validity although
as earlier seen a laying clause may prevent the enabling Act being H
556 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A declared invalid for excessive delegation."

In Clariant International ltd. & Anr. v. Securities & Exchange Board
qf India, [2004] 8 SCC 524, this Court observed:

"When any criterion is fixed by a statute or by a policy, an attempt
B should be made by the authority making the delegated legislation to
follow the policy formulation broadly and substantially and in
conformity therewith. [See Secy., Ministry of Chemicals & Fertilizers,
Govt. of India v. Cipla Ltd, SCC para 4.1.)"

We may notice that in State of Rajasthan & Ors. v. Basant Nahata,
C [2005] 12 SCC 77 : AIR 2005 SC 3401, it was pointed out:

"The contention raised to the effect that this Court would not
interfere with the policy decision is again devoid of any merit. A
legislative policy must conform to the provisions of the constitutional
mandates. Even otherwise a policy decision can be subjected to
D judicial review."

In B.K. Industries & Ors. v. Union ofIndia & Ors., [I 993] Supp. 3 SCC
?21, this Court clearly held that a delegate cannot act contrary to the basic
feature of the Act stating:

E " ..... The words "so far as may be" occurring in Section 3(4) of the
Cess Act cannot be stretched to that extent. Above all it is extremely
doubtful whether the power of exemption conferred by Rule 8 can be
carried to the extent of nullifying the very Act itself. It would be
difficult to agree that by view of the power of exemption, the very
levy created by Section 3(1) ca'? be dispensed with. Doing so would
F amount to nullifying the Cess Act itself Nothing remains thereafter
to be done under the Cess Act. Even the language of Rule 8 does
not warrant such extensive power. Rule 8 contemplates merely
exempting of certain exciseable goods from the .whole or any part of
the duty leviable on such goods. The principle of the decision of this
G Court in Kesavananda Bharati v. State of Kera/a, [1973] 4 SCC 225,
applies here perfectly. It was held therein that the power of amendment
conferred by Article 368 cannot extend to scrapping of the Constitution
or to altering the basic structure of the Constitution. Applying the
principle of the decision, it must be held that the power of exemption
cannot be utilised for, nor can it extend to, the scrapping of the very
H
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 557
Act itself. To repeat, the power of exemption cannot be utilised to A .
dispense with the very levy created under Section 3 of the Cess Act
or for that matter under Section 3 of the Central Excise Act."

The law, which, therefore, has been laid down is that if by a notification,
the Act itself stands effaced; the notification may be struck down. But that
may not be the only factor. 'B

In Hindustan Lever & Ors. v. Hindustan Lever Mazdoor Sabha & Ors.,
[1994] Supp.I SCC l this Court again laid down the law that exercise of power
of exemption can be made on the basis of twin tests of the basic object
underlying the Act and valid classification stating :
c
" ..... But such exemption cannot be on the basis of the workers and
their wages differentiating between different classes of workmen of
the same unit."

(See also Nedurimilli Janardhana Reddy v. Progressive Democratic
Students' Union & Ors., [1994] 6 SCC 506, Agricultural Market Committee D
v. Shalimar Chemical Works Ltd, [1997] 5 SCC 516, Additional District
Magistrate (Rev.) Delhi Admn. etc. v. Siri Ram etc., [2000] 5 SCC 45 l and JTW
Signode India Ltd. v. Collector of Central Excise, [2004] 3 SCC 48.)

It is interesting to note that in Secretary, Ministly of Chemicals &
Fertilizers, Government of India V. Cipla Ltd & Ors., [2003] 7 sec l, this E
Court opined:

"It is axiomatic that the contents of a policy document cannot be
read and interpreted as statl!tory provisions. Too much of legalism
cannot be impo1ted in understanding the scope and meaning of the F
clauses contained in policy formulations. At the same time, the Central
Government which combines the dual role of policy-maker and the
delegate of legislative power, cannot at its sweet will and pleasure
give a go-by to the policy guidelines evolved by itself in the matter
of selection of drugs for price control. The Government itself stressed
on the need to evolve and adopt transparent criteria to be applit:d G
across the board so as to minimize the scope for subjective approach
and therefore came forward with specific criteria. It is nobody's case
that for any good reasons, the policy. or norms ha've been changed
or have become impracticable of compliance."

H
558 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R.

A We may hereinafter notice the decisions relied upon by Mr. Nariman.

In Maharashtra State Board of Secondary and Higher Secondary
Education & Anr. etc. v. Paritosh Bhupeshkumar Sheth and Ors., [1984] 4
SCC 27, this Court was concerned with a regulation laying down the terms
and conditions for revaluating the am;wer papers. Indisputably, there exists
B a distinction between regulations, rules and bye-laws. The sources of framing
regulations and bye-laws are different and distinct but the same, in our
opinion, would not mean that the court will have no jurisdiction to interfere
with any policy decision, legislative or otherwise.

In Indian Express Newspapers (Bombay) Pvt. Ltd. & Ors. etc. v. Union
C of India & Ots. etc., [1985] l SCC 641, the question which arose for
consideration therein was as to whether the exemption notification issued
under Section 25 of the Customs Act, 1962 was beyond the reach of the
Administrative Law. Venkataramiah, J. speaking for the Bench, held that the ' '
Court exercising power of judicial review of a piece of subordinate legislation
D can exercise its jurisdiction, apart from the grounds on which a plenary
legislation can be challenged, but if it is contrary to other statute or if it is
so unreasonable so as to attract the wrath of Article 14 of the Constitution
of India opined that the arbitrariness is not treated as a separate ground in
India as it is a part of Article 14 of the Constitution stating:

E " .... A distinction must be made between delegation of a legislative
function in the case of which the question of reasonableness cannot
be enquired into and the investment by statute to exe~cise particular
discretionary powers. In the latter case the questio" may be considered
on all grounds on which administrative action may be· questioned,
such as, non-application of mind, taking irrelevant matters into
F consideration, failure to take relevant matters into consideration, etc.,
etc. On the facts and circumstances of a case, a subordinate legislation
may be struck down as arbitrary or contrary to statute if it fails to take
into account very vital facts which either expressly or by necessary
implication are required to be taken into consideration by the statue
G or, say, the Constitution. This can only be done on the ground that
it does not conform to the statutory or constitutional requirements or
that it offends Article 14 or Article 19(l)(a) of the Constitution. It
cannot, no doubt, be done merely on the ground that it is not reasonable.
or that it has not taken into account relevant circumstances which the
Court considers relevant."
H

•
VASU DEV SINGH v. U.0.1. (S.B. SINHA, J.] 559
It was categorically held that a subordinate legislation would not enjoy A
the same degree of immunity as a legislative act would.

To the same effect are the decisions of this Court in Khoday Distilleries
Ltd & Ors. v. State of Karnataka & Ors., [1996] 10 SCC 304 and Dai-ichi
Karkaria Ltd v. Union of India & Ors., [2000] 4 SCC 57, wherein Indian
Express Newspapers (Bombay) Pvt. Ltd. (supra) was followed. We, therefore, B
need not deal with them separately

It is not necessary for us to dilate on this subject as in Bombay Dyeing
& Mfg. Co. Ltd (3) v. Bombay Em•ironmental Action Group & Ors.. reported
in [2006] 3 sec 434, the power of judicial review on delegated legislation has
been considered at some details, opining : c
"For the foregoing reasons, we are of the opinion that in cases
where constitutionality and/ or interpretation of any legislation, be it
made by the Parliament or an executive authority by way of de!egated
legislation, is in question, it would be idle to contend that a court of ,
0
superior jurisdiction cannot exercise the power of judicial review. A
distinction must be made between an executive decision laying down
a policy and executive decision in exercise of its legislative maicing
power. A legislation be it made by the Parliament/Legislature or by the
executive must be interpreted within the parameters of the well-known
principles enunciated by this Coi.;rt. Whether a legislation would be E
declc1red ultra vires or what would be the effect and Page 1243
purport of a legislation upon interpretation thereof will depend upon
the legislation in question vis-a-vis the constitutional provisions and
other relevant factors. We would have to bear some of the
aforementioned principles in mind while adverting to the rival F
contentions raised at the bar in regard to interpretation of OCR 58 as
well as constitutionality thereof."

(See also Kera/a Samsthana Chetu Thozhilali Union v. State of Kera/a
& Ors., [2006] 4 SCC 327.)

Judicial review of delegated legislation is, therefore, permissible. G

National Housing Policy and other reasons for issuing the impugned
notification :

It is not in dispute that the Central Government evolved a National H
560 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Housing Policy. The said Policy, according to Respondents, was made
pursuant to or in furtherance of a decision of this Court in Prabhakaran Nair
& Ors. v. State of Tamil Nadu & Ors. [1987] 4 SCC 238 stating:

"It is common knowledge that there is acute shortage of housing,
various factors have led to this problem. The laws relating to letting
B 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 rational,
c humane, 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 meaningful
D 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 reasonableness 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 to prevent .a
E major breakdown of law and order and gradual disillusionment of ·
people. After all shelter is O!le of our fundamental rights. New national
housing policy must attract new buildings, encourage new buildings,
make available new spaces, rationalise the rent structure and rationalise
the rent provisions and bring certain amount of uniformity though
F leaving scope for sufficient flexibility among the 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.
G Litigations must come to end quickly. Such new 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
H law and preconceived judicial attitude."
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 561

The said national policy was made on or about 17.7.2002. Therein, it 'A
was, inter a/ia, recommended that appropriate amendments be made in the
existing laws and regulations so as to achieve a balance of interests of both
the landlords and tenants, which would stimulate further constructions. On
the basis of series of consultations with the State Governments and various
experts, the Ministry of Urban Development suggested various features of a B
model rent control law which was considered in the Chief Ministers' Conference
held on 7.3. l 992 laying down a broad frame-work therefor. The features as
' •'
regards exemption laid down therein are as under: (I) No rent control law
should apply to an urban area, population whereof as per the 1991 census
exceeds 3 million; (2) Exemption to residential and non-residential premises
carrying more than a rental value ranging from Rs. 1500/- to Rs. 3500/- per C
month as may be specified on city-wise basis. The ceiling for rent will be
automatically revised upwards as per escalation formula of standard rent.
Exemption would extend to existing as well as new tenancies and covering
new and existing constructions-. (3) There should be a provision for fixation
of standard rent by a certain specified percentage. (4) Rent Control Act
should be made a permanent one. D

Additional affidavit by the Administrator

We have noticed hereinbefore that pursuant to an observation made by
the High Court on 11.3 .2004 an additional affidavit was filed before the High
Court by the Administrator. In his additional affidavit affirmed on 24.7.2002, E'
the Administrator assigned reasons for issuing the said notification. Reference
was also made .to the correspon~ences passed between the Central
Government and the Union Territory culminating in issuance of the said
notification.

