Important point
The Bombay Port Trust is an instrumentality of State and hence an ‘authority’ within the meaning of Article 12 of the Constitution, therefore, all its actions must be for the public good and even while playing the role of a landlord or a tenant, the State and its authorities cannot be heard or seen causing displeasure or discomfort to Article 14 of the Constitution of India.

Headnote:(i) Constitution of India-Article 12-‘Authority’-Bombay Port Trust constituted and governed by Major Port Trust Act, now known as Board of Trustees of Port of Mumbai, is an ‘authority’ within the meaning of Article 12 of the Constitution-It is amenable to writ jurisdiction of the High Court as well as Supreme Court-It must act within four corners of the statute which has created and governs it-All its actions must be for public good, achieving the objects for which it exists, accompanied by reason and not whim or caprice. (Paras 15 and 17)
       (ii) Major Port Trust Act, 1963-Bombay Port Trust Act, 1873-Bombay Port Trust Act, 1879-Bombay Port Trust Estate-306 hectares of area occupied by lessees of various tenures-There were about 600 lessees-Leases were created long back, some of which being around a century old-Lease rents were revised and increased from time to time but only by way of ad hoc arrangements-Disparity between realised rent and billed rent-Revision of rent as also revision of terms and conditions of leases-Writ petitions filed by some of the lessees challenging revision of rent-Rate of rent which was Rs. 66.44 in year 1948 and which gradually increased to Rs. 317.11 in year 1981, was proposed to be revised at Rs. 4515.86-Board reconsidered the matter and arrived at a formula termed as ‘compromise proposals’-Division Bench of the High Court held that ‘the revised proposals submitted by the Port Trust were extremely reasonable and fair’-Appeal by special leave filed by lessees-Bombay Port Trust also filed a memo of cross-objections seeking relief beyond one allowed by Division Bench-Whether cross objections are maintainable in appeal by special leave-(No) (Paras 33 and 34)-Matter disposed of based on compromise proposal-Constitution of India-Article 136-Civil Procedure Code, 1908-Order 41 Rule 22.
       Held : A balance has to be struck between the two extremes. Having been exempted from the operation of rent control legislation the courts cannot hold them tied to the same shackles from which the State and its instrumentalities have been freed by the legislature in their wisdom and thereby requiring them to be ruled indirectly or by analogy by the same law from which they are exempt. Otherwise, it would tantamount to defeating the exemption clause consciously enacted by the Legislature. At the same time the liberty given to the State and its instrumentalities by the statute enacted under the Constitution does not exempt them from honouring the Constitution itself. They continue to be ruled by Article 14. The validity of their actions in the field of landlord-tenant relationship is available to be tested not under the rent control legislation but under the Constitution. The rent control legislations are temporary, if not seasonal; the Constitution is permanent and all time law. (Para 20)
       A careful reading of the judgment of the High Court and the order of remand passed by this Court together significantly reveals that none has cast any reflection - much less any adverse one - on the report of Kirloskar Consultants and the decision of the Board based thereon. The only consideration which prevailed with the High Court and this Court was one of reasonability and the need for striking a balance before taking a long leap in the direction of an upwards revision of rates. The stand throughout taken by the Board has to be appreciated. It has been agreeable to every reasonable suggestion made by the Court and has never treated the issue as to revision of rent as a matter of its prestige or with the ego of a landlord. This Court made a remand to the Division Bench of the High Court persuaded by the consideration that there were a few aspects of paramount significance which needed the attention of the Division Bench of the High Court. The fact remains that in the quest for an amicable, and if not so, then at least a reasonable resolution of the dispute, the Division Bench of the High Court as well as this Court have proceeded on an assumption that for the future, the settlement whether mutual or by dictum of the Court, shall centre around the Compromise Proposals. This Court wanted the Court to be assured for itself and the lessees to be satisfied for themselves that the Compromise Proposals were not just an arrow shot in the dark but were capable of being illuminated by assigning reasons. At the same time, though all the lessees were to be treated alike so far as laying down of common standards governing different classes of leases was concerned, care had also to be taken to redeem the grievances of certain individual lessees who could make out a case for further legitimate reduction in rates on account of peculiarities attaching with the land or lease held by them. Later, while delivering the 2000 judgment, which is impugned herein, the Division Bench certainly assumed a wider field of jurisdiction than the one which had been permitted by this Court and entered into examining the whole controversy afresh and as if all the contentions of all the parties were open before it, which view of the High Court, in our opinion, cannot be countenanced on a reading as a whole of the order of remand passed by this Court along with the judgment of the Division Bench which was impugned then. In our opinion, the matter between the parties has to be decided by treating the Compromise Proposals dated 13th August 1991 as the base. Any going behind would unsettle the settled issues - expressly or by necessary implication. (Paras 23 and 24)
       All the appeals are directed to be disposed of in terms of the following directions:-
