# "( JAMSHED HORMUSJI WADIA v. BOARD OF TRUSTEES, PORT OF MUMBAI AND ANR

- **Citation:** [2004] 1 S.C.R. 483
- **Court:** Supreme Court of India
- **Decided:** 2004-01-13
- **Bench:** R.C. Lahoti, Brijesh Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jamshed-hormusji-wadia-v-board-of-trustees-port-of-mumbai-and-anr-19850
- **Pages:** 37

## Headnote

B
Rent Control and Eviction:
Major Port Trust Act, I 963/Constitution of India, 19j0; Articles 12 and c
14/Code of Civil Procedure, 1908; Order. I Rule 8 and Order 41 Rule 22:
Bombay Port Trnst!Board of Trustee-Lessees-Revision of Rent and
terms and conditions thereof-Engaging of consultant for valuation of the
land-Acceptance of Report-Fixation of fair market rates-Notices for
termination of tenancy/payment of revised rent-Challenge to-Single Judge D
of the High Court struck down the notices-In appeal, Division Bench directing
the Board to formulate a formula for fixation of rent-Formula/compromise
(,
proposal-Approved by the Division Bench-Challenge to-Held: Bombay
Port Trust is an instrumentality of State, hence an authority-States have to
act just and fair in conformity with Article 14 of the Constitution whether
acting as a landlord/tenant-State is empowered to raise rent to the extent to E
compensate the loss caused by injlationmy tendencies including increased
cost of maintenance/taxes/administrative expenses but not allowed to earn
profit/unreasonable eviction-Revision of rate of rent, recove1y of arrears and
levy of interest thereon could be decided on the basis of the compromise
proposal/formula with certain modifications in the rate of interest on the F
arrears of rent-Direction issued.
• 1
Revision in Rent as per compromise proposal-Relaxation-Held: since
the appellant/tenant could neither make use of the entire property nor could
develop it fidly owing to its peculiar location and surrounding status and
nature of land held by him which find support from documentmy evidence!
Report of the consultants, hence deserves some relaxation-Such other tenants G
could also file representations-The representations would be adjudicated by
an Adjudicator to be appointed by the High Court.
Cross-objection in appeal under Article 136-Va/idity of-Held: crossobjection does not lie.
483
H
484
SUPREME COURT REPORTS
[2004] I S.C.R.
A
Constitution of lndia:
Article 136 of the Constitution-Scope of-Held: it confers discretionarJ'
power on the Supreme Court to inte1fere in suitable cases-Self imposed
restrictions placed as fetters-Could not restrict the Court from leaping into
resolution of controversies-However, the jurisdiction of the Court remains
B an extra ordinary jurisdiction, whether exercised in granting /eave/deciding
the appeal.
Civil Procedure Code, 1908: Order 41 Rule 22-Scope of-Discussed.
Respondent, Born bay Port Trust (BPT), known as Board of Trustee
C holding huge land, a part of which was under intensive use for its own
activities and rest of the land was in occupation of a large number of
lessees holding leases of various tenures and leases were created long back.
The lease rent was revised upward from time to time. Later, in 1962, the
World Bank as well as the Comptroller and Auditor General of India
D advised the Board to secure a fair and reasonable revenue for its estate
to perform its public duties effectively. The board undertook a massive
exercise for the revision of rent and also the terms and conditions of the
leases and engaged a consultant. A draft report submitted by the
consultants was accepted by the Board after serious deliberations on the
subject. Following up the recommendation, notices were issued to lessees
E for termination of tenancy, payment of revised rent with arrears and
interest thereon. Aggrieved, lessees challenged the revision in rent as not
reasonable and fair. Single Judge of the High Court held that the proposed
revision and demand of rent did not breach the provisions of the Major
Port Act; 1963. However, he opined that the revision in rent was arbitrary
F and capricious and violative of the constitutional restraint on the Port
Trust in the capacity of an instrumentality of the State and notices were
struck down. In appeal, the Division Bench of the High Court directed
the Board to formulate a formula for revision in rents. The Board arrived
at a formula termed as compromise proposal.

## Text

_Characters 0–39,910 of 94,136. This is a partial read: ask again with offset=39910 for what follows._

-"(
JAMSHED HORMUSJI WADIA
A
V.