We may take note of the contents of the said affidavit at some details.
F
In the said additional affidavit, it was stated:

" ... Given the nature of Rent Control Laws, it is submitted that the
balance of rights of landlords and .tenants is tilted in favour of tenants
by these laws resulting in deleterious economic and social G
consequences as noted in the Urban Reforms Policy of Government
of India. Therefore, the balance of rights would be fully restored if
and when Urban Rent Control Laws, as they presently exist are repealed
and contracts between tenants and landlords are governed by the Jaw
of the land subject to such special provisions as may be required to
H
562 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A regulate such contracts given their specific nature. In these
circumstances the Administration's notification dated 7.11.2002 is a
step towards improving the balance of rights between landlords and
tenants.

As regards the limit of exemption, which is Rs. 1500/- p.m. it has
B been brought out that in various other States similar exemptions are
in the range of Rs.1000-3500 p.m. Specific mention has been made
01 Section 3 of the Punjab Rent Act, l 995 which has not so far been
notified by Government of Punjab, but wherein the State Government
would have to notify the exemption for properties that have a deemed
monthly rent above certain limit, that limit being between Rs.1500-
c 3500/-. The Chandigarh Administration's notification limit ofRs.1500/
- is in line with the range mentioned in the Punjab Act of 1995. As
such it will not be in public interest to alter this limit."

It was fmther averred :
D "The Act came into effect in December 1988. Large number of writ .:.

petitions were filed in the Supreme Court challenging the
constitutionality of the amendments. The Supreme Court, in a series
of judgments, has upheld the validity of these amendments. The
Govt. of India irns requested all the State Governments to enact
E amendments to rent control laws on similar lines. This was broadly
endorsed, as a part of the Draft National Housing Policy, in the
Conference of Housing Ministers in October 1990. A number of
States have initiated amendments in this regard."

In para 5 of the said recommendations, provisions have been made for
F grant of exemption to the residential or non-residential property according to
the current price index.

Jn the written statement filed on behalf -of Ajministrator if'was stated:

" .... The city of Chandigarh has grown in size, economy, population
G etc. and has occupied an important position so far as other Cities in
India are concerned. Further, Chandigarh has the highest per capita
income compared to any other city/state in the country as per the
latest census. Suffice it to submit the classification has a nexus with
the object sought to be achieved. It is not violative of Article 14 of
the Constitution of India nor does it amount to repeal of the 1974 Act.
H
.. VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.]

It may be mentioned here that the stamp duty on conveyance
563

A
deeds has been reduced from 12.5% to 6% by the Chandigarh
Administration vide notification no. 5645-HIIl(5)-2002/14968 dated
2.8.02 issued under Section 9-A of the Indian Stamp Act, 1899 .

... That the contents of ground (xiii) to (xix) denied being wrong
and incorrect. As stated above, the Administrator has the jurisdiction 1

B
to issue the notification dated 7-11-02. There is no requirement of any
consultation or prior sanction."

By a letter dated 17th July, 2002, the State Governments were, asked by
Union of India to regulate the rent control and rental housing, inter alia,
stating: C
"As you are aware, in his Budget Speech 2002-03, the Union
Finance Minister has announced the creation of an Urban Reforms
Incentive Fund with an outlay of Rs. 500 crore for the year. During
finalization of the size of Annual Plan of your State, the Planning
Commission has indicated the amount out of this Fund, as part of D
State's share of resources (vide Annexure-1). However, actual release
is to be based on action on the reform front, for which a Memorandum
of Agreement is to be signed between the State Government and
Government of India. I enclose the draft of the MoA (Annexure II).

xxx xxx xxx xxx xxx E
3. The specific actions to be taken by the States are indicated in
the separate note at Annexure III. The first instalment, equal to I/3rd
of the eligible amount, will be released on the State signing the MoA,
to be followed by two further instalments for the financial year which F,
will be based on the progress in implementing the agreed reform
calendar, as indicated in Annexure III. We will also provide Guidelines
for the reform items, for which an Expert Committee is at work. It may
please be noted that "for purposes of release of funds the total
package is to be taken into account and not any individual component".

4. You will agree that the reforms which have been mentioned in
G
the Budget Speech and in this letter are long overdue in the urban
sector. The incentive Fund only highlights them and encourages their
adoption. The over-all intention is to encourage construction of
housing including rental housing, to reduce· transaction costs and
delays in property transactions, to provide for easier availability of H
564 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A land for construction, and improve municipal finances with a view to
developing infrastructure and civic services in our cities."

The Central Government issued another letter on or about 10th December,
2002, wherein upon reference to the said notification dated 7.11.2002, a detailed
report was called for as to what steps have been taken by the States concerned
B by the Ministry of Urban Development and Poverty Alleviation.

As regards reforming the Rent Control Act it was stated :

" ... .In the MoA the State will undertake to carry out a range ofreforms
in rent control commencing, during the current year, with legislative
c measures to ensure that new construction (i.e., buildings constructed
on or after 1-4-2002), and any vacancy of any existing building
occurring on or after the date of the signing of the MoA, will not
come under the ambit of Rent Control or tenancy protection. States
which do not have a Rent Control Act will undertake not to introduce
such a measure (rent control).
D
In order to qualify for the second and third instalments, the two
measures to be taken are :

(i) the required legislation should have been enacted and brought
into effect in respect of new construction/newly arising vacar.cy as
E agreed to in the MoA;

(ii) the State Government should have issued a Government Order/
Resolution laying down the total policy of reform of rent control. The
policy statement should include, in addition to the policy in respect
of new construction or newly arising vacancy in an existing building
F as stated above, also the ·policy regarding existing tenancies. In
respect of existing tenancies, the State will adopt the following in their
policy:

i. To remove ceiling on rent on existing tenancies, and to provide
for rents to move to market rates,
G
ii. To fix time limit of three years for existing tenancies which do
not have a proper written lease agreement between landlords and
tenants,

iii. To restrict tenancies to the life-time of lessee,

H
VASUDEVSINGHv. U.0.L [S.B. SINHA,J.] :!65

iv. To permit possession on termination of tenancy without A
recourse to litigation,
v. To create an Authority and provide guidelines to fix rents on
the basis of market rates in respect of existing tenancies.

Action in the Year 2003-04 : The policy on existing tenancies
should be brought into effect through appropriate legislative changes; B
in the second year of the scheme. Release of URIF in future years
will be based on implementation of the agreed schedule of reform in
respect of existing tenancies."

[Emphasis supplied] C
Union of India, in its affidavit filed before the High Court, had referred
to its Jetter dated I 0.12.2002. The Joint Secretary, Finance, Chandigarh in
response thereto by letter dated 23.12.2002 informed the Central Government
about issuance of the said notification dated 7.11.2002 and the background
~~ D
Notifications issued in respect of the city of Chandigarh and issued
under Section 3 of the Act of 1949 :

Let us now consider some of the notifications to which our attention
has been drawn by Mr. Nariman which were applicable to the city of Chandigarh E
and issued under Section 3 of the Act.

A press note was issued on 23rd May, 1959 by the Government of
Punjab exempting the city of Chandigarh from the operation of the Act for
a period of 25 years, the reference whereof, has been made in a Full Bench
judgment of the Punjab and Haryana High Court in Dr. Harikishan Singh v. P
Union of India & Ors., AIR (1975) P&H 160. The said press note was found
to be invalid in law by the High Court. On or about 24.9.1974 a notification
was issued by the Chief Commissioner under Section 3 of the Act exempting
all new buildings from the purview of the Act for a period of five years. Yet
again on 5.3.1985 the Chief Commissioner granted exemptions to all buildings G
and rented lands belonging to the Government. We would det.1 with the said
notification and similar other notifications issued by the State of Punjab and
other States consequently a little later.

The Administrator of Union Territory of Chandigarh issued the impugned
no_tification dated 7.11.2002 directing that the provision of the Act was not H
566 SUPREME COURT REPORTS (2006] SUPP. 8 S.C.R.

A applied to the buildings and rented lands whose monthly rent exceeds Rs. l ,500.
Before adverting to the question involved in these appeals, we may also
notice similar notifications issued by the State of Punjab and other States to
which our attention has been drawn by Mr. Nariman.

B Other exemption notifications :

By reason of a notification dated 12.9.1950, the evacuee properties were
exempted from the purview of rent laws. The premises vested in local
Government bodies were also exempted by issue of notification dated 21.2.1947.
Similarly, the lands and buildings belonging to Municipal Committee and
C Notified Area Committee, District Boards or Panchayats were also exempted
by a notification dated 3.6.1959. The validity of the said notification has been
upheld by the Full Bench of the Punjab and Haryana High Court in Hari
Prasad Gupta v. Jitender Kumar Kaushik, reported in AIR ( 1982) P&H 165.
By a notification dated 8. 10. 1959, buildings and rented lands belonging to the
D improvement trust were exempted. A similar notification was issued on
5. l l. 1959 exempting buildings and rented lands belonging to the Cantonment
Boards of ' Ambala, Ferozpur and Jullunder. The buildings belonging to·the
Government of India and the State of Punjab and other States were exempted
by a notification dated 5.1.1949. Yet again, all the buildings and rented lands
in the urban area of Mohali were exempted for the period from 28. 1. 1983 and
E expiring on 31.3. 1995 by a notification dated 9.2.1984.

