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IN THE HIGH COURT OF BOMBAY
A.P. Shah S.A. Bobde, JJ.
Crompton Greaves Ltd. others .... Petitioners.
Versus
State of Maharashtra others.... Respondents.
Writ Petition Nos. 555, 1027, 1028, 968, 1018, 1238, 1403, 1404, 1405, 1406, 1407, 1408, 1409, 1410, 1411, 1456 1576 of 2001, decided on 20-7-2001.
Advocates appeared :
Aspi Chinoi with N.H. Seervai, M.S. Doctor and Ashok Purpohit i/b Zohair and Co., in W.P. No. 555 of 2001, for petitioners.
G.E. Vahanvati, Adv.Gen. with N.V. Deshpande, A.G.P., in W.P. No. 555, 1027, 1028, 968 1018, 1238, 1403, 1456 of 2001, for respondent No. 1.
Devarajan i/b Thakordas Madgavkar, in W.P. No. 555 of 2001, for respondent No. 2.
Navroz Seervai with Birendra Saraf, M.S. Doctor and Sachin Mandlik i/b Udwadia Udeshi and Berjis, in W.P. No. 1027, 1028 of 2001, for petitioners.
Suraj Shah i/b. S.M. Shah, in W.P. No. 1027 of 2001, for respondent Nos. 2 to 5.
S.J. Kathewalla i/b. Akhila Kaushik, in W.P. No. 1028 of 2001, for respondent No. 2.
B.R. Naik i/b. P.R. Naik, in W.P. No. 968, 1018, 1238, 1403, 1404 to 1411 of 2001, for petitioners.
R.B. Chavan with L.T. Satelkar, in W.P. No. 968 and 1018 of 2001, for respondent No. 2.
A.S. Chanduwala i/b. Desai and Diwanji, in W.P. No. 968 of 2001, for respondent Nos. 3 to 7.
M.S. Bhandari i/b. Suman Jain, in W.P. No. 968 of 2001, for respondent Nos. 3 to 5.
N.V. Deshpande, A.G.P., in W.P. No. 1238, 1403, 1456 of 2001, for respondent No. 1.
A. Kaushik, in W.P. No. 1238 of 2001, for respondent Nos. 3 4.
M.S. Karnik with Mandar Goswami, in W.P. No. 1238, 1403, 1404 to 1411 of 2001, for respondent No. 2.
R.M. Nakhwa i/b. V.B. Dhavan, in W.P. Nos. 1403 1409 of 2001, for respondent Nos. 3 4.
Manoj Prajapati with A.G. Pawar, in W.P. No. 1406 of 2001, for respondent Nos. 3 and 4.
L.H. Rambhia with Ashok Verma, in W.P. No. 1407/2001, for respondent Nos. 3 4.
M.M. Bagadia, in W.P. No. 1408 1411 of 2001, for respondent No. 3.
M. Chirag Balsara and Chirag Mody i/b R.M.G. Lad Associates, in W.P. No. 1410 of 2001, for respondent No. 3.
A.J. Rana with K.B. Swamy, Ms. Joyti Salgal i/b. N.S. Lal, in W.P. No. 1456 of 2001, for petitioner.
R.A. Kapadia with S.A. Divan, R.K. Sakpalkar Kaizad Irani i/b. Mulla and Mulla, in W.P. No. 1456 of 2001, for respondent No. 2.
M.S. Doctor i/b Zohair Co, in W.P. No. 1576 of 2001, for petitioner.
Harsh Desai i/b Thakore Jariwalla and A.S.S., in W.P. No. 1576 of 2001, for Intervenors in all matters.
Constitutional Validity - Maharashtra Rent Control Act, 1999 - Section 3(1)(b) - The Act exempts certain categories of tenants from protection under the rent legislation, including corporate entities with a paid-up share capital of more than Rs. 1 crore. The court upheld the constitutional validity of the provision, finding that it was a matter of legislative policy to strike a balance between the interests of landlords and tenants and encourage housing activity. The court held that the classification was not arbitrary and did not violate Article 14 of the Constitution.
