IMPORTANT POINT
Notification dated 7-11-2002 issued by the Administrator of Chandigarh in exercise of his power conferred upon him under Section 3 of the East Punjab Urban Rent Restriction Act whereby and whereunder it was directed that the provisions thereof would not apply to the buildings, monthly rent whereof exceeded Rs. 1,500/-, is liable to be quashed.

Headnote:(i) East Punjab Urban Rent Restriction Act, 1949 - Section 3 - Notification dated 7-11-2002 issued u/s 3 of the Act whereby and whereunder it was directed that provisions thereof would not apply to buildings monthly rent whereof exceeded Rs. 1500/- - Writ petitions filed by tenants in the premises situated within the Union Territory of Chandigarh, challenging validity of the notification - Jurisdiction of the Administrator to issue this notification challenged - High Court dismissed writ petitions holding that the said notification was not ultra vires the provisions of the 1949 Act - High Court upheld validity of the said notification stating that the Administrator has not acted contrary to the legislative policy - Whether impugned judgment can be sustained - (No) - Rs. 1500/- could not have been fixed as the quantum of rent for the purpose of extending the exemption provision u/s 3 of the Act to the Administrator.
       Held : 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.(Para 102)
       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 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 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.(Para 110)
       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.(Para 111)
       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 3 of the Act. (Para 112)
       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.(Para 120)
       What should have been the criterion for fixing the quantum of rent so as to render the classification constitutional and valid in law although is not a matter which would ordinarily fall for consideration of the court, but the 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. (Para 121)
       The Administrator while issuing the impugned notification 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 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. He further failed to take 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.(Para 123)
       For the aforementioned purpose, it was necessary to collect relevant data. Rental of Rs.1500/- could not have been applied mechanically. The High Court has followed D.C. Bhatia (supra) but it has failed to notice that in D.C. Bhatia (supra) itself whereas the proposal in the bill was to fix Rs.1500/- as the outer limit, the members of the 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 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.(Para 124)
       We, therefore, in this case, have sufficient materials on record to hold 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.(Para 129)
       The legislative objective and policy indisputably must be considered having regard to the preamble and other core provisions of the Act. 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.(Para 130)
       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 land and building but the same would not 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.(Para 131)
       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 section of the tenants.(Para 132)
       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 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 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 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.(Para 133)
       (ii) ADMINISTRATIVE LAW - Judicial Review of Delegated Legislation - Scope - While considering validity of delegated legislation, scope of judicial review is limited - However, scope and effect thereof has to be considered having regard to the nature and object thereof - A subordinate legislation would not enjoy the same degree of immunity as a legislative act would.
       Held : While considering the validity of delegated legislation, the scope of 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;
       (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.(Paras 18 & 19)
       (iii) ADMINISTRATIVE LAW - Legislative Policy - Determination of - Legislative Policy of a State can be gathered from the Preamble, Statement of Objects and Reasons and the core provisions contained therein. (Para 80)
       (iv) INTERPRETATION OF STATUTES - Legal History - It is trite that legal history can be taken into consideration for construction of a statute.(Para 78)
       (v) INTERPRETATION OF STATUTES - Preamble - 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.
       Held : We are not oblivious that 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, (1) 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, (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 capable of given a literal meaning. (Para 86)
       Preamble of a statute, as stated in State of Rajasthan & Ors. v. Basant Nahata (supra), however, provides for a key to understand it. It, together with the Statement of Objects and Reasons which are called heart and soul of the statute, may have to be considered in a given situation for the purpose of giving effect thereto.(Para 87)
       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.(Para 90)
       (vi) East Punjab Urban Rent Restriction Act, 1949 - Section 3 - Power of exemption - Distinctive features between power of the Administrator u/s 3 of the Act and power of legislative to amend the law - Circumstances in which the executive government can exercise its power of exemption.
       Held : The executive government can exercise its power of exemption in the following circumstances:
       (1)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
       (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 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 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 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. 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.(Paras 94 to 96)
       (vii) ADMINISTRATIVE LAW - Conditional Legislation and Delegated Legislation - Distinction.
       Held : 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 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 should be brought in force. The taking effect of a legislation, therefore, is made dependent upon the 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 rules or regulations, however, must be exercised within the four corners 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 whereunder, an exemption is granted for application of the Act itself.(Para 16)

JUDGMENT

S.B. Sinha, J. - Leave granted.

Background facts :

2. Appellants are tenants in the premises situated within the Union Territory of Chandigarh. They were protected in terms of the East Punjab Urban Rent Restriction Act, 1949 (for short, the 1949 Act). The Administrator of Chandigarh in exercise of his power 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.1,500/-. Aggrieved by issuance of the said 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 in these appeals, we may notice the legislative history of the legislations in question.

Rent Act :

3. Union Territory of Chandigarh was a part of the State of Punjab prior to coming into force of the Punjab Reorganization Act, 1966. The Central Government in exercise of its power conferred under Section 87 thereof issued a notification for extending the provisions of the Act to the Union Territory of Chandigarh. The 1949 Act is a pre-constitution Act.

4. 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.

5. "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 therewith, but does not include a room in a hotel, hostel or boarding-house;"

6. "Urban Area" has been defined in section 2(j) 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 the provisions of this Act shall not apply to any particular building or rented land or any class of buildings or rented lands."

7. 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.

8. 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 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. Section 13A provides for right to recover immediate possession of residential or scheduled building to accrue to certain persons.

9. 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. Chandigarh was declared to be an urban area in 1972.

10. 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:

"1. 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

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2006 Supreme(SC) 1064

Cases Referred (43)