Indisputably, the validity of some of the aforementioned notification
ha:s been upheld by this Court in Punjab Tin Supply Co., Chandigarh and
Ors. v. Central Gove~nment & Ors., [1984] 1 SCC 206, Mis. Kesho Ram &
Co. & Ors. etc. v. Union ofIndia & Ors., [1989] 3 SCC 151, Firm Amar Nath
F Basheshar Dass v. Tek Chand, [1972] 1 SCC 893 and Sadhu Singh v. District
Board, Gurdaspur & Anr., [ 1969] RCR 156, however, we would consider the
applicability of the decisions of this Court in this case hereinafter. The
applicability of the said decision vis-a-vis the notifications which fall for
consideration therein would be noticed by us.
G Notifications issued by other States :

The Government of Rajasthan issued notification dated 19.5. 1976
exempting the properties of Wakf Board which has been upheld by this Court
in Tharumal & Anr. v. Masjid Hajum Pharosan Va Madrassa Talimul Islam,
H Mirza Izsmail Road, Jaipur, [1994] 3 SCC 375.
VASU DEV SINGH v. U.0.l. [S.B. SINHA, J.] 567
The Andhra Pradesh Government has issued a notification dat~d A
29 .12.1983 under Section 26 of the Andhra Pradesh Buildings (Lease, Rent &
Eviction) Control Act, 1960 exempting all buildings fetching rental ofRs. l,000/
- from the purview of the Act w.e.f. 26. l 0.1983. The validity of the said
notification came up for consideration before a learned Single Judge of the
Andhra Pradesh High Court in Writ Petition No.8081 of 1986. Following a B
Division Bench decision of the said Court in Mis. Buywe/l Corporation v.
Mahadevma/, (1988) APLJ-1-345, the said writ petition was dismissed.

Statutes exempting application of the Act :

Mr. Nariman has drawn our attention to the amendments in the statutes C
made by some other States.

Section 2(g) of U.P. Urban Buildings (Regulation of Letting, Rent anc,l
Eviction) Act, 1972 was inserted, exempting buildings fetching rent of mort(
... than Rs.2000/-, by U.P. (Amendment) Act 5, 1995 .

Legislature of the National Capital Region of Delhi amended Section D
3(c) of the Delhi Rent Control Act, 1958 which was considered to be the role
model by the Central Government exempting buildings fetching rent of more
than Rs.3500/-. We would notice the decisions of the court in relation to the,
said amendments and in particular the amendment of Section 3(c) of Delhi
Rent Control Act at an appropriate stage. E
Precedents dealing with notifications :

The power of the superior Court to interfere with a notification by way ,
of judicial review came up for consideration before this Court in PJ. Irani v.,
The State of Madras & Anr., [1962] 2 SCR 169. Having regard to the fact that F
the correctness and otherwise of the said decision of this Court is not in
question and furthermore, as therein, the Court has laid down the parameters
of judicial review elaborately, we would consider the same at some details.

In P.J. Irani (supra), a notification was issued exempting a cinema ,
house, the lease whereof expired in 1942. Despite expiry of lease, he remained ,G
in possession. In terms of Madras (Lease and Rent Control) Act, 1946 came ,
into force protecting tenants in possession from eviction even after expiry of
their leases. In terms of Section 13 of the Act, the State was empowered to
exempt any building or class of buildings from all or any of the provisions
of the Act. The State of Madras issued a notification in exercise of the said
568 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A power exempting the cinema house occupied by the said tenants. Validity of
Section 13 of the said Act came to be questioned by the landlord before the
High Court of Madras. The High Court held Section 13 of the Act to be ultra
vires and also quashed the said notification dated 4th June, 1952. This Court
in appeal thereagainst, although, upheld the validity of Section 13 of the Act
B but opined that the notification in question was bad in law. An order made
under Section 13 of the Act was held to be amenable to judicial review on
three grounds : ·{I) If it was discriminatory, (2) If it was made on grounds
which were not germane or relevant to the policy and purpose of the Act;
and (3) if it was made on grounds which were ma/a fide.

C This Court noticed that the legislation was enacted for achieving three
purposes: (i) the regulation ofletting, (ii) the control of rents; and (iii) prevention
of unreasonable eviction obtaining from the residential or non-residential
buildings.

Before the High Court a memorandum, setting out the reasons why
D exemptio~ was thought to be granted was filed, stating:

"(l) When the High Court offered in 1940 to lease out the premises
in question for period of 21 years, Sri Chettiar elected to take it on
lease only for period of seven years, which expired in 1947. As per
the High Court's order in C.S. Nos.280 to 286 of 1939, Sri J.H. Irani,
E father of Sri P.J. Irani took a lease of the premises for a period of 13
years 11 \12 months from 1947 and he deposited Rs. I 0,000/- towards the
said lease. He is therefore entitled for the'~enefits from 1948 onwards.

(2) Had not the Rent Control Act come into force, Sri P.J. Irani
would have got possession in the ordinary course as per High Court's
F order and the terms of the lease deed. The operation of the Act is
therefore really a hardship to him.

(3) Sri Chettiar is only an absentee lessee and he is having several
other business in South India. ·'

G (4) The conduct of Sri Chidambaram Chettiar in refusing to
surrender the possession of the building to Sri P.J. Irani who had
taken a valid lease under the order of the High Court is that of a hard
litigant seeking to exploit the letter of the law without much regard to
bona fides; and

H (S) Sri Chettiar had already managed to be in possession of the
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 569
building for five more years than he was legitimately entitled to be." A
The notification was quashed by the High Court stating:

"Reasons 1, 2 and 4 go together to have reference to the order of the
High Court in 1940 directing the Receivers to execute a lease for seven
years to the appellant and after the expiry of that period to grant a B
lease for fourteen years to the second respondent's father. It is
undoubtedly true that but for the application of the Act, the second
respondent's father would have obtained possession of the premises'
after the expiry of lease in favour of the appellant. That could be said'
of thousands of cases in which the leases in favour of tenants have
expired and, but for the Act the owners would be entitled to obtain ' C
possession of the demised premises. If this circumstance alone is '
sufficient to exempt any premises from the operation of the Act, then
the Act itself should be repealed ...... There is no policy or principle
involved in this circumstance."

This Court agreed with the said view of the High Court holding ground D
Nos. l and 2 to be contrary to the legislative policy of the Act and ground
No. 3 not germane for granting exemption. Reason No.5 was held to be really
no reason at all.

The scope of judicial review has, thus, been laid down succinctly.
E
Although we would notice hereinafter that various notifications issued
by the Chief Commissioner, as also the Administrator of the Onion Territory
of Chandigarh and various other notifications issued by the State of Punjab
and other States had been upheld in various judgments of this Court which
we have noticed hereinbefore in those cases also, as for example in Sadhu ,f
Singh (supra), Punjab Tin Supply Co. (supra) and Kesho Ram (Supra), the
ratio of P.J. Irani (supra) was followed. In Sadhu Singh (supra) while
upholding the notification of exemption granted in favour of the District
Board by this Court, a distinction was sought to be made that whereas in the
Madras Act which was applicable in the case of P.J. Irani (supra), the
expression .used was "unreasonable eviction of tenants", in Punjab Act, the 0-
expression used was "eviction of tenants". But this Court found no distinction
between the two Acts as one of the objects of the Acts was unreasonable
eviction of tenants and the expression "unreasonable" thus was read in the
title of the Rent Act.

H
,.
570 SUPREME COURT REPORTS [2006]'SUPP. 8 S.C.R.

A So far as the first notification is concerned, the same has been upheld
by this Court in Sadhu Singh v. District Board, Gurdaspur & Anr., [l 969]
RCR 156 following the case of P.J. Irani v. State of Madras & Anr., (1962] 2
SCR 169.

In Sadhu Singh (supra) P.J. Irani was distinguished stating :
B
"The learned counsel says that it may be that the decision of this
Court in Irani 's case concludes the question as far as Art.14 is
concerned but different issues arise while dealing with the case of
excessive delegated legislation. But, in our opinion, in this case the
conclusion of the Court that enough guidance is afforded by the
c preamble and the operative provisions of the Act for the exercise of
the discretionary powers vested in the Government also repels the
argument regarding excessive delegation because if an Act gives
sufficient guidance to an authority for the purpose of issuing a
notification it cannot be said that there is excessive delegation."
D The notification dated 23.5.1959 has been quashed by the Punjab &
Haryana High Court in Dr. Harkishan Singh v. Union of India & Ors., AIR
(1975) P&H 160= (1975) PLR 163], stating that:

". all that section 88 of the Punjab Re-organization Act means is that
any law which was in force immediately before the appointed date i.e.
E
01.11.1966 in the erstwhile State of Punjab or any part thereof was to
continue to apply to those territories irrespective of the re-organization
of that State into four successor States .... Since the East Punjab Rent
Restriction Act did not apply to or was not in force in the territories,
now comprised in the Union Territory of Chandigarh immediately
F before the appointed date, references to "Punjab" iri section l, clause
2 of the East Punjab Rent Restriction Act cannot be read as Union
Territory of Chandigarh nor could this act be adopted under Section
89 of the Re-organization for facilitating its application to the Union
Territory of Chandigarh or any part thereof. The Act had first to be
applied to the Union Territory of Chandigarh or any part thereof by
G
a notification in the official Gazette by the Central Government under
Section 87 of the Re-organization Act with the necessary adaptation."

Paragraph 16 of the Judgment concludes as follows :

H
VASU DEV SINGH v. U.0.1. (S.B. SINHA, J.] 571

"For the reasons given above, this petition is accepted and the A
notification of the Central Government dated October 13, 1972 published
in the Government of India Gazette (Extraordinary) dated November
28, 1972 is hereby quashed and it is held that the Act has not been
brought into force in the Union Territory of Chandigarh or any part
thereof."
B
The said decision has been approved by a larger Bench of this Court
in Mis. Kesho Ram & Co. & Ors. etc. v. Union ofIndia & Ors., [1989] 3 SCC
151, wherein it was observed as follows :

"This is the third round of litigation initiated by tenants in
~hallenging Section 3 of the East Punjab Rent Restriction Act, 1949 C
and notifications issued thereunder for the purpose of granting
exemption to the newly constructed buildings in the urban areas for
a period of five years from the operation of the provisions of the
Act."