BOARD OF TRUSTEES, PORT OF MUMBAI AND ANR.
JANUARY 13, 2004
[R.C. LAHOTI AND BRIJESH KUMAR, JJ.]
B
Rent Control and Eviction:
Major Port Trust Act, I 963/Constitution of India, 19j0; Articles 12 and c
14/Code of Civil Procedure, 1908; Order. I Rule 8 and Order 41 Rule 22:
Bombay Port Trnst!Board of Trustee-Lessees-Revision of Rent and
terms and conditions thereof-Engaging of consultant for valuation of the
land-Acceptance of Report-Fixation of fair market rates-Notices for
termination of tenancy/payment of revised rent-Challenge to-Single Judge D
of the High Court struck down the notices-In appeal, Division Bench directing
the Board to formulate a formula for fixation of rent-Formula/compromise
(,
proposal-Approved by the Division Bench-Challenge to-Held: Bombay
Port Trust is an instrumentality of State, hence an authority-States have to
act just and fair in conformity with Article 14 of the Constitution whether
acting as a landlord/tenant-State is empowered to raise rent to the extent to E
compensate the loss caused by injlationmy tendencies including increased
cost of maintenance/taxes/administrative expenses but not allowed to earn
profit/unreasonable eviction-Revision of rate of rent, recove1y of arrears and
levy of interest thereon could be decided on the basis of the compromise
proposal/formula with certain modifications in the rate of interest on the F
arrears of rent-Direction issued.
• 1
Revision in Rent as per compromise proposal-Relaxation-Held: since
the appellant/tenant could neither make use of the entire property nor could
develop it fidly owing to its peculiar location and surrounding status and
nature of land held by him which find support from documentmy evidence!
Report of the consultants, hence deserves some relaxation-Such other tenants G
could also file representations-The representations would be adjudicated by
an Adjudicator to be appointed by the High Court.
Cross-objection in appeal under Article 136-Va/idity of-Held: crossobjection does not lie.
483
H
484
SUPREME COURT REPORTS
[2004] I S.C.R.
A
Constitution of lndia:
Article 136 of the Constitution-Scope of-Held: it confers discretionarJ'
power on the Supreme Court to inte1fere in suitable cases-Self imposed
restrictions placed as fetters-Could not restrict the Court from leaping into
resolution of controversies-However, the jurisdiction of the Court remains
B an extra ordinary jurisdiction, whether exercised in granting /eave/deciding
the appeal.
Civil Procedure Code, 1908: Order 41 Rule 22-Scope of-Discussed.
Respondent, Born bay Port Trust (BPT), known as Board of Trustee
C holding huge land, a part of which was under intensive use for its own
activities and rest of the land was in occupation of a large number of
lessees holding leases of various tenures and leases were created long back.
The lease rent was revised upward from time to time. Later, in 1962, the
World Bank as well as the Comptroller and Auditor General of India
D advised the Board to secure a fair and reasonable revenue for its estate
to perform its public duties effectively. The board undertook a massive
exercise for the revision of rent and also the terms and conditions of the
leases and engaged a consultant. A draft report submitted by the
consultants was accepted by the Board after serious deliberations on the
subject. Following up the recommendation, notices were issued to lessees
E for termination of tenancy, payment of revised rent with arrears and
interest thereon. Aggrieved, lessees challenged the revision in rent as not
reasonable and fair. Single Judge of the High Court held that the proposed
revision and demand of rent did not breach the provisions of the Major
Port Act; 1963. However, he opined that the revision in rent was arbitrary
F and capricious and violative of the constitutional restraint on the Port
Trust in the capacity of an instrumentality of the State and notices were
struck down. In appeal, the Division Bench of the High Court directed
the Board to formulate a formula for revision in rents. The Board arrived
at a formula termed as compromise proposal. The Division Bench of the
High Court issued notices to the lessees in terms of Order I Rule 8, C.P.C.
G and finally approved the compromise formula. Some of the lessees,
including the appellant, felt aggrieved, and filed the special leave petitions.
Disposing of the petitions, this Court remanded the case to High Court
for decision afresh in the light of certain directions. H!gh Court directed
the Board to go ahead with the fixation of rent complying with certain
H instructions/observations. Hence the present appeals.
