1. Dispute concerning the constitutionality of Section 13 of the Madras Buildings (Lease and Rent Control) Act, 1949, and the validity of a government order granting building exemption. (Para 1 , 2 , 3 , 4 , 5 )
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1961 Supreme(SC) 198
SUPREME COURT OF INDIA
21st April, 1961
B.P. SINHA. C.J.I., S.K. DAS, A.K. SARKAR, N. RAJAGOPALA AYYANGAR AND J.R. MUDHOLKAR, JJ.
P. J. Irani, Appellant
Versus
State of Madras and another, Respondents.
Civil Appeal No. 671 of 1957. 1732
Advocates Appeared
Mr. Sachin Chaudhuri, Senior Advocate, Mr. N. A. Palkhiwala, Senior Advocate (M/s. J. B. Dadachanji, S. N. Andley and P. L. Vohra, Advocates of M/s. Rajinder Narain & Co., with them), for Appellant; M/s B. R. Gopalakrishnamachar and T. M. Sen. Advocates for Respondent No. 1 Mr. A. V. Viswanatha Sastri, Sr. Advocate ( Ganapathy Iyer, Advocate Mr. G. Gopalakrishnan, Advocate of M/s. Gagrat & Co., with him), for Respondent No. 2
Advocates:
A.V.VISHWANATHA SASTRI, B.R.GOPALAKRISHNAN, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, J.B.DADACHAN, N.A.PALKHIWALA, P.L.VOHRA, R.Ganapathy Iyer, RAJINDAR NARAIN, S.N.ANDLEY, Sachin Chandra Chawdhury, T.M.SEN
A.V.VISHWANATHA SASTRI, B.R.GOPALAKRISHNAN, G.GOPALAKRISHNAN, GAGRAT JANEDRA LAL, J.B.DADACHAN, N.A.PALKHIWALA, P.L.VOHRA, R.Ganapathy Iyer, RAJINDAR NARAIN, S.N.ANDLEY, Sachin Chandra Chawdhury, T.M.SEN
The power of the State Government to exempt buildings from rent control laws is constitutionally valid if guided by the Act's preamble. However, individual exemption orders are subject to judicial review to ensure they are based on grounds germane to the Act's purpose of preventing unreasonable eviction.
Headnote:(A) Madras Buildings (Lease and Rent Control) Act, 1949 - Section 13 - Constitution of India - Articles 14 and 226 - Power of State Government to exempt buildings from the operation of the Act - Constitutionality of the power of exemption - Whether the power is unguided and arbitrary - Guidance provided by the preamble and operative provisions of the Act - Individual orders of exemption subject to judicial review to ensure they are not discriminatory, mala fide, or based on grounds not germane to the policy and purpose of the Act. (Paras 10-a, 11, 13)
(B) Writ Jurisdiction - Article 226 - Scope of judicial review of administrative orders - Power of the High Court to examine the relevance of reasons for granting exemption - Distinction between findings of fact and the relevance of those facts to the exercise of statutory power. (Paras 14, 21)
(C) Rent Control - Prevention of unreasonable eviction - Whether the mere expiry of a lease term constitutes a valid ground for exemption from the protection of the Act - Protection against eviction is specifically intended for tenants whose terms have expired. (Paras 17, 19)
Facts of the case:
A tenant continued in possession of a cinema theatre after the expiry of the lease term, protected by a rent control statute. The State Government issued a notification exempting the specific building from the Act's provisions, enabling the reversionary lessee to seek eviction. The tenant challenged the validity of the exemption power and the specific order of exemption under the Constitution, arguing that the power was arbitrary and the specific order was discriminatory.
Findings of Court:
The power of the State Government to exempt buildings is constitutionally valid as the preamble of the Act provides sufficient guidance. However, the specific order of exemption was quashed because the reasons provided—such as the expiry of the lease and the tenant's status as an absentee lessee—were not germane to the Act's purpose of preventing unreasonable eviction.
Issues: (i) Whether the power to exempt buildings under the Act violates the equal protection of laws guaranteed by Article 14; (ii) Whether the specific order of exemption was based on grounds relevant to the policy of the Act; and (iii) Whether such an order is amenable to judicial review under Article 226.
Ratio Decidendi: A statute may leave the selection of persons or things to the discretion of the Government, provided it follows a policy or principle laid down by the statute for guidance. While the enabling section may be valid, the executive action taken under it can be condemned as unconstitutional if it does not follow said policy. The protection of rent control laws is specifically designed for tenants whose leases have expired; therefore, the mere termination of a lease cannot be a valid ground for exempting a building from the Act.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Challenge to Section 13 as conferring arbitrary power violating Article 14 — contention that the exemption order was administrative and not subject to judicial review. (Para 5 , 7 , 10 )
3. Section 13 is valid as the preamble provides guidance; however, individual exemption orders are subject to judicial review for relevance to the Act's purpose and non-discrimination. (Para 11 , 13 , 14 , 16 , 17 , 19 )
4. A statutory power to exempt is valid if the statute's policy provides guidance, but executive exercise of that power must be germane to the statute's purpose. (Para 11 , 13 )
5. Appeal dismissed; the government order exempting the building from the Rent Control Act is quashed. (Para 22 , 36 )
6. Does a provision allowing the government to exempt buildings from rent control without specific criteria violate Article 14?