In State of Madhya Pradesh v. Kanhaiyalal & Ors., (1969) RCJ 695, P.J. D
Irani and Sadhu Singh were followed opining :

"Before we can hold in favour of the State Government, we must be
satisfied that the ground of exemption was germane to the policy of
the Act. In this case there is no affidavit by any officer who had E
anything to do with the order granting exemption. The returns filed
on behalf of the State Government do not throw any light on this
question. It would appear that in granting the exemption the State
applied merely a rule of thumb and issued the notification on the basis
of the assertion by the trust that the entire rental income from the
property was being applied to meet the expenses of the trust. Such F
a statement only allows an institution to apply for exemption under
section 3(2). By itself it is not enough. Any institution covered by
section 3(2) had to allege why it had become necessary for it to apply
for exemption. It was not the case of the trust that they wanted to
evict the tenants because they wanted the whole of the accommodation G
itself nor was it their plea that the income accruing to them was very
low compared to prevailing rates of rent and that it was wholly
inadequate for meeting the expenses of the trust. If groJnds like
these or other relevant grounds had been alleged it would have been
open to the State Government to consider the same and pass an order
thereon. In our view State Government did not apply its mind which H
572 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A it was required to do under the Act before issuing a notification and
the return does not disclose any ground which was germane to the
purpose of the Act to support the claim for exemption."

[Emphasis supplied]

B In Punjab Tin Supply (supra) the buildings which were granted either
sewerage connection or electric connection were exempted for a period of five
years by reason of the notification dated 31.1.1973. Following P.J. Irani
(supra) it was held that the object of the Act can be gathered from its
preamble. The legislative policy could be culled out from other provisions
C contained therein holding that the object and policy of the Act appear to be
wider than some of the key provisions thereof. The Court noticed that the
Act was passed as one of the measures was taken to mitigate the hardship
caused to the tenants. Such mitigation can be attained by several measures,
one of them being creation of incentive to persons with capital who were
otherwise reluctant to invest in the construction of new buildings in view of
D the chilling effect of the rent control laws and to persuade the landlords to
invest in the construction of new buildings by granting exemption in their
favour for a period of 5 years is not the basis to the legislative policy stating:

"The impugned notification is not, therefore, ultra vires Section 3 of
the Act as in its true effect, it advances the scheme, object and
E purposes of the Act which are articulated in the preamble and the
substantive provisions of the Act. Moreover the classification of
buildings into exempted buildings and unexempted buildings brought
about by the notification bears a just and reasonable nexus to the
object to be _achieved namely the creation of additional housing
accommodation to meet the growing needs of persons who have no
F accommodation to reside or to carry on business and it cannot be
considered as discriminatory or .arbitrary or unreasonable in view
of the shortness of the period of exemption available in the case of
each exempted building. The exemption granted for a period of five
years only serves as an incentive as stated above and does not create
G a class of landlords who are forever kept outside the scope of the Act.
The notification tries to balance the interests of the landlords on the
one hand and of the tenants on the other in a reasonable way. We
do not, therefore, agree with the submission that the notification
either falls outside the object and policy of the statute or is
discriminatory."
H
VASUDEVSINGHv. U.0.1. [S.B. SINHA,J.] 573
[Emphasis supplied] A
Exemption from the· application of the said Act was, thus, for a short
period, and as such found to be in tune with the policy of the State. Had
such exemption been for ever in favour of the landlords, the matter might have
been otherwise. The validity of the said notification, therefore, was upheld
because of the temporary nature vf the statute. B
Even in the said case, the Act was directed to be applied prospectively
and not retrospectively.

In Motor General Traders & Anr. v. State of Andhra Pradesh & Ors.,
[1984] l sec 222, exemption was initially granted in favour of the landlords c
for a period of five years but the same was being extended from time to time.
In that situation, this Court was of the opinion that while earlier the exemption
granted to the tenants under Section 32(b) of the Act had short life and the
concession should be tolerated for a short while, but having regard to the

/
extension granted, the same having not been done, the amendment was struck D
I
down holding that :

" ... This is a case wher~ the ~egislarure while passing the law had
given the exemption app·arently as an incentive to encourage building
activity. The learned coun_sel were not able to show how the
continuance of the exemption in the case of persons who have built E ,
houses more than two decades ago will act as an incentive to builders
of new hQ._uses now. If that is really so, then there is no justification
to continue to have the restrictions imposed by the Act on buildings
built prior to August 26, 1957 also and the whole Act should have
to be repealed for if the impugned exemption can act as an incentive
the repeal of the Act should also act as an incentive. We are of the F
view that in the instant cases rio investigation as contemplated· in the
above two decisions of this Court is necessary. The long period that
has elapsed after the passing of the Act itself serves as a· crucial
factor in deciding the question whether the impugned law has become
discriminatory or not because the ground on which the classification G
of buildings into two categories is made is not a historical or
geographical one but is an economic one. Exemption was granted by
way of an incentive to encourage building activity and in the
circumstances such exemption cannot be allowed to last for ever. "·

[Emphasis supplied] H
574 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A This Court referred to, with approval, the decision of this Court in .
R.MD. Chamarbaugwa/la & Anr. etc. v. Union of India & Anr. etc., [1957]
SCR 930 stating that it is legitimate to take into account the history of
legisiation, its object and title and preamble to it holding :

"The incentive to build provides a rational basis for classification and
B it is necessary in the national interest, that there should be freedom
from restrictions for a limited period of time. It is always open to the
State Legislature or the State Government to take action by amending
the Act itself or under Section 26 of the Act, as the case m"ay be, not
only to provide incentive to persons who are desirous of building
c new houses, as it serves a definite social purpose but also to mitigate
the rigour to such class of landlords who may have recently built
their houses for a limited period as it has been done in the Union
Territory of Chandigarh as brought out in our recent judgment in
Punjab Tin Supply Co., Chandigarh v. Central Government."

D In Mis. Kesho Ram (supra) also exemption was granted for a period of
five years and following P.J. Irani,. Sadhu Singh and Punjab Tin Supply
validity of the notification was upheld.

This Court upheld the validity of a notification m Parripati
Chandrasekharrao & Sons v. Alapati Jalaiah, [ 199 5] 3 SCC 709 on different
E ground. The questions which have been raised herein did not fall for
consideration in the said decision. It is, therefore, not an authority for the
proposition as to whether such a notification is ultra vires Section 3 of the
Act or not. In that case, this Court was considering a question as to whether
the right vested in the tenant can be taken away during the pendency of a
F proceeding as therein the High Court, while exercising its revisional jurisdiction
held that the Rent controller had jurisdiction to interfere and decide the
application filed by the tenant, upon arriving at a finding that the notification
impugned therein had no application to the tenant's· proceedings.

The said view of the High Court was reversed by this Court opining
G that the right of a tenant could be taken away by such notification.

Jn S. Kandaswamy Chettiar v. State of Tamil Nadu & Anr., [1985] I SCC
290 this Court, while following P.J. Irani, held that exemption issued in. favour
of those which are public trusts, was valid having regard to the provisions
contained in Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. This
H ·Court referred to decision in Gorieb v. Fox, (71LEd1228: 274 US 603) and
VASU DE.V SINGH v. U.0.1. [S.B. SINHA, J.) 575

held that there must be some rationale behind the conferral of such power on A
the State Government to grant exemption and stated that:

" .... Obviously the power to grant exemptions under Section 29 of the
Act has been conferred not for making any discrimination between
tenants and tenants but to avoid undue hardship or abuse of the
beneficial provisions that may result from uniform application of such B
provisions to cases which deserve different treatment. Of course, as
observed by this Court in P.J. Irani case 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 C
enactment."

This Court again noticed that the notification was in consonance with
the object of the Act which had three purposes, 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 D
from such buildings.

In Buywel/ Corporation (supra), a bench of the Andhra Pradesh High
Court upheld a notification granting permanent exemption to all buildings
whose rent was more than Rs. I 000/-. We do not, for the reasons stated
hereinafter, think that the law laid down therein is correct. E
Classification for exclusion of building :

The word 'building' includes a part of building let out for any purpose
whether being actually used for that purpose or not. The Act applies to
rented building. Section 3 refers to 'a building'. While constituting the term F
'building', it is to be read as 'rented building' and having regard to the
definition of 'building', a part of the building would also come within the
purview thereof. In that view of the matter, rent of a building, which has been
let out, would be a relevant criteria for classification of the tenanted premises.

The question, however, is whether by fixing Rs.1500/- as the monthly G
rental for granting exemption from operation of the said Act most of the
buildings in the Union Territory would be covered and what would be the
effect thereof.

In this connection, our attention was drawn to a notice dated 30.11.2002 H
576 SUPREME COURT REPORTS [2006) SUPP. 8 S.C.R. -.
A purported to be issued under Section l 06 of the Transfer of Property Act on
behalf of one Sarabjit Singh and Kamaljit Singh to his tenant Shri Brij Mohan
Gaind wherein although monthly rent was Rs. 3000/-; damages were claimed
@Rs. 90,000/-. Yet again, in terms ofa letter of an advocate dated 27.01.2003,
issued on behalf of one S. Harcharan Singh Brar to Mis. Sodhi Boot House,
B wherein monthly rent was Rs.2, l 00/-, but damages were claimed @ Rs.2,00,000/
- per month from the date of expiry of the notice period upto the date of
handing over the possession.

It was further shown that after the said notification was issued, the
prices of land have sky-rocketed.
c We, for the purpose of determination of the issue, need not go into the
correctness or otherwise of the said contentions but we may only notice that
they have not been specifically denied or disputed by Respondents. We,
however, hasten to add that we would not intend to lay down a law that even
for the purpose of enactment of an amending legislation the consequence
D thereof would be a relevant criteria.