        (i) by this judgment and in these proceedings the controversy as to the rates of rent applicable to the lessees shall be deemed to have been resolved for the period 1.4.1994 to 31.3.2000;
        (ii) the ‘Compromise Proposals’ as approved by the Board of Trustees of the Port of Mumbai in their meeting held on 13.8.1991 which are very fair, just and reasonable, subject to the modification that the revision in rent from 1.4.1994, shall be on the basis of rates of return at 10 for non-residential uses and 8 for residential uses, based on Kirloskar Consultants’ report, instead of 15 and 12 respectively as was suggested in the ‘Compromise Proposals’. The ‘Compromise Proposals’ so modified shall bind the parties, and all the lessees even if not parties to these proceedings in view of the proceeding taken by the High Court under Order 1 Rule 8 of the C.P.C.;
        (iii) the rates of rent for the period upto 31.3.1994 shall remain as suggested in the ‘Compromise Proposals’;
        (iv) the interest chargeable by the Board of Trustees of the Port of Mumbai in respect of arrears of rent for the period commencing 1.4.1994 upto the date of actual payment shall be calculated at the rate of 6 per annum,
        (v) subject to the abovesaid modifications, all other terms and conditions of ‘Compromise Proposals’, shall remained unchanged;
        (vi) within a period of eight weeks from today lease deeds consistently with the ‘Compromise Proposals’, subject to the modifications as above said, shall be executed by the lessees and even if lease deeds are not executed the terms of ‘Compromise Proposals’ shall bind the lessees;
        (vii) such of the tenants as may wish to contend that there are certain real and material distinguishing features to be considered for the purpose of carving out an exception and relaxing the general terms and entitling them to reduction in the rates of rent applicable as above said, may file representations each setting out specific grounds and relevant facts precisely in that regard in the office of the Bombay Port Trust under a written acknowledgement. The Bombay Port Trust shall maintain a register of all such representations filed. No representation filed after the expiry of six weeks from today shall be received or entertained.
        (viii) We request the High Court to appoint a retired Judge, preferably (and not necessarily) of the rank of District Judge, as a Sole Adjudicator of the objections/representations filed in terms of the above decision. The High Court shall appoint a place of sitting and the amount of remuneration to be paid per case (and not on per day basis) to the Adjudicator. The fee shall be paid by each lessee filing the representation for decision. The requisite secretarial and clerical assistance shall be provided by the Bombay Port Trust or as directed by the High Court. The learned Adjudicator shall commence his proceedings on expiry of eight weeks from today and on the record of representations being made available to him and shall conclude the same within a period of 4 months thereafter. The Adjudicator shall not be bound to record evidence and may determine and dispose of the representations by summary hearing, receiving such affidavits and documents as required by him, and/or carrying out inspection of the leased properties, if he deems fit to do so. The Adjudicator shall examine and decide to what relief in the rate of rent and/or any other term of lease such representing lessee is entitled. The decision by the Adjudicator shall be final and binding on the parties. In case of any difficulty in implementing this procedure directions may be sought for from the High Court.
        (ix) The abovesaid procedure is not to be utilised as justification for withholding the payment of any arrears of rent to be calculated in terms of these directions. The payments have to be made and made regularly. Any amount becoming due for refund in terms of any relief granted by the Adjudicator shall be refunded or adjusted thereafter.
        (x) We expect the lessees to cooperate in finalisation of the disputes. We also expect the lessees to desist from preferring immaterial or frivolous objections or objections just for their sake. If any one does so the learned Adjudicator may impose costs on him which shall be payable to and recoverable under law by the BPT as arrears of rent.
        (xi) For the purpose of appointing an Adjudicator and dealing with application, if any, seeking resolution of difficulties, in terms of the preceding direction, we request the learned Chief Justice of the High Court of Bombay at Mumbai to assign this matter for being placed before any learned judge of his Court. We, on our part, suggest in the interest of expeditious disposal, that the matter may be assigned to any one of the judges available in the High Court out of those who had earlier dealt with the matter (i.e., the learned Single Judge who passed the order dated 1/4-10-1990, the two learned Judges who passed the judgment dated 11/12-3-1993 and the two learned judges who passed the order dated 1-8-2000). His acquaintance with the facts of the case would accelerate the hearing and disposal. However, this is only a suggestion and is not in any manner intended to fetter the power of the learned Chief Justice to assign the matters for hearing in the High Court.
        (xii) The issue as to the applicability of the Maharashtra Rent Control Act, 1999, to the Port of Mumbai and the property held by it is left open to be decided in appropriate proceedings. (Para 41)
       (iii) Constitution of India-Article 136-Appeal by special leave-Jurisdiction of Supreme Court-Discretionary power of Supreme Court to interfere in suitable cases-Self imposed restrictions-Exercise of appellate jurisdiction under Article 136 of the Constitution is not dependent on provisions of Order 41, Civil Procedure Code-Civil Procedure Code, 1908-Order 41 Rule 22. (Paras 33 to 37)

