The central legal point established in the judgment is the need for reasonableness in exercising discretionary powers under the Kerala Buildings Lease and Rent Control Act, 1965, and the distinction between public trusts and private landlords.

Leave granted in S.L.P. (C) No. 11259/2000.

2. Two notifications were issued under S.25 of the Kerala Buildings Lease and Rent Control) Act, 1965 (for short'the Act') - one S.R.O. No. 435/92 issued on 7.3.92 published in the Kerala Gazette on 7.4.92, which exempted in public interest the buildings of all Churches/ Mosques of all the minority religions from the provisions of S.4, 5, 7, 8,11 and 13 of the Act and another notification SRO No. 769/96 was published exempting buildings of all Dioceses, Archdioceses, Monasteries, Convents, Wakfs and Madrasas also from the provisions of S.4, 5, 7, 8,11 and 13 of the Act and amended earlier notification. A batch of Writ Petitions was filed in the High Court challenging the validity of these notifications. The High Court held that there is no application of mind by the Government in issuing the impugned notifications resulting in arbitrary exercise of the discretionary powers conferred upon a statutory authority and there is no material before the Government to exercise such exemption. In reaching this conclusion, the High Court took into consideration that the buildings of Churches or Mosques are commercially used and, therefore, granting of exemption under S.25 of the Act on the basis of ownership is not right. The High Court also proceeded to consider the scope of secular nature of the Constitution and observed that conferment of power upon the Government to grant such blanket exemptions would defeat the very power conferred on it.

3. In the counter affidavit the State supported the exemptions of the basis of the law declared by this Court. This Court in P.J. Irani v. State of Madras (1962 (2) SCR 169), held that a similar power vested under the Madras Buildings (Lease and Rent Control) Act, 1949 to exempt any building from the provisions of the Madras Act is not violative of Art.14 of the Constitution by holding that the charitable and religious trusts or endowments fall into a separate class. In S. Kandaswamy Chettiar v. State of Tamil Nadu & Ann (1985 (1) SCC 290), this Court upheld grant of total exemption in respect of buildings belonging to public trusts, religious or charitable in nature, on the basis that such trusts constituted a well recognised distinct group inasmuch they not only serve public purpose, but the disbursement of their income is governed by the objects with which they are created.

4. On an earlier occasion in Jayakaran v. Kerala Health R. & W Society (1994 (1) KLT 24), the High Court held as follows:

"Grant of exemption in favour of charitable bodies like the petitioner must be held to be in public interest. Even though no reasons are stated in the notification granting exemption it is enough if it is stated in the counter-affidavit. The notification granting exemption is undisputably being in public interest, the same is not open to challenge on the ground urged in the Original Petition."

5. The High Court after referring to the said decision held that the exercise of discretionary power is subject to test of reasonableness but observed that by one stroke the entire buildings owned by minority religions in the State have been taken away from the purview of the Act without being supported by any material enabling the Government to consider the issue in a legal and proper manner uninfluenced by any extraneous considerations or acting under the dictation of a third party. The High Court compared the provisions under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 considered in S. Kandaswamy Chettiar case (supra) and the provisions of the Act under consideration and drew a distinction between the two provisions. The relevant portions of the said two Acts are as follows:

The High Court noticed that the power of exemption under S.29 of the Tamil Nadu Act is general nature, while such power could be exercised under the Act only "in public interest or for any other sufficient cause". But, we find that distinction sought to be made by the High Court