We, however, do not agree with the submissions of the learned counsel
appearing on behalf of Appellants that notification issued orr the basis of
rental of a building premise is bad in law. We may notice some of the
decisions of this court upholding validity of notification issued under similar
E provisions as under:

(a) The notification dated 12.8.1974 issued by the State of Madras
under Section 29 of the Tamil Nadu Buildings (Lease and Rent
Control) Act, 1960 exempting all buildings ow1~ed by Hindu,
Christian and Muslim religious public trusts and public charitable
F trusts without any restriction on the period of its operation was
upheld in S. Kandaswamy Chettiar (supra).

(b) Notification dated 21.11.1976 issued by the State of Madras under
Section 29 of the Tamil Nadu Buildings (L~ase and Rent Control)
Act, 1960 exempting all buildings belonging to all co-operative
G societies was upheld in S.M Mahendru & Co. & Ors. v. State
of Tamil Nadu & Anr., [1985] I SCC 395.
Precedent dealing with the amending statutes :

The amendment made in Section 3(c) of the Delhi Rent Act, 1958 was
H the first legislation where the National Housing Policy was implemented. The
VASUDEVSINGHv. U.0.1.[S.B.SINHA,J.]. 577
effect of the said legislation has been noticed hereinbefore. A
Rental not exceeding Rs. 3500/- per month by the Government of Delhi
amending Delhi Rent Control Act was upheld in D.C. Bhatia & Ors. v. Union
of India & Anr., [1995) I SCC 104. The Kamataka Rent Control Act, 1961
exempting the b.Jildings fetching a rental for more than Rs.500/- in C.N.
Rudramurthy v. K. Barkathulla Khan & Ors., [1998) 8 sec 275 has also been B
upheld. Similarly amendment made by the State of Jammu and Kashmir in the
Jammu and Kashmir Rent Control Act, exempting the tenants whose income
exceeds Rs. 40,000/- per annum was held to be intra vires in Delhi Cloth &
General Mills etc. v. S. Paramjit Singh & Anr. etc., [1990) 4 SCC 723.
Indisputably the legislature of a State has the requisite legislative power C
therefor.

The question, however, which falls for our consideration is as to whether
such exemption could be granted by an executive order issued under Section
3 or only by way of an amendment.
D
We would, for the said purpose, notice D.C. Bhatia (supra) in some
details. This Court, therein was dealing with an amendment made by the
Legislature to the following effect :

"3. Act not to apply to certain premises. Nothing in this Act shall
~~; E
(a) ..
(b) ..

(c) to any premises, whether residential or not, whose monthly
rent exceeds three thousand and five hundred rupees; or..... " F
The Court took notice of the materials brought on records of the case
including the National Housing Policy leading to insertion of sub-Section ( c)
in Section 3 of the Delhi Rent Control Act. It also referred to the Statement
of Objects and Reasons of the said Act. It was noticed that :
G
"The original proposal in the bill was to exempt from the purview of
the Rent Act those premises whose monthly rent exceeded Rs.1500.
The legislature, however, after considering various factors, drew the
dividing line at .Rs. 3500."

The Delhi Rent Control Act was amended in the year 1988, the Statement H
578 SUPREME COURT REPORTS [2006) SUPP ..8 S.C.R.

A of Objects and Reasons whereof was as under:
-
"For quite some time, there have been demands from the
associations of house-owners as well as tenants for amendment of
Delhi Rent Control Act, 1958. The Committee on Petitions of Rajya
Sabha, the Economic Administration Reforms Commission, Secretaries'
B Committee and National Commission on .Urbanisation have· also
recommended amendment of certain provisions of the Act. Considering
these demands/recom'!lendations as :llso the fact that with the passage
of time, the circumstances have also changed, necessitating a fresh
look at the tenant-landlord relationship, the amendment of Delhi Rent
C Control Act, 1958 has been proposed with the following objects:

(a) To rationalise t.he present rent control law by bringing about
a balance between the interests of landlords and tenants.
(b) To give a boost to house-building activity and maintain the
existing housing stock in a reasonable state of repairs.
D
(c) To reduce litigation between landlords and tenants and to
ensure expeditious disposal of disputes between them."

One of the contentions raised therein was that Rs. 3500/- per month was
such a rreagre amount of rent for the town of !:>elhi; practically everybody
E would be taken out of the protection of the Rent Control Act. Repelling the
said contention, this Court opined that the objects of the amending Act were
quite different from the objects of the Parent Act as the object of the Amending
Act was not merely to protect the weaker sections of the society, i.e., the
tenants but also the landlords. It was noticed that prior to enactment of the
said amendment, various representations were made by the landlords'
F association. It was thought by the legislature that the Rent Act had brought
halt to the housing building activity for letting out. Keeping in view the acute
shortage of accommodation causing hardship to the rich and the poor alike,
the Act was held to have been enacted to strike a balance between the
interests of the landlords and those of the tenants and for giving a boost to
G house building activity and pursuant thereto the legislature in its wisdom
decided to restrict the prote::tion of the Rent Act not only to those premises
in respect whereof rent payaLle was upto Rs.3500/- per month but also
decided not to extend the statutory protection to the premises constructed
on or after the date of coming into operation of the. Act for a period of ten
H years. It was categorically held that as the Legislature could repeal the Rent 1:

Act altogether, it could do so also step by step. The said amendment was
.... VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 579

found to be one of the steps for repealing the Act opining .: A
"In our view, it is for the legislature to decide what should be the cut-
off point for the purpose of classification and the legislature of
necessity must have a lot of latitude in this regard. It is well settled
that the safeguard provided by Article 14 of the Constitution can only
be invoked, if the classification is made on the grounds which are · B
totally irrelevant to the object of the statute. But, if there is some
nexus between the objects sought to be achieved and the classification,
the legislature is presumed to have acted in proper exercise of its
constitutional power. The classification in practice may result in some
hardship. But, a statutory discrimination cannot be set aside, if there C
are facts on the basis of which this statutory discrimination can be
justified."

As regards the nexus for the ceiling limit of Rs. 3500/-, the Court
observed that the exemption, with the passage of time, may not have any
· nexus with the objects sought to be achieved by the statute. But, it was for D
the legislature to decide which particular section of people requires protection
at any given point of time. The persons who, as of then, were paying less
than Rs.42,000/- per year were considered to be belonging to weaker section.
The wisdom of the legislature was again emphasized in paragraph 52 thereof
holding:
E
"We are unable to uphold this contention for a number of reasons.
Prior to the enactment of the Rent Control Act by the various State
Legislatures, the legal relationship between the landlord and tc ant
was governed by the provisions of the Transfer of Property Act. Delhi
Rent Control Act provided protection to the tenants from drastic
enhancement of rent by the landlord as well as eviction, except on F
certain specific grounds. The legislature by the Amendment Act No.
57 of 1988 has partially repealed the Delhi Rent Control Act. This is
a case of express repeal. By Amending Act the legislature has
withdrawn the protection hitherto enjoyed by the tenants who were
paying Rs. 3500 or above as monthly rent. If the tenants were sought G
to be evicted prior to the amendment of the Act, they could have
taken advantage of the provisions of the Act to resist such eviction
b,y the landlord. But this was nothing more than a right to :ke
advantage of the enactment. The tenant enjoyed statutory protection
as long as the statute remained in force and was applicable to him.
H
A
580 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

If the statute ceases to be operative, the tenant cannot claim to
continue to have the old statutory protection. It was observed by
-
Tindal, C.J., in the case of Kay v. Goodwin, 130 ER 1403 : (ER p.1405)

"The effect of repealing a statute is to obliterate it as completely
from the records of the parliament as if it had never been passed; and,
B it must be considered as a law that never existed, except for the
purpose of those actions which were commenced, prosecuted, and
concluded whilst it was an existing law.""

The Karnataka Rent Control Act, 1961 was amended by reason of
Section 31 of the Amending Act exempting buildings fetching a rental of more
C than Rs.3500/- from the ambitthereof. The question as regards validity of the
said provision came up for consideration before this Court in C.N. Rudramurthy
v. K. Barkathulla Khan & Ors., [1998] 8 SCC 275, wherein D.C. Bhatia
(supra) was followed. We need not, therefore, deal with the ratio in the said
decision separately.
D The legislature of Jammu and Kashmir amended Section 3(iii). The
classification of tenants on the basis of income made therein was upheld by
this Court in Delhi Cloth & General Mills etc. v. S. Paramjit Singh & Anr.
etc., [l 990) 4 sec 723 in the following terms:

" .. .It is the tenant that the legislature intends to protect and not the
E landlord or his building. The test adopted by the legislature for this
purpose is with reference to the tenant's net income, whether accruing
inside or outside the State, as on the date of the landlord's application
for eviction as well as on the date of the decree for eviction. The
legislative obje~t is, therefore, to protect tenants who are economically
F weaker in comparison to those affluent tenants falling outside the
specified limit of income, and at the same time to encourage construction
of new buildings which. will result in better availability of
accommodation, employment opportunity and economic prosperity.
This is a reasonable classification which does not suffer from the vice
of being too vague or broad. Classification based on income is well
G known to law. Such classification has a reasonable relation to the twin
legislative objects mentioned above. We see nothing unreasonable or
irrational or unworkable or vague or unfair or unjust in the classification
adopted by the impugned provision."

