1999 Supreme(SC) 879

1999(7) Supreme 311
Supreme Court of India
(From Punjab & Haryana High Court)
S. Saghir Ahmad & R.P. Sethi, JJ.
M/s. Style (Dress Land) etc. etc. -Appellants
versus
Union Territory Chandigarh & Anr. -Respondents
Civil Appeal No. 4540 of 1999
(Arising out of SLP (C) No. 13471 of 1998)
With
Civil Appeal Nos. 4541-4557 of 1999
(Arising out of SLP (C) No. 10676-10692 of 1998)
With
Civil Appeal No. 4558 of 1999
(Arising out of SLP (C) No. 13472 of 1998)
With
Civil Appeal No. 4559 of 1999
(Arising out of SLP (C) No. 13475 of 1998)
With
Civil Appeal Nos. 4560-4573 of 1999
(Arising out of SLP (C) Nos. 16266-16279 of 1998)
With
Civil Appeal Nos. 4574-4575 of 1999
(Arising out of SLP (C) Nos. 17894-95 of 1998)
With
Civil Appeal No. 4576 of 1999
(Arising out of SLP (C) No. 12188/99 (CC 902/99) )
Decided on 18-8-1999
Counsel for the Parties :
For the Appellants : D.A. Dave, & H.N. Salve, Sr. Advocates, Ms. Minakshi Vij, Naresh Bakshi, Nidesh Gupta, Advocates.
For the Respondents : K.N. Rawal, Additional Solicitor General, Sunil Gupta, Ms. Kavita Wadia, Ms. Indu Malhotra, Advocates.

Headnote:(i) Capital of Punjab (Develop­ment & Regulation) Act, 1952-Sections 3 and 22-Enhancement of rent of leased out shops in Sector 17, Chandigarh-Obligation of Central Government to make rules -Failure to make rules would not render transfer of property made under terms of lease as illegal, void or inoperative - Central Government is expected to make rules without lose of any further time-In absence of rules enhancement of rent is required to be fair and reasonable-Government cannot act like a private individual-Shops leased out at Rs. 525 per month for 10 years - Subsequent enhancement of rent at Rs. 2,671 after expiry of 10 year lease period with effect from 1982-High Court upholding enhancement-Again rent enhanced at Rs. 14,000-Challenge to enhancement-High Court upholding enhancement and awarding interest at 18 for arrears of rent -Held, enhancement not unreason­able-However, interest reducted to 15 .

       Held : The combined reading of Sec­tions 3 and 22 of the Act would indicate the existence of an obligation on the Central Government to make rules for the purposes of regulating the terms and conditions relating to the transfer of property including leasing it out. However, failure to make the rules would not render the transfer of the property made under the terms of the lease as illegal, void or inoperative. Power to transfer the property including leasing it out is authorised by Section 3 itself and its terms and conditions left to the satisfaction of the Central Government. Though, not legally obliged to make the rules, the Central Government was obliged to take steps in making the rules regulating the transfer of properties con­templating transfer of properties by the modes envisaged under the section, for allaying apprehensions of the citizens regarding discrimi­nation and arbitrariness. It would have been in the interests of the Central Government itself to frame the rules for infusing confidence and rationality, reasonableness and fairness in their actions. We trust and hope that the Central Government would not loose any further time in making the rules as mandated by the Section and embark upon enhancement of rent, if deemed necessary, only under such rules, as and when made for the purposes of carrying on the objects of the Act to their logical conclusions. In the absence of the rules, the action of the respondents regard­ing imposition of terms and conditions of the lease including the enhancement of rent is required to be fair and reasonable and not actuated by considerations which could be termed as arbitrary or discriminatory. The government cannot act like a private individual in imposing the conditions solely with the object of extracting profits from their lessees. Governmental actions are required to be based on standards which are not arbitrary or unauthorised. (Paras 8 & 9)

       Even the administrative orders and not quasi judicial are required to be made in a manner consonance with the rules of natural justice, when they affect the rights of the citizens to the property or the attributes of the property. While exercising the powers of judicial review the Court can look into the reasons given by the Government in support of its action but cannot substitute its own reasons. The Court can strike down an executive order, if it finds the reasons assigned were irrelevant and extraneous. The courts are more concerned with the decision making process than the decision itself. (Para 10)

       The High Court examined the matter in depth and rightly concluded that the procedure adopted and made the basis for enhancing the rent could not be termed to be either arbitrary, discriminatory or unreasonable. We agree with the conclusions arrived at by the High Court and find no infirmity in the action of the respondents in raising the rate of rent on the basis of the grounds noticed by us hereinabove. Such an action is stated to have been uniformly applied with respect to all the shopkeepers similarly situated and placed. Mere inaction in respect of certain tenants could not be made the basis for setting aside the action initiated against the appellants and others. The respondents assured and the High Court rightly issued appropriate directions for initiating similar actions against those who are left out. It is not the case of the appellants that the favour done to those whose rent has not been enhanced is legal or valid. Such an omission is also not referable to any lawful action of the respondents. The question of discrimination would arise only if it is found that the order in favour of the left over was legal and valid and that the case of the writ petitioners was similar in material respects to the case of such persons. No such allegation has been made or arguments ad­dressed. There is, therefore, no basis for the appellants to urge the violation of Article 14 alleging discrimination against them. (Para 12)

       It is settled principle of law that as and when a party applies and obtains a stay from the Court of law, it is always at the risk and responsibility of the party applying. Mere passing of an order of stay cannot be presumed to be the conferment of any additional right upon the litigating party. The High Court was, therefore, not wrong in directing the payment of interest on the amount of arrears of rent for the period when the stay order was obtained till the period the writ petitions were dis­missed. We, however, feel that awarding of interest @ 18 per annum from the aforesaid period was on the excessive side. The respondent-authority could not be equated with private commercial institutions and conferred with an amount of compensation in the form of interest which, in the judicial parlance, may amount to penalty, despite the fact that the persons found to have jeopardised the process of law were rightly held liable to compensate the respondent - authority by way of interest. In our opinion 15 per annum interest for the afore­said period would have been just and proper. We, however, agree with the findings of the High Court that the respondents are free to charge appropriate interest on the amount of arrears of rent between 1.3.1992 to the date when the stay orders were passed by the High Court. We are sure that in determining such rate of interest the respondent-authority would act fairly and justly. (Paras 13 & 14)

       (ii) Capital of Punjab (Develop­ment and Regulation) Act, 1952-Sections 3 and 22-Enhancement of leased out property-Shops leased out by Administration on a monthly rent of Rs. 1090 for a period of three years-Enhancement of rent before expiry of three years period - Not permissible - After expiry of three years Administration is at liberty to enhance rent. (Paras 15 & 16)