..... .
;
, >-' '
J.H. WADIA 1·.BOARD OF TRUSTEES, PORT OF MUMBAI
485
Disposing of the appeals, the Court
HELD: I.I. The Bombay Port Trust is an instrumentality of State
and hence an 'authority' within the meaning of Article 12 of the
Constitution. The position of law is settled that the State and its authorities
including instrumentalities of States have to be just, fair and reasonable
A
in all their activities including those in the field of contracts. Even while B
playing the role of a landlord or a tenant, the State and its authorities
remain so and cannot be heard or seen causing displeasure or discomfort
to Article 14 of the Constitution of India. 1501-A; 502-B, CJ
Mis. Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of C
Bombay, 11989] 3 SCC 293, relied on.
1.2. In the field of contracts the State and its instrumentalities ought
to so design their activities as would ensure fair competition and nondiscrimination. They can augment their resources but the object should
be to serve the public cause and to do public good by resorting to fair D
and reasonable methods. The State and its instrumentalities, as the
landlords, have the liberty of revising the rates of rent so as to compensate
themselves against loss caused by inflationary tendencies. They can - and
rather must - also save themselves from negative balances caused by the
cost of maintenance, and payment of taxes and costs of administration.
The State, as landlord, need not necessarily be a benevolent and good E
charitable Samaritan. The felt need for expanding or stimulating its own
activities or other activities in the public interest having once arisen, the
State need not hold its hands from seeking eviction of its lessees. However,
the State cannot be seen to be indulging in rack-renting, profiteering and
indulging in whimsical or unreasonable evictions or bargains.
F
1503-G, H; 504-A, BJ
P.J. Irani v. State of Madras and Anr., AIR (1961) SC 1731, followed.
Mis. Dwarkadas Maifatia and Sons v. Board of Trustees of the Port of
Bombay, !19891 3 SCC 293; Baburao Shantaram More v. Bombay Housing
Board, !19541SCR572 and Kumari Shrilekha Vidyarthi etc. etc. v. State of G
UP. and Ors .. !199111 SCC 212, relied on.
Ratti Palonji Kapadia and Anr. v. State of Maharash1ra and Ors., (1992)
Born. L.R. 1356, referred to.
1.3. A balance has to be struck between the two extremes. Having H
486
SUPREME COURT REPORTS
[2004] I S.C.R.
A been exempted from the operation of rent control legislation the courts
)... \
cannot hold the State and its instrumentalities tied to the same shackles
from which they have been freed by the legislature in their wisdom and
thereby requiring them to be ruled indirectly or by analogy by the same
law from which they are exempt. Otherwise, it would tantamount to
defeating the exemption clause consciously enacted by the Legislature. At
B. the same time the liberty given to them by the statute enacted under the
Constitution does not exempt them from honouring the Constitution itself.
They continue to be ruled by Article 14. The validity of their actions in
the field of landlord-tenant relationship is available to be tested not under
the rent control legislation but under the Constitution. The rent control
C legislations are temporary, if not seasonal; the Constitution is permanent
and all time law. 1504-C, D, El
2.1. In an appeal by special leave under Article 136 of the
Constitution, cross objections do not lie; the Board having given a proposal
to the Court though on being prompted by the Court to do so, it should
D not be permitted to beat a retreat and withdraw from the compromise
proposals or lay challenge to it in the facts and circumstances of the case.
The compromise proposals have been held to be fair, just and reasonable,
and challenge to it is devoid of any merit; the issue as to compromise
proposals stands implicitly circumscribed by the order of remand passed
E by this Court and cannot be allowed to be reagitated at this stage.
1510-D, E, Fl
F
Alopi Nath and Ors. v. Collector, Varanasi, 119861 Supp. SCC 693,
referred to.
2.2. In an appeal under Article 136 of the Constitution, the
respondent cannot file cross-objections. If the judgment of the High Court
was partly against the respondent, it was for it to have filed an application
seeking leave to appeal. That right having been foregone by it and the
period of limitation having expired, the cross-objections cannot be
entertained. In the instant case, filing of cross-objections by a respondent
G in this Court is an attempt at exercising the right of filing an application
for special leave to appeal after the expiry of limitation and in a manner
not contemplated by Article 136 of the Constitution. 1515-G, H; 516-AI
Municipal Corporation of Delhi and Ors. v. Jntnl. Security & Inteliigence
Agency Ltd., JT (2003) 2 SC 103; Superintending Engineer and Ors. v. B.