Judgment

R.C. Lahoti, J.-Leave granted in SLP (C) Nos. 19877/01, 6064/02 & 8657/02).

2. The Bombay Port Trust (hereinafter ‘BPT’, for short), presently constituted and governed by the Major Port Trust Act, 1963, and now known as The Board of Trustees of the Port of Mumbai, is an ‘authority’ within the meaning of Article 12 of the Constitution of India. It has been the subject matter of several legislations governing its constitution, administration, powers and duties, some of which are The Bombay Port Trust Act, 1873, The Bombay Port Trust Act, 1879 and the Major Port Trust Act, 1963. Bombay, presently known as Mumbai, continues to be the commercial capital of the country. In spite of the development of several other ports having taken place along the coasts of India, some of them being of recent origin, the Bombay port continues to be the Gateway of India for international trade and commerce. Space is scarce in Mumbai as it is an island, and demands on its land are heavy in view of the ever-growing industrial, commercial and economic activities. Due to the availability or continuously growing modern infrastructure at Mumbai large sections of the population from throughout the country continues of migrate to Mumbai, which, with its characteristically liberal metropolitan culture, open-heartedly accommodates anyone who seeks shelter in its arms.

3. The Bombay Port Trust Estate, admeasuring around 720 hectares (1800 acres approx.) of land is a huge stretch from Colaba to Raoli junction, including Pir Pau, Butcher island, land at Titwala and other islands. The population is highly urbanized and dense. Out of the total area of 720 hectares the area under the jurisdiction of Estate department of the BPT is around 336 hectares. Out of these, 306 hectares of area is occupied by the lessees of BPT holding leases of various tenures. Around 720 hectares of land was under intensive use for the Board’s own activities around the year 1980. There were about 600 lessees. The lessees could broadly be divided into three categories: monthly or annual lessees, 15 years’ term lessees, and 99 years’ or long term lessees, with or without clauses for renewal. In case of monthly or annual leases, the municipal taxes are borne by the BPT, while in cases of 15 years term and long term leases, the liability to pay municipal taxes is with the lessees. The BPT Estate cannot be sold; it is all held out on leases excepting for the land in the use of the Port and for Port activities i.e. for the self requirement of the BPT. Leases were created long back, some of which being around a century old. The lease rents were revised and increased from time to time not as a matter of some uniform policy decisions but only by way of adhoc arrangements. In the year 1962, the World Bank advised BPT that its rate of return on its real estate was hopelessly inadequate and needed to be reviewed. The Comptroller and Auditor General of India too, in his report of the year 1979-80, shared the opinion of the World Bank and highlighted the obligation on the part of the trustees to secure a fair and reasonable revenue for its estate so as to attend better to its manifold public duties. The trustees felt convinced that the Port Trust had to perform several functions under the Law governing it which were in the nature of public duties to fulfill public objects; that the expenditure on maintenance was gradually increasing and there was disparity between realised rent and the billed rent; and that a minus rate on return was actually being secured taking into account the expenditure incurred by the Board on maintenance. All these factors persuaded the Board to undertake a massive exercise for the revision of rent as also for the revision of the terms and conditions of leases, whereunder the different categories of lessees were holding land and estates from the Board. The Board by inserting advertisements in all-India newspapers invited proposals from consultancy firms and practicing valu

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2004 Supreme(SC) 44

Cases Referred (17)