Judgment

THOMMEN, J.:- Civil Appeal No. 4043 of 1987. The question which arises in this appeal is as regards the validity of clause (iii) of sub-section (3) of Section 1 of the Jammu & Kashmir Houses and Shops Rent Control Act, 1966 (hereinafter referred to as "the Act"). The challenge against the clause on the ground of its alleged violation of Article 14 of the Constitution was rejected by the High Court of Jammu & Kashmir. The High Court following its earlier decision in the J & K Bank Ltd. v. State of J & K, AIR 1987 J & K 18 upheld the validity of the clause.

2. The impugned provision, as it stood at the relevant time, reads:

"1(3) Nothwithstanding anything contained in sub-section (2), nothing in this Act shall apply to-

(i)......................................

(ii) Omitted

(iii) any tenancy in respect of any house or shop where the income of the tenant, whether accruing within or outside the State, exceeds rupees 40,000 per annum;

Explanation: the word income means net income. "

3. The appellant, the Delhi Cloth & General Mills Limited, is the tenant of the building in question. Its claim for the protection of the Act was disallowed by the courts below on the ground that clause (iii) of subsection (3) of Section 1, read with the Explanation, was attracted in respect of the appellant.

4. According to the appellant, the impugned clause is discriminatory and arbitrary because it draws an artificial distinction between tenants on the basis of their income. Those tenants earning net income below Rs. 40,000/ - per annum are fortunate enough to be protected by the beneficial provisions of the Act, while a person like the appellant whose annual net income is undoubtedly in excess of the statutory limit of Rs. 40,000/-, is unreasonably and unfairly denied the protection of the Act. This statutory discrimination, it is contended, places persons like the appellant at the mercy of the landlords who can easily evict them by recourse to the far less restrictive provisions of the Transfer of Property Act, 1882 and on the strength of their agreements of lease.

5. Counsel for the appellant submits that the impugned clause does not take into account the nature of the building, but only the income of the tenant. The income of the landlord himself is irrelevant. The protection of the Act is withheld or extended, dependent solely on the financial capacity of the tenant and without regard to the need of the landlord or the age or other conditions of the building or any other factor. Treating tenants differently with reference to their annual income is not an intelligible classification, for the income of a tenant may vary from year to year,depending upon the nature of his business and other factors. This variation in income may expose him to eviction in a particular year when the business is prosperous but protects him from eviction when the business declines and income falls. Furthermore, counsel says, "income" is not a clear and precise concept. Limiting it to net income does not make it clearer. What are the permissible deductions to arrive at the "net", the Act does not say. The Section is invalid because it is too broad or vague. Any classification based on such vague differentia is unintelligible and, therefore, violate of Article 14. In any view, counsel submits, the classification sought to be made between persons falling on either side of the specified income has no reasonable relation to the object sought to be achieved by the statute. Counsel relies on the observation of this Court in Rattan Arya v. State of Tamil Nadu (1986) 3 SCC 385 declaring Section 30(ii) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 as unconstitutional. Counsel also relies upon the decision of this Court in Motor General Traders v. State of Andhra Pradesh (1984) 1 SCC 222 declaring Section 32(b) of the A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960 as unconstitutional.

6. These decisions, in our view, are easily distinguishable. In Ratta