H Subha Reddy, 1199914 SCC 423 and Vashist Narain Sharma v. Dev Chandra
.(,
'
• l
•
~
I
•
••
--
J.H. WADIA r.BOARD OF TRUSTEES, PORT OF MUMBAI
487
and Ors, [19551 1 SCR 509, referred to.
Sri Babu Ram v. Shrimati Prasanni and Ors., 119591 SCR 1403,
distinguished.
A
2.3. It is well-settled that Article 136 of the Constitution does not
confer a right to appeal on any party; it confers a discretionary power on B
the Supreme Court to interfere in suitable cases. The very conferment of
the discretionary power defies any attempt at exhaustive definition of such
power. When no law confers a statutory right to appeal on a party, Article
136 cannot be called in aid to spell out such a right. That self-imposed
restrictions placed as fetters on its own discretionary power under Article C
136 have not hindered the Supreme Court from leaping into resolution of
individual controversies once it has been brought to its notice that the
judgment in case has failed to deliver substantial justice or has perpetuated
grave injustice to parties or is one which shocks the conscience of the Court
or suffers on account of disregard to the form of legal process or with
violation of the principles of natural justice. Often such are the cases where D
the judgment or decision or cause or matter brought to its notice has failed
to receive the needed care, attention and approach at the hands of the
Tribunal or Court below, or even the High Court at times, and the
conscience of this Court pricks or its heart bleeds for imparting justice
or undoing injustice. The practise and experience apart, the framers of
the Constitution did design the jurisdiction of the Court to remain an E
extraordinary jurisdiction whether at the stage of granting leave or at the
stage of deciding the appeal itself after the grant of leave.
1512-D, E; 513-D, E, Fi
Pritam Singh v. The State, [19501SCR453 and The Bharat Bank Ltd.,
Delhi, v. Employees ()f the Bharat Bank Ltd., Delhi and The Bharat Bank
Employees Union, Delhi, [19501SCR459, followed.
F
Mis. Bengal Chemical & Pharmaceutical Works Ltd., Calcutta v. Their
Workmen, [ 19591 Suppl. 2. SCR 136; State of Bombay v. Rusy Misl!J' and
Anr., AIR (1960) SC 391 and Basudev Hazra v. Matiar Rahaman Manda/, G
[197111 SCC 433; Arunachalam v. P.S.R. Sadanatham, [1979[ 2 SCC 297
and Subedar v. The State of UP., 119701 2 SCC 445, relied on.
3. This Court in a number of decided cases has made a reference to
Order 41 Rule 22 CPC and permitted the respondent to support the decree
or decision u11der appeal by laying challenge to a finding recorded or issue H
488
SUPREME COURT REPORTS
[2004] I S.C.R.
A decided against him though the order, judgment or decree was in the end
in his favour. This is done not because Order 41 Rule 22 CPC is applicable
to appeals preferred under Article 136 of the Constitution; it is because
of a basic principle of justice applicable to Courts of superior jurisdiction.
A person who has entirely succeeded before a Court or Tribunal below
B cannot file an appeal solely for the sake of clearing himself from the effect
of an adverse finding or an adverse decision on one of the issues as he
would not be a person falling within the meaning of the words 'person
aggrieved'. In an appeal or revision, as a matter of general principles, the
party, who has an order in his favour, is entitled to show that even if the
order was liable to be set aside on the grounds decided in his favour, yet
C the order could be sustained by reversing the finding on some other ground
which was decided against him in the court below. This position of law is
supportable on general principles without having recourse to Order 41
Rule 22 of the Code of Civil Procedure. The exercise of appellate
jurisdiction under Article 136 of the Constitution is not dependent on the
D
provisions of Order 41 of the CPC. The Court may frame rules governing
its own procedure and practice. No such rule has been framed by the Court
which entitles or permits a respondent to file a cross-objection.