No, provided the preamble and operative provisions of the Act disclose a policy and purpose that furnish adequate guidance for the exercise of the discretionary power. (Para 11 , 13 )
7. Are individual government orders granting exemptions from rent control subject to judicial review?
Yes, courts can examine whether such orders are discriminatory, made on grounds germane to the policy and purpose of the Act, or are mala fide. (Para 11 , 14 )
8. Can the mere expiry of a lease be a valid ground for the government to exempt a building from rent control protection?
No, because the primary purpose of rent control legislation is to protect tenants from eviction specifically after their lease terms have expired. (Para 17 )
9. Is an order of exemption under the Rent Control Act an administrative act immune from writs of certiorari?
No, if the order violates fundamental rights or is ultra vires, it is amenable to judicial review under Article 226, regardless of whether it is administrative or quasi-judicial. (Para 14 )
Judgment
AYYANGAR, J. : (on behalf of himself, Sinha C.J.I. and Mudholkar J.) This is an appeal against a judgment of a Division Bench of the High Court of Madras on a certificate under Arts. 132 and 133(1) of the Constitution, and raises for consideration the constitutionality of S. 13 of the Madras Buildings (Lease and Rent Control) Act, 1949 and the legality of an order of the State Government passed thereunder.
2. The facts giving rise to the appeal are briefly as follows : The dispute relates to premises No. 1, Blackers Road, Mount Road, Madras - a property which was originally owned by one Sir Haji Ismail Sair. In or about the years 1914 one Venkayya obtained a lease of this property from Sir Haji Ismail Sait and constructed a cinema theatre thereon which he ran under the name of "the Gaiety Theatre". Venkayya was adjudicated an insolvent and the Official Assignee of Madras in whom his estate including the leasehold interest in the suit site vested, obtained a further lease of the property from the representatives of Sir Haji Ismail Sait who had by then diesd for a period of 9 years from March 1926. Thereafter the Official Assignee sold the superstructure of the theatre to one Mrs. Madan to whom he also assigned the unexpired portion of the lease. Mrs. Madan, subsequently, obtained a further lease of the property from the representatives of Sir Haji Ismail Sait s estate for a further period of 7 years from June 1935 Mrs. Madan was thus the owner of the super-structure and the lessee of the site, with a term which would expire in or about May 1942. While one T.S.P.L.P. Chidambaram Chetty who is the second respondent before us obtained a conveyance of all the rights which Mrs. Madan possessed in the super-structure and in the lease for a sum of Rs. 36,000/- under a registered deed dated January 4, 1937, and he ran the cinema house from then.
3. There was litigation between the heirs of Sir Haji Ismail Sait, pending on the original side of the High Court of Madras, and by interim orders passed in two suits (C. S. Nos. 280 and 286 of 1939), the High Court appointed two advocates as Joint Receivers to administer the property in suit. In the the early months of 1940, one J. H. Irani the father of P. J. Irani - the appellant before us - had negotiated with the Receivers for a lease of a property adjacent to No. 1 Blackers Road with a view to construct a cinema theatre thereon. That lease was for a period of 21years and would have expired in or about April May 1961. Irani offered to the Receivers to take a lease also of the property now in dispute and on which the Gaiety theatre stood, also till April-May 1961. The Receivers then moved the Court for directions regarding the grant of the lease. The second respondent, whose term of lease would have expired in 1942, was offered by the Court the option of taking a leased for 21 years from the 1st of May, 1940 but he expressed his unwillingness to take a lease for such a long term. He was, however, willing to have the lease continued for a period of 7 years from the 1st of May 1940 i.e., for 5 years beyond the term of his then existing lease. The Court thereupon passed an order on May 2, 1940, reading :
"The lessee of the Gaiety Theatre (Chidambaram Chetty) will be given a lease of seven years from this date. They will not be given any further option. On the expiry of that period, i.e., from 2nd May 1947 the same may be included in the lease of J. H. Irani at the same rate of rent at which it is being leased to the lessee of the Gaiety Theatres."
In accordance with this order the Receivers of the estate of the late Sir Haji Ismail Sait executed two lease deeds (1) in favour of the second respondent for a period of 7 years from May 1, 1940 and (2) a reversionary lease in favour of J. H. Irani for a period of 13 years - 11 1/2 months commencing from May 1, 1947, i.e., on the expiry of the lease in favour of the second respondent this term being fixed so as to be conterminous with the lease
