1997 Supreme(Raj) 935
Supreme Court
Honble J.S. VERMA, CJI, B.N. KIRPAL & M. SRINIVASAN, JJ.
Malpe Vishwanath Acharya and others - Appellant
Versus
State of Maharastra and another - Respondents
D.B. Civil Appeal Nos. 2797 of 1998
Decided On : December 19, 1997
F.S. Nariman, Sr. Advocate, Mulraj Shah, P.H. Parekh, Jagdish Karia, Subhash Sharma, Dhun Chapgar, Sunita Sharma, Nikhil Sakhardande, Sameer Parekh, Advocates with him, for Appellants M.S. Nargolkar, Sr. Advocate, D.M. Nargolkar, S.M. Jadhav, Advocates wi
Headnote:Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, Sec. 5,7,11 – Standard rent – Fixation – Principle to off-set inflation – Provision going down to rent paid on 1.9.1940 or first rent paid for premises let out after 1.9.1940 – Provision no longer remain reasonable – Periodical revision necessary to see that disproportionately larger benefit is not given to tenants. (Paras 26 to 28 & 30)
(2). The appellants are landlords or their representative of different premises in Bombay which have been given on rent to various tenants. They had filed in the High Court of Bombay writ petitions challenging the constitutional validity of S. 5(10)(B), Sec. 11(1) and Sec. 12(3) of the Bombay Rent Act, inter alia, on the ground that the said provisions pertaining to standard rent were ultra vires Arts. 14, 19 and 21 of the Constitution and consequently void. The main challenge to the said provisions was not the ground that the restriction on the right of the landlords to increase rent, which had been frozen as on 1st September, 1940 or at the time of the first letting, was no longer a reasonable restriction and the said provisions had, with the passage of time, become arbitrary, discriminatory, unreasonable and consequently ultra vires Art. 14 of the Constitution. By the impugned judgment the High Court dismissed the writ petitions, inter alia, holding that the object of the Bombay Rent Act was not to provide to the landlord an adequate return on its investment and it was not open to him to claim an increase in the rent by taking into account the increase in the land price etc. The Court also observed that the writ petitions lacked particulars in order to satisfy the Court that the relevant provisions of the Bombay Rent Act were unreasonable or arbitrary.
(3). The Bombay Rent Act came into force on 13th February, 1938. The 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 this behalf. This Act has been extended from time to time at least on twenty occasions and the present extension remains in force upto 31st March, 1998. Sections 5(10), 7, 9(b) and 11(1)(a) which are being impugned in the present cases read as follows:
``5(10) ``Standard rent in relation to any premises means-
(a) where the standard rent is fixed by the Court and the Controller respectively under the Bombay Rent Restriction Act. 1939, or the Bombay Rents. Hotel Rates and Lodging House Rates (Control) Act, 1944, such standard rent; or
(b) when the standard rent is not so fixed-
Subject to the provisions of Section 11.-
(i) the rent at which the premises were let on the first day of September 1940.
(ii) where they were not let on the first day of September, 1940, the rent at which they were last let before that day, or
(iii) where they were first let after the first day of September, 1940, the rent at which they were first let or
(iii-a) notwithstanding anything contained in paragraph (iii), the rent of the premises referred to in sub-sec. (1A) of S.4 shall, on expiry of the period of five years mentioned in that sub section, not exceed the amount equivalent to the amount of net return of fifteen per cent, on the investment in the land and building and all the outgoing in respect of such premises; or
(iv) on any of the case specified in S.11, the rent fixed by Court.
(7). (1). Except where the rent is liable to periodical increment by virtue of an agreement entered into before the first day of September 1940, it shall not be lawful to claim or receiver on account of rent for any premises any increase above the Standard rent, unless the landlord was before the coming into operation of this Act entitled to recover such increase under the provisions of the Bombay Rent Restriction Act 1939, or the Bombay Rents. Hotel Rates and Lodging House Rates (Control) Act, 1944 or is entitled to recover such increase under the provisions of the ct (either b