[513-G, H; 514-A, B, C; G, H[
Ramanbhai Ashabhai Patel, [ 1965[ I SCR 712; Management of
E Northern Railway Co-operative Soceity ltd., [ 1967] 2 SCR 476; Bharat Kala
Bhandar ltd. v. Municipal Committee, Dharman Gaon, [1965] 3 SCR 499;
Na/akath Sainuddin v. Koorikadan Sulaiman, [2002] 6 SCC I and Banarsi
and Ors. v. Ram Phal, JT (2003) 5 SC 224, referred to.
F
4. All the appeals are disposed of in terms of the directions.
5. Issue as to the applicability of the Maharashtra Rent Control Act,
1999, to the Port of Mumbai and the property held by it left open to be
decided in appropriate proceedings. [516-F; 519-B[
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5559 of
G 2001.
From the Judgment and Order dated l .8.2000 of the Bombay High
Court in A. No. 258/91 in W.P. No. 35 of 1983.
WITH
H
C.A. Nos. 5562, 5561, 5563-64, 5565-66, 5567-68/2001, 209, 207/
..
--
J.H. WADIA LllOARD OF TRUSTEES, PORT OF MUMBAI [LA HOT!, J.]
489
2004, 3211 /2002, 208 of 2004.
A
R.N. Trivedi, Additional Solicitor General, F.S. Nariman, R.F. Nariman,
Dushyant Dave, Gopal Subramanium, V.A. Mohta, Harish N. Salve (NP)
Yashank P. Adhyaru, Sameer prarekh, Darjus Khumbatta, Ms. Sweety
Manchanda, P.P. Mohanty, Ms. Jina Mullick, Gaurab Banerjee, Ms. Nandini
Gore, Ms. Ruby Singh Ahuja, R.N. Karanjawala, Rajesh Kumar, Ms. Meghna B
Sati, Mrs. M. Karanjawala, Vivek Shara, P. Venugopal, P.S. Sudheer, Rajiv
Tyagi, Tapes Tyagi, Shivaji M. Jadhav, Sunil Kr. Verma, Himanshu Gupta,
S. Barthakur for Sunil Kumar Jain, H. Devarajan, V. Ramaswamy, Ms. Happy,
P.N. Gupta, Aarohi Balla, Ms. Sujata Kurdukar, Vibhu Bhakru, P.N. Puri,
S.N. Singh, Vimal Chandra S. Dave, K.K. Rai, Bankey Bihari, J.B. Dadachanji, C
K.J. Gandhi, Buddy A. Ranganandhan, Ms. Sunita Sharma, K.J. Gandhi,
V.N. Raghupathy, Mahesh Agarwal, Rishi Agarwal, E.C. Agrawala, Jay Savla,
Ms. Reena Bagga, Ms. Mennakshi Ogra, Ms. Ruby Singh Ahuja, Ms. Meghna
Mishra, Vivek Sharma, Sandeep Kapur, Bharagava V. Desai, Sanjeev Kr.
Singh, P.H. Parekh, P.N. Puri, S. Saini, V. Ramaswamy for D. Mahesh Babu,
S.V. Deshpande, D. Mahesh Babu, S.R. Setia a.nd S. Udaya Kumar Sagar for D
the appearing parties.
The Judgment of the Court was delivered by
R.C. LAHOTI, J. Leave granted in SLP (C) Nos.19877/01, 6064/02
& 8657102.
E
The Bombay Port Trust (hereinafter 'BPT', for short), presently
constituted and governed by the Major Port Trust Act, 1963, and now known
as The Board of Trustees of the Port of Mumbai, is an 'authority' within the
meaning of Article 12 of the Constitution of India. It has been the subject
matter of several legislations governing its constitution, administration, powers F
and duties, some of which are The Bombay Port Trust Act, 1873, The Bombay
Port Trust Act, 1879 and the Major Port Trust Act, 1963. Bombay, presently
known as Mumbai, continues to be the commercial capital of the country. In
spite of the development of several other ports having taken place along the
coasts of India, some of them being of recent origin, the Bombay port continues G
to be the Gateway of India for international trade and commerce. Space is
scarce in Mumbai as it is an island, and demands on its land are heavy in
i.
view of the ever-growing industrial, commercial and economic activities.