H Having noticed the notifications and the precedents operating in the
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 581

field, we may notice the distinguishing features of this case. A
Statutory scheme :

It is trite that legal history can be taken into consideration for
construction of a statute. Chandigarh, admittedly, is a new town. It was.
meant to be used as a union territory in terms of the provisions of the Punjab, B
Resettlement Act. It enjoys a unique feature which no other town in India
does, namely, capital of two States as also being an Union Territory in itse\f.
Although it is a capital of two States, the essential functions of a legislative
authority as also power of administrations are in the hands of the Central
Government in terms of Article 239 of the Constitution of India. It is the C
Parliament alone which would legislate on its behalf. The Central Government
extended the beneficial legislation of rent control in the Union Territory. It
was declared an urban area only in November, 1972. In view of the Full Bench
Decision of the Punjab & Haryana High Court in Dr. Harkishan Singh v. ·
Union of India & Ors., AIR (1975) P&H 160: 1975 PLR 163), the Parliament
enacted the 1974 Act in terms whereof the provisions of 1949 Act were D
extended to the Union Territory of Chandigarh. The 1949 Act is a pre-
constitutional legislation. The 1974 Act was enacted immediately after partition
of India. The State of Punjab during pre-partition days was known as State
of East Punjab. It consisted of areas both urban and rural. The main purpose
at· the time of enactment of the said Act might have been restricted to two
areas, i.e., (l) rent of certain premises situated within the limits of urban areas E
(2) eviction of tenants therefrom, whereas the main enactment applied to the
entire State of Punjab. The extension of 1949 Act, evidently would apply to
the Union Territory of Chandigarh. Sub-section (2) of Section 1 of the 1949
Act made a distinction between the urban area and cantonment area. It was
not to apply to the cantonment area and prcsumably for that reason the p
preamble uses the words "certain premises". The definition of building in the
Act provides for a broad meaning. It includes out houses, go-downs, furniture,
except a room in a hotel, hostel or boarding house. The types of premises
to which the said Ad would apply, thus may be found out from the definition
of 'building' itself.
G
Unlike similar legislations enacted by other State Governments, the Act
is not a temporary Act. It is indisputably in force for a period of more than
57 years.

Legifi/ative policy :
H
582 · SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A Legislative Policy of a State can be gathered from the Preamble, the
Statement of Objects and Reasons and the core provisions contained therein.
It is, however, not much in dispute that the Rent Act was a beneficent
legislation wbich sought to protect a category of the tenants occupying
rented buildings specified therein not only from enhancement of rent, but also
B from unreasonable eviction. The Act furthermore provides for protecti_on of
the tenants from unreasonable harassment at the hands of the landiords.

The Transfer of Property Act governed the field relating to eviction of
all kinds of tenants. For eviction of a monthly tenant 15 days' notice ending
with the tenancy month, a5 envisaged under Section I 06 thereof was sufficient·
C to bring an action for a landlord to evict his tenant. The tenant, inter alia,
could raise a defence of defect in the said notice in case eviction is sought
for or applicability of other provisions thereof as also non-compliance of the
other requirements contained therein.

The Transfer of Property Act does not contain any provision empowering
D any court to regulate enhancemerit of rent. No provision existed therein also
for protection of tenants from harassment at the hands of the landlords, as
for example, disconnecting the electrical and water connection from the tenanted
premises. The Rent Control Act, on the other hand, was enacted to protect
the tenant, inter alia, in relation to the matters noticed hereinbefore.

E We may briefly notice the core provisions of the 1949 Act. Section 3
of the Act empowers the Administrator to issue an exemption notification.
Sections 4, 5 and 6 deal with determination of fair rent. Section I 0 prohibits
the landlord from disconnecting electrical energy, etc. Sectionl3 enumerates
the grounds upon which the landlord seeks eviction of a tenant.

F The legislative policy of the State was, therefore, required to be
deciphered from the said provisions.

Different Rent Control Acts enacted by different States use different
preambles. Some Acts provide for control of rents, eviction and rents, letting
G houses, the lease of vacant premises to Government and some Acts seek to
control only enhancement of rent or fixation of rent, unreasonable eviction of
tenants. It is permissible to read the preamble of a statute to ascertain the
legislative policy.

We are not oblivious that in construing· a statute, preamble may not
H have a role to play unless the meaning thereof is obscure or if plain meaning
. VASU DEV SINGH v. U.0.L [S.B. SINHA, J.] 583
is to be given, the same would lead to an absurdity, but, (1) the preamble A
being a part of the statute can be read along with other portions of the Act
to give clear meaning to the provisions and to decide whether they are clear
or ambiguous, (2) the preamble in itself is not an enacting provision as other
relevant enacting words have to be found elsewhere in the Act, and (3) the
utility of the preamble diminishes if the statutory provisions are themselves B
capable of given a literal meaning. (See Union of India v. Elphinstone Spg.
& Wvg. Co. Ltd & Ors. [2001] 4 SCC 139.)

Preamble of a statute, as stated in State of Rajasthan & Ors. v. Basant
Nahata (supra), however, provides for a key to understand it. It, togeth~r
with the Statement of Objects and Reasons which are called heart and soul C
of the statute, may have to be considered in a given situation for the purpose
of giving effect thereto.

In Vasantlal Maganbhai Sanjanwala v. State of Bombay & Ors., [1961]
1 SCR 341 a provision empowering Provincial Government to fix a lower rent
of the maximum rent payable by the tenants was upheld on the ground tqat D
the legislation policy and principles may be found out from the preamble and
provisions of the Act. Subba Rao, J., while expressing his dissention, opined:

" .... When the decisions say that the legislature shall lay down the
legislative policy and its formulation as a rule of conduct, they do dot
mean vague and general declaration of policy; but a definite policy E
controlling and regulating the powers conferred on the executive for
carrying into effect that policy."

Both the majority and minority, therefore emphasized on the importance
of the legislative policy which must not be vague and should be definite and
bona fide. F
It is equally well settled that a policy underlying the statute should be
gathered from reading the statute, including its preamble as a whole. Once,
however, the words used in statute have a plain meaning, the courts should
not busy themselves to find out the supposed intention or the policy underlying
statute. (See Sardar Gurmej Singn v. Sardar Partap Singh Kairon, [1960] G
l SCR 909.) But we are herein concerned with somewhat a different question,
viz., whether the impugned notification is violative of the legislative policry.

In Lachmi Narain and Ors. v. Union of India & Ors., [1976} 2 SCC
953, this Court was considering the effect of a notification issued in terms of H
584 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A Section 2 of the Union Territories (Laws) Act, 1950, where the words "not
less than three months' notice" were substituted by the words "such previous
notice as it considers reasonable" were struck down stating that :

"The impugned notification, dated December 7, 1957, transgress
the limits which circumscribe the scope and exercise of the power
B conferred by Section 2 of Laws Act, at least in two respects.

Firstly, the power has not been exercised contemporaneously
with the extension or for the purposes of the extension of the Bengal
Act to Delhi. The power given by Section 2 of the Laws Act had
exhausted itself when the Bengal Act was extended, with some
C alterations, to Delhi by notification, dated April 28, 195 I. The impugned
notification has been issued on December 7, 1957, more than 6Y:i years
after the extension."

It was further.held that:

D "Secondly, the alteration sought to be introduced by this
notification (December 7, 1957) in Section 6(2), goes beyond the scope
of the "restrictions and modifications" permissible under Section 2 of
the Laws Act; it purports to change the essential features of sub-
section (2) of Section 6, and the legislative policy inherent therein."

E This Court was also of the opinion that Section 6(2) of the Act embodies
a determination of a legislative policy and its formulation as an absolute rule
of conduct which could be diluted, changed or amended only by the legislature
in exercise of its essential legislative function. Necessarily taking recourse
to executive action was. forbidden.

F In State of Rajdsthan & Ors. v. Basant Nahata (supra), the question
as to whether the public policy could be the subject matter of delegation of
essential legislative function, this Court opined:

"There cannot be any doubt whatsoever that the court shall not
invalidate a legislation on the ground of delegation of essential
G legislative function or on the ground of conferring unguided,
uncontrolled and vague powers upon _the delegate without taking into
account the preamble of the Act as also other provisions of the
statute in the event they provide good means of finding out the
meaning of the offending statute."
H
VASU DEV SINGH v. U.0.1. (S.B. SINHA, J.] 58~

It was further held : A
"Hence, Section 22-A of the Act through a subordinate legislation
cannot control the transactions which fall out of scope thereof.

We have noticed hereinbefore the effect of a power of attornex
under the Indian Contract Act or the Power-of-Attorney Act. A B
subordinate legislation which is not backed up by any statutorY
guideline under the substantive law and opposed to the enforcement
of a legal right, in our opinion, thus, would not be valid."

Analysis :

The decisions of this Court clearly point out the distinctive feature~
c
between the power of the Administrator in terms of a provision of the nature
of Section 3 of the Act and the power of the legislature to amend the law.
The executive government can exercise its power of exemption in the following,
·- circumstances:
D
(l) Where such exemption had been granted only for a limited period;
(2) in respect of new buildings;
(3) in respect of the government buildings, buildings belonging to
the local self-government and other public sector undertakings;
and E
(4) areas belonging to the Cantonment Board which was outside the ,
purview of the applicability of the original Act having regard to
the fact that such areas of the cantonment are governed by
separate Act, like. Cantonment Acts.
(5) Where the same would come within the purview of the delegated ,
F
legislation.

(6) Where the tenants or tenanted premises form a distinct and
separate class.

(7) Where having regard to the constitutional scheme that any State G
within the meaning of Article 12 of the Constitution of India
would not treat its tenants in an unfair and arbitrary manner
despite the rent control laws being not applicable in their case;
as they would be treated to be forming a separate class; and

(8) Where the exemption notification is granted for a limited period ,H
586 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A or in respect of new buildings for a limited period.

In other words, the Administrator will have no jurisdiction to issue a
notification which would have a permanent impact. The Administrator cannot
change the basic features of the law or act contrary to the legislative policy.

B The legislature, on the other hand, can not only repeal the statute, it
can change the basic features of the law. The only limitation. on the part of
the legislature is that ordinarily it cannot take away a vested right.

Validity of the impugned notification :

C At the outset, we may notice that the learned counsel appearing on
behalf of Appellants did not question the constitutionality of Section 3 of the
Act. We are, therefore, concerned only with the validity of the impugned
·-.notification dated 7.11.2002. For the aforementioned purpose we would proceed
on the basis that the rental fetched by a tenanted building or a part thereof
can give rise to reasonable classification. The principal question, therefore,
D wh!ch would arise for consideration is as to whether the impugned notification
satisfies the tests laid down in P.J Irani (supra).