Fact of the Case:
The constitutional validity of section 3(1)(b) of the Maharashtra Rent Control Act, 1999 was challenged. The provision exempts certain categories of tenants, including corporate entities with a paid-up share capital of more than Rs. 1 crore, from the protection of the rent legislation. The petitioners argued that the provision was discriminatory and violated Article 14 of the Constitution.
Finding of the Court:
The court found that the Act aimed to strike a balance between the interests of landlords and tenants and encourage housing activity. It held that the classification was not arbitrary and did not violate Article 14 of the Constitution. The court dismissed all the writ petitions.
Issues: Constitutional validity of section 3(1)(b) of the Maharashtra Rent Control Act, 1999, and whether it violated Article 14 of the Constitution.
Ratio Decidendi: The court held that the Act was enacted to protect tenants and provide fair returns to landlords, and to encourage housing activity. It found that the classification of tenants under the Act was a matter of legislative policy and did not violate Article 14 of the Constitution.
Final Decision: The court upheld the constitutional validity of section 3(1)(b) of the Maharashtra Rent Control Act, 1999, and dismissed all the writ petitions.
2. Section 3(1)(b) of the Maharashtra Rent Control Act, 1999, which is hereinafter referred to for the sake of brevity as the Act, lays down :
"Section 3(1). This Act shall not apply
(a) .......
(b) to any premises let or sub-let to banks, or any Public Sector Undertakings or any Corporation established by or under any Central or State Act, or foreign missions, international agencies, multinational companies, and private limited companies and public limited companies having a paid up share capital of rupees one crore or more.
Explanation.---For the purpose of this Clause the expression "bank" means:-
(i) the State Bank of India constituted under the State Bank of India Act, 1955:
(ii) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 :
(iii) a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980; or
(iv) any other bank, being a scheduled bank as defined in Clause (e) of section 2 of the Reserve Bank of India Act, 1934."
3. The main contention of the petitioners is that the provisions of section 3(1)(b) of the Act are ultra vires of Article 14 of the Constitution. The argument is that this provision seeks to make an invidious distinction between companies having paid capital of Rs. 1 crore and other commercial ventures. It is urged that the classification of the companies on the basis of paid up share capital of a company is not a reasonable classification and that the same bears no nexus with the object of the legislation. In any event it would be discriminatory to single out only corporate tenants whilst other categories of tenants who are similarly situated like partnership firms, HUFs, and proprietory concerns continue to receive the protection of the Act.
4. Before dealing with the various contentions raised specifically, it will be useful to refer to the legislative history of the Maharashtra Rent Control Act. The first rent legislation which was introduced was the Bombay Rent Act, 1938 which came into force on 13-2-1938. This Act was meant to be a temporary measure. The original Act was enacted only for two years with a power to the Government to extend the same by notification in that behalf. This Act was extended from time to time at least on 22 occasions till it was replaced by the present Act. We hasten to add that there were 3 different Acts which were in force in the State of Maharashtra. In the areas of erstwhile Bombay State, Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, i.e. Bombay Rent Act was in operation. In the areas of Central Provinces and Berar, namely, Vidarbha Region, the Central Provinces and Berar Letting of Houses Rent Control Order, 1949 which was under the Central Province and Berar Regulation of Letting of Accommodation Act, 1949 was in operation and in Marathwada areas, which was formarly in the State of Hyderabad, the Hyderabad Houses (Rent, Eviction and Lease) Control Act, 1954 was in operation. With a view to unify different rent laws operating in the State and in the light of provisions of Model Rent Legislation and reports of the Rent Acts Enquiry Committee and the State Law Commission to which we shall refer to little later, the Rent Control Bill was introduced in the State Legislature in 1993. This Bill contained an exemption provision whereby premises let to foreign missions, international agencies, multinational companies and public limited companies having paid up share capital of more than Rs. 1 crore were exempted from the Act.
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