Due to the availability or continuously growing modern infrastructure at
Mumbai large sections of the population from throughout the country continue
to migrate to Mumbai, which, with its characteristically liberal metropolitan H
490
SUPREME COURT REPORTS
[2004] I S.C.R.
A culture, open-heartedly accommodates anyone who seeks shelter in its arms.
The Bombay Port Trust Estate, admeasuring around 720 hectares ( 1800
acres approx.) of land is a huge stretch from Colaba to Rao Ii junction, including
Pir Pau, Butcher island, land at Titwala and other islands. The population is
highly urbanized and dense. Out of the total area of 720 hectares the area
B under the jurisdiction of Estate department of the BPT is around 336 hectares.
Out of these, 306 hectares of area is occupied by the lessees of BPT holding
leases of various tenures. Around 720 hectares of land was under intensive
use for the Board's own activities around the year 1980. There were about
600 lessees. The lessees could broadly be divided into three categories: monthly
C or annual lessees, 15 years' term lessees, and 99 years' or long term lessees,
with or without clauses for renewal. In case of monthly or annual leases, the
municipal ta)fes are borne by the BPT, while in cases of l 5 years term and
long term leases, the liability to pay municipal taxes is with the lessees. The
BPT Estate cannot be sold; it is all held out on leases excepting for the land
in the use of the Port and for Port activities i.e. for the self requirement of
D the BPT. Leases were created long back, some of which being around a
century old. The lease rents were revised and increased from time to time not
as a matter of some uniform policy decisions but only by way of adhoc
;"<,
arrangements. In the year 1962, the World Bank advised BPT that its rate of
return on its real estate was hopelessly inadequate and needed to be reviewed.
E The Comptroller and Auditor General of India too, in his report of the year
1979-80, shared the opinion of the World Bank and highlighted the obligation
on the part of the trustees to secure a fair and reasonable revenue for its estate
so as to attend better to its manifold public duties. The trustees felt convinced
that the Port Trust had to perform several functions under the Law governing
it which were in the nature of public duties to fulfill public objects; that the
F expenditure on maintenance was gradually increasing and there was disparity
between realised rent and the billed rent; and that a minus rate on return was
actually being secured taking into account the expenditure incurred by the
Board on maintenance. All these factors persuaded the Board to undertake a
massive exercise for the revision of rent as also for the revision of the terms
G and conditions of leases, whereunder the different categories of lessees were
holding land and estates from the Board. The Board by inse1ting advertisements
in all-India newspapers invited proposals from consultancy firms and practicing
valuers for ascertaining the market value of the land of the Bombay Port
Trust, including lands in docks and bunders. Out of the several offers received,
the choice of BPT fell on Kirloskar Consultants Ltd., Pune, who were entrusted
H with the task on the following terms of reference:-
,~.
..
1
JH. WADIA v BOARD OF TRUSTEES. PORT OF MUMBAI [LAHOTJ, l]
49]
"(i) To give an estimate of market values of the Bombay Port Trust A
land (including the lands in the Docks and Bunders) dividing
them into convenient zones or blocks to be delineated on the
Port Trust estates and having regard to the various factors relevant
to the valuation for the Po1t Trust estates ranging from Raoli
Junction to Colaba, Pir Pau and Butcher Island. In all, the lands B
admeasure about 1800 acres and are inclusive of land at Titwala
and Butcher and other islands.
(ii) The estimate of market value should indicate values of lands
both in vacant and occupied conditions and for different users.
(iii) The market values should be given separately for each zone or C
block on two relevant dates, viz. as on I st January 1975 and I st
January I 978 (these dates have since been modified at the time
of signing the agreement as lst January 1975 and !st January
1980).
(iv) To lay down a general formula for the guiding principles to D
enable the Port Trust to arrive at land values rationally at a
future date and realize a fair share of the future increase in land
values periodically."