One of the grounds for invalidating the notification would be if irrelevant
factors have been taken into consideration. Another test which can be
E applied is as to whether the notification is otherwis.e malafide in the sense
that the same has been used for unauthorised purpose.

The Administrator is said to have taken into consideration the National
Housing Policy, which was circulated as far back in the year 1992. Such a
balancing procedure indisputably was recommended to be done by way of
F legislation and not by executive action. The National Housing Policy
recommended for step by step ·repeal of the Act and substituted the same by
a new permanent Act. By reason thereof the fact that most of the States had
enacted temporary Acts which had been extended from time to time, was,
thus, taken into consideration. Only because some exemption notifications
had been issued under the Punjab Act by itself may not be a ground to follow
G the same blindly inasmuch as the Punjab Act applies to the entire State.
There may not be any town in the said State which may be as important as
Chandigarh and where the rental of the tenanted premises would be as high ·. ·
as in the said town. We have seen hereinbefore how the Administrator
himself has described the status of Chandigarh. Despite the same, he equated
H Chandigarh with other towns of the State of Punjab.
VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.] 587
The Administrator in issuing the notification has missed the relevance A
of the distinction between the National Housing Policy and the legislative
policy. The power of exemption could be exercised having regard to th~
legislative intent and policy whereas the National Housing Policy could be
given effect to by the legislature in modifying, varying or altogether doing
away with the existing legislative policy and laying down a new policy
therefor. Change of legislative policy with the aid of the National Housing B
Policy was not within the domain of the Administrator. It was the sole
prerogative of the legislature.

A statute can be amended, partially repealed or wholly repealed by the
legislature only. The philosophy underlying a statute or the legislative policy, C
with the passage of time, may be altered but therefor only the legislature has
the requisite power and not the executive. The delegated legislation must be
exercised, it is trite, within the parameters of essential legislative policy. The
question must be considered from another angle. Delegation of essential
legislative function is impermissible. It is essential for the legislature to
declare its legislative policy which can be gathered from the express words D
used in the statute or by necessary implication, having regard to the attending
circumstances. It is impermissible for the legislature to abdicate its essential
legislative functions. The legislature cannot delegate its power to repeal the
law or modify its essential features.

Section 3 of the Act, indisputably, is constitutionally valid. It, however, "?
provides for an enabling provision. The Central Government, by reason of
the said provision, has been empowered to direct that all or any of the said
provisions would not apply to any of the building or rented buildings or any
class of buildings or any rented lands.

Sections 4, 5 and 6 of the Act dealt with the determination of fair rent F:
Submissions of Mr. Nariman and Mr. Venugopal, both appearing for the
landlords, however, are, inconsistent with each other. Whereas Mr. Nariman
submitted that Sections 4, 5 and 6 for all practical purport and intent are not
applicable as regard to the town of Chandigarh; according to Mr. Venugopal,
Section 4(4)(ii)(c) would be applicable and thus enhancement of rent even in G'
respect of the buildings, which came into existence after 1965-66, is permissible.

When the 1949 Act was passed, there was no 'building' in Chandigarh
within the meaning of the said Act. In terms of Section 4(3)(i) & (ii) of the
said Act, the increase in the basic rent was contemplated where the rate of
rental was Rs.25/- to R.s.50/-. It may not, thus, be correct to contend that H
588 SUPREME COURT REPORTS (2006) SUPP. 8 S.C.R.

A Sections 4, 5 and 6 of the Act did not provide for enhancement of rent at all.
Any rent which exceeded a sum of Rs.50/- would also come within the
purview of Section 5 of the Act but by reason thereof, it cannot be said that
the Act sought to provide for a cut-off mark as regard the quantum of rent
which could have been the subject matter of enhancement. However, it
B cannot be denied that having regard to the fact that the question as regard
enhancement of rent was required to be considered by the Rent Controller
with reference to rent payable when the Act came into force, hardly any relief
could be granted in favour of the landlord. Appellants also in their writ
petition stated:

"That at this stage, it is important to mention here that Sections 4 and
c 5 of the Punjab Act of 1949 are not applicable to Chandigarh, as no
building existed in the year 1939.. The Parliament, while enacting the
East Punjab Urban Rent Restriction (Extension to Chandigarh) Act,
1974 intentionally did not provide fixation of fair rent or increase in
the fair rent and gave more protection to the tenants of Chandigarh
D than the tenants of State of Punjab."

If the rental of Rs.50/- cannot be considered to be a cut-off mark, the
same by itself would not mean, as was contended by Mr. Venugopal, that
exemption granted in respect of a building the rent whereof exceeds Rs.1500/
- would meet the object of the Act as the philosophy underlying it was to
E protect only such buildings where only tenants belonging to weaker sections
reside. Sections 4, 5 and 6 of the Act are not the only provisions which
provide for the protection of the tenants. What shall be the criteria to
determine the question as to who would fall within the purview thereof
depends upon a host of factors. Due application of mind was, thus, necessary
F for determining the said question.

Section 13 of the Act enumerates the grounds upon which the landlord
may seek eviction of a tenant. Section 13-A is an exception to Section 13 in
the sense that the same provides for grounds for eviction of a tenant in
certain cases enumerated therein. Section 13-B enables the landlords named
G therein to recover immediate possession of the residential building or scheduled
building and/or non-residential building to accrue to Non-resident Indian.
The legislature itself, therefore, provided for speedy relief to a section of
landlords. It is interesting to note that whereas eviction of a tenant from a
residential building was permissible, it was made impermissible so far as non-
residential premises are concerned, but, the same has been declared ultra
H
VASU DEV SINGH v. U.0.L [S.B. SINHA, J.] 589

vires by this Court. A
The provisions have been enacted for the purpose of protection of
tenants of certain provisions.

The words "certain premises", thus, for the purpose of ascertaining the
legislative policy must be construed having regard to their definition of :$
"building" only. The words "certain premises", having regard to its applicability
in the urban areas, would also mean that the premises situated in the urban
area and not in rural area.

The reason behind the enactment of the 1949 Act is well known and has
been noticed by this Court in a large number of cases. It was conceived as C
a measure to overcome shortage of rental accommodation in the wake of
Second World War and the influx of refugees following partition. The Union
of India also accepts that the object of the State Act to provide for control
and regulation of the rental housing market, determination of fair rent, protection
of tenants against indiscriminate eviction at the hands of landlords and the
rights of the landlords for recovery of tenanted premises in specific cases.

The reasons for which the impugned notification was issued was stated
to be that the social objective of the Rent Control Act had not been realised
and it had various other adverse effects including simulation of investment
in rental housing especially from the lower and middle income groups. A E
model Rent Control legislation was circulated in the year I 992 wherein proposal
was made to give exemption to residential non-residential premises carrying
more than specified rental of Rs.1500/- per month. The Government of India
had been advocating urban section reforms and had introduced an urban
reforms incentive scheme whereunder funds are to be provided by it and to
urban sector reforms such reform was to be carried out for removing the rental F
laws. .

However, National Housing Policy itself suggests that the existing rent
control laws were to be repealed. The National Housing Policy, it was
proposed, should be achieved step by step so as to enable the States to enact
a permanent law. G
What was, therefore, contemplated was amendment of the existing
legislation by the legislature so as to achieve partial repeal of the Act. The
National Housing Policy or the Central Government did not and could not
recommend that what can be done only by the legislature, can be achieved
through the route of notification issued by the Administration under section H
590 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A 3 of the Act.
Mr. Nariman contended that it is a virtual amendment by the
Administrator but an Administrator cannot make an amendment. Concept of
virtual amendment of a legislative Act by the executive is unknown. He has
a limited jurisdiction and such jurisdiction must be exercised within the
B parameters of Jaw as laid down in P.J. Irani (supra).
In D.C. Bhatia (supra) it has clearly been pointed out that it is the
legislature's function alone to make amendment and such measures are
permissible so as to enable the legislature to achieve the goal as set down
in terms of the national policy. The Government of Delhi did so.
C Even in Motor General (Supra) this Court has held that what can be
done by a temporary measure cannot be done for an indefinite period, inasmuch
as the exemption <:annot be granted in perpetuity. This Court clearly pointed
out that an earlier notification which was applicable for a limited period cannot
be sustained after a lapse of 23 years. Kandasamy (supra) is again an
D authority for the proposition that certain institutions, as for example, charitable
institution which let out its property can be granted exemption having regard
)-
to the purport and object for which the same had been constituted.
It is not disputed that a delegate must act within the four corners of the
Act; the guidelines wherefor must be provided for in the Act itself.
E The classification as regards the premises occupied and possessed by
the State the Local Self Governme~t or other public sectors, however, stand
on a different footing. It is now beyond any controversy that this Court
treated the houses stated to be belonging to the State or public sector
undertaking absolutely on a different footing on the pre-supposition that they
would not unreasonably· enhance the rental of the premises and they would
F conduct themselves in such a manner so as to make a tenant feel that they
would be subjected to unreasonable eviction.
In Baburao Shantaram More v. Bombay Housing Board & Anr., [1954]
SCR 572 : AIR (1954) SC 153, this Court has held:
"It is not to be expected that the Government or local authority or the
G Board would be actuated by any profit-making motive so as to unduly
enhance the rents or eject the tenants from their respective properties
as private landlords are or are likely to be. Therefore, the tenants of
the Government or local authority or the Board are not in need of such
protection as the tenants of private landlords are and this circumstance
H is a cogent basis for differentiation. The two classes of tenants are
- VASU DEV SINGH v. U.0.1. [S.B. SINHA, J.]

not by force of circumstances placed on an equal footing and the
tenants of the Government or local authority or the Board cannot,'
591
A

therefore, complain of auy denial of equality before the law or of equal
protection of the law. "

Mis. Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of .
Bombay, [1989] 3 SCC 293 is another instance where the Court placed faith B
on the public sector stating:

"The field of letting and eviction of tenants is normally governed
by the Rent Act. The Port Trust is statutorily exempted from the
operation of the Rent Act on the basis of its public/governm(fntal
character. The legislative assumption or expectation as noted in the C
observations of Chagla, C.J. in Rampratap Jaidayal case cannot make
such conduct a matter of contract pure and simple. These corporations
must act in accordance with certain constitutional conscience and
whether they have so acted, must be discernible from the conduct of
such corporations. In this connection, reference may be made on the D
observations of this Court in Som Prakash Rekhi v. Union of India
reiterated in MC. Mehta v. Union ofIndia wherein at p. 148 this Court
observed: (SCC p. 480, para 55)

"It is dangerous to exonerate corporations from the need to have
constitutional ·conscience; and so, that interpretation, language E
permitting, which makes governmental agencies, whatever their
mien, amenable to constitutional limitations must be adopted by
the court as against the alternative of permitting them to flourish
as an imperium in imperio."

Therefore, Mr. Chinai was right in contending that every F.
acti011Jactivity of the Bombay Port Trust which constituted "State"
within Article 12 of the Constitution, in respect of any right
conferred or privilege granted by any statute is subject to Article
14 and must be reasonable and taken only upon lawful and
relevant grounds of public interest."
G
(See also Jamshed Hormusji Wadia v. Board of Trustees, Port ofMumbai
& Anr., (2004] 3 SCC 214 and Municipal Corpn., Chandigarh & Ors. v.
Shantikunj Investment (P) Ltd & Ors., (2006] 4 SCC 109).

- Even the criterion underlying the policy is required to be changed by
way of modification or variation in the standard of rent, object whereof should H
592 SUPREME COURT REP0RTS [2006] SUPP. 8 S.C.R.

A have been achieved only by making suitable amen<lments in the Act itself.
The Administrator could not have tinkered with the provisions of the Act.

What should have been the criterion for fixing the quantum of rent so
as to render the classification constitutional and valid in Jaw although is not
a matter w!tich would ordinarily fall for consideration of the court, but the
B question as to whether by reason of fixation of such a rent which would
render the Act inapplicable to a large section of the tenants, in our considered
view, would come within the scope of judicial review.

We, however, cannot accept the submissio:i that as Appellants
C themselves in the writ petition contended that as in the year 1978 a building
standing on a land of 1500 square yards with 3 to 4 bed rooms, one drawing
and dining room, garage and servant quarter, was available on a monthly rent
of Rs. I 000/-and, thus, on that premise a presumption can be raised that such
tenanted premises used to be occupied by the affluent families, those who
are paying less than Rs.1500/- continued to be protected and, thus, the same
D would come within the purview of the legislative policy and the object and
purport of the Act. The criterion which was required to be considered was
not as to what rent a building could have fetched in 1978 but what would
have been a fair criterion as regard the quantum of rent when the notification
was issued. For that purpose, no data has been collecte~ nor has any study
been made. As to how the said criterion had been fixed is not known. Except
E stating that the rent of Rs.1500/- to Rs.3500/- was ~ade the criterion in terms
of the National Housing Policy, the Administrator did not assign any other
reason.

If the contention of Appellants is correct that in Chandigarh 99% of the
F lands have already been leased out, the scope of applicability of the new
housing scheme might not be of much relevance. The Administrator while
issuing the impugned notification misdirected himself in Jaw insofar as he
failed to take into consideration that he could ,1ot have exercised any
jurisdiction in terms thereof as the National Housing Policy, inter a/ia, contains
the guidelines for the State legislatures for enactment of law and the same was
G not meant to be taken recourse to by the Executive Government of the State.
While exercising his jurisdiction under Section 3 of the Act, the Administrator
was required to apply his own mind to the relevant facts. Application of mind
on the part of the Administrator was also necessary having regard to the rate
of inflation and other factors includinr. the prevalent rental in the neighbouring
H areas of the States of Punjab and Haryana. He further failed to take into
consideration that in terms of National Housing Policy, that quantum of rent
.,,, VASU DEV SINGHv. U.O.I. [S.B. SJNHA.J.] 593
was made flexible. Only a broad guideline had been provided therefor. What A
was necessary to be applied was the principle and not the minimum rent
specified therein.

For the aforementioned purpose, it was necessary to collect relevant
d<·ta. Rental of Rs.1500i- could not have been applied mechanically. !he
High Court has followed D.C. Bhatia (supra) but it has failed to notice that B
in D. C. Bhatia (supra) itself whereas the proposal in the bill was to fix
Rs.1500/- as the outer limit, the members of t!ie legislature upon deliberation
in the matter, had fixed the quantum of rent at Rs.3500/-. Furthermore, for the
aforementioned purpose, the lowest "Ceiling of Rs.1500/- might have been
treated to be fair in the year 1992 but the same would have lost much C
significance and relevance in the year 2002 in view of the passage of time.
The rate of inflation and other relevant factors as well as the fact that the per
capita income in UT of Chandigarh is considered to be the highest in the
country, were necessary to be taken into consideration. This Court, in
Prabhakaran Nair & Ors. v. State of Tamil Nadu & Ors., [1987] 4 SCC 238,
opined that a National Housing Policy should be formulated and the D
observations made therein had been given effect to. But, this Court never
intended that a National Housing Policy would be applied in a manner not
contemplated under our constitutional scheme.

A new legislative policy indisputably was framed having regard to the E
new economic policy of the Central Government as was fonnuiated in the year
1991. However, by reason thereof only it cannot be said that the social justice
doctrine, as adumbrated in the preamble of the Constitution, need not be
given effect to under any situation. Social justice legislations and other
legislations beneficent to the weaker sections of the country are still on the
statute book. The rent Acts would continue to control the tenns and conditions F
of tenancy. On some occasions, only the same can be interpreted differently
having regard to change in time. But, it was not for the executive government
to do so. They have not been repealed. Repealing of such Acts can be
brought about by the competent legislature. What would be the legislative
policy in relation thereto was within the exclusive domain of the Central
Government. The Constitution of India, having regard to the provisions of G
Articles 24 5 and 246 of the Constitution of India clearly demarcate the fields
of legislation and, thus, it would not be correct to contend that only because
that the Central Government has changed its economic policy, the same must
be reflected in all the legislative fields occupied by the State legislature.
H
594 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A In D.C. Bhatia (supra), this Court clearly held that what can be done
by the legislature cannot be done by the delegatee. Yet again, in B.K.
Industries & Ors. v. Union ofIndia & Ors. [1993] Supp. 3 SCC 621, this Court
clearly opined that by reason of such notification the delegatee cannot take
recourse of the virtual repeal of the Act. Having regard to the fact that the
rental of Rs.1500 per month for the town of Chandigarh was too low a rent,
B the submissions of Appellants are of some significance that by reason thereof,
over 9/lOth of the tenanted premises would go out of the purview of the Rent
Act.

In Rattan Arya & Ors. v. Staie of Tamil Nadu & Anr., AIR (1986) SC
C 1444, this Court categorically observed that fixing exemption li!Ilit at Rs.400/
- had become unrealistic with the passage of time particularly fri view of the
hike in re.nts. In this case, the manner in which the rate ofrent of the tenanted
premise or the value of the property has gone up as evident from the data
furnished by Appellants in their writ petition. The same was not denied or
disputed.
D
For the aforementioned purpose, our attention has been drawn to certain
documents to show the effect of the said notification, i.e., that immediatety
thereafter exorbitant rent was claimed from the tenants by the landlords.

We, therefore, in this case, have sufficient materials on record to hold
E that Rs.1500/- could not have been fixed as the quantum of rent for the
purpose of extending the exemption provision under Section 3 of the Act to
the Administrator.

The legislative objective and poli<,:y indisputably must be considered
having regard to the preamble and other core provisions of the Act. Section
F 3 although is a part of the Act, but the same cannot be said to contain an
in-built policy so as to empower the Administrator to do all such things which
can be done by the legislature itself.

By taking recourse to the preamble, it cannot be said, as has been
G submitted by Mr. Nariman, that the power to exclude the tenanted premises
can be exercised without taking into consideration the legislative policy and
the object of the Act. It may be true that by reason of Section 3 of the Act,
n·J arbitrary power as such has been conferred in view of the fact that the
Act applies only to certain classes of land and building but the same would
not mean that the .Administrator is free to take any action in any manner he
H likes. The action of the Administrator is indisputably subject to judicial
VASU DEV SINGH v. U.O.I. [S.B. SINHA, J.] 595
review. A
It is also true that the term 'building' having regard to its definition
would mean tenanted building and, thus, the building fetching a rent to a
prescribed extent can form the base for determining criterion for the purpose
of classification but the same would not mean that the Administrator would
be entitled to lay down a criterion which would be applicable only to a large B
section of the tenants.
"
Moreover, the notification has not been issued for a limited period. It
will have, therefore, a permanent effect. Submission of Mr. Nariman that
having regard to the provisions of the General Clauses Act, the same can be
modified, amended at any time and withdrawn, cannot be accepted for more C
than one reason. Firstly, Respondent proceeded on the basis that the said
notification has been issued with a view to give effect to the National policy,
i.e., amendments must be carried out until a new Rent Act is enacted. Whether
the Act would be enacted or not is a matter of surmises and conjectures. It
would be again a matter of legislative policy which was not within the domain D
of the Administrator. Secondly, the Administrator in following the National
Policy proceeded on the basis that the provisions of the Act must ultimately
be repealed. When steps are taken to repeal the Act either wholly or in part,
the intention becomes clear i.e. the same is not meant to be given a temporary
effect. When the repealed provisions are sought to be brought back to the
statute-book, it has to be done by way of fresh legislation. In any event, the E
General Clauses Act shall not apply to an executive action. Executive actions
can be taken by a person who is statutorily authorized therefor. He is required
to apply his own mind. What can be done in future by another authority
cannot be a ground for upholding an executive act.

Conclusion :
F

For the reasons, aforementioned, the impugned judgments cannot be
sustained which are set aside accordingly. The appeals are allowed. However,
in the facts and circumstances of the case, there shall be no order as to costs.

N.J. Appeals allowed.
G