F
At the point of time when Kirloskar Consultants embarked upon their task,
there were 764 law suits filed by BPT in several courts and another 265 were E
in the pipeline - proposed to be filed. Nearly I/3rd of the land of BPT was
rented out, and lessees were holding the same on rates of rent which had
remained stationary for long number of years. The gigantic task entrusted to
them was well performed by Kirloskar Consultants Ltd. - the experts in
association with Mis. M.N. Dange & Associates, the government approved
valuers. The BPT(including its trustees, officers and staff) and the several
government departments - all rendered their assistance. A draft report was
submitted on October 18, 1980, and after discussions with the Estate
department and the Chairman of the BPT, the final report was submitted on
December 25, 1980. The report runs into volumes. The experts in their report
explained their approach and methodology, took into account the factors G
influencing land prices in Bombay, the legal aspects relevant to the land of
BPT, constraints of BPT estate, blockwise fair market rates during half a
decade preceding the report, future values and the factors of leasing of land
viz. a viz. its need. The experts also carried out international port studies. In
the meeting of BPT held on August 23, 1982, the report of the consultants
was accepted, preceded by serious deliberations. Notices were issued to several H
492
SUPREME COURT REPORTS
[2004] I S.C.R.
A lessees terminating the tenancies but with an option that the lessees would
continue as lessees subject to their agreeing to pay the revised rent fixed in
pursuance of the report submitted by the experts.
Some of the lessees filed writ petitions under Article 226 of the
Constitution of India complaining that the BPT being an instrumentality of
B the State within the meaning of Article 12 of the Constitution, it was bound
to be reasonable and fair in its dealing with the lessees. The increase in rent
proposed by the BPT was exorbitant, for example, the rate of rent which was
Rs.66.44 in the year 1948 and which gradually increased to Rs.317 .11 in the
year 1981, was proposed to be revised at Rs.4515.86. The petitions were
C disposed of by a learned single Judge (S.M. Daud, J.) vide his judgment
dated 1/4.10.1990. The learned single Judge dealt with two points around
which the controversy had centred. On the first point, the learned single
Judge held that the proposed revision of rent and the consequent demand of
rent did not breach the provisions of the Major Port Trust Act, 1963. On the
second issue, the learned single Judge formed an opinion that the revision of
1
D rent by the BPT was arbitrary and capricious and therefore violative of the
constitutional restraint on the Port Trust as an instrumentality of the State. In
the opinion of the learned single Judge, the BPT was entitled to protect itself
'."(,
against erosion in the rentals as a result of inflationary trends, but excepting
this no other factor could be taken into consideration and in any case the BPT
E could not afford to behave like a private landlord indulging into rack-renting
by co-relating the rates of rent with market rates. The notices terminating the
tenancies with the option for continuance subject to revision of rent based on
Kirloskar Consultants report were struck down. Thus the decision of the
learned single Judge had the effect of nullifying the entire exercise undertaken
by the BPT through Kirloskar Consultants.
F
The BPT preferred an intra-Court appeal which was dealt with by a
Division Bench. On 28.6.1991, the matter came up for consideration before
a Division Bench (consisting of Chief Justice P.O. Desai, and Justice
Sukumaran). The Division Bench formed an opinion and expressed it to the
parties that the matter should be put to an end and suggested that they would
G fix a cut-off date and the number of years upto the expiry of which they
would direct the lessees to pay the increase in rent at a certain percentage to
be decided by them, so that at fixed ·intervals of years BPT would get
.tpermanently an automatic increase in rent at the percentage fixed by them.
The Division Bench called upon the BPT to suggest some formula to enable
H them to arrive at a percentage of rent to be fixed by them. It was also
~
1
>
-1J.H. WADIA 1•.BOARD OF TRUSTEES, PORT OF MUMBAI [LAHOTI, J.]
493
suggested that such formula could be made applicable to other lessees of the A
BPT who were not pa11ies in the appeal before the High Court by giving a
public notice under Order 1 Rule 8 of CPC.
The Board reconsidered the matter and a fresh exercise was undertaken
by the Board so as to respond to the suggestion of the Court. The Board
arrived at a formula which has been termed as "compromise proposals", B
approved in the meeting of the Board held on August 13, 1991, and subm.itted
to the Court. It is not necessary to deal with the exchange of views amongst
the trustees which received consideration in the meeting of the Board. The
summary of the "compromise proposals", which is based on a detailed note
submitted by the office of the 13PT for being placed before the Board, is as C
under:-
"(i) Nature of occupations may continue as at present on revised
rents. Development may be in accordance with the Development
Plan and the Development Control Regul~tjons and BPT Master
Plan including restructuring from time to time to cater for port's D
and city's needs,
(ii) Occupations may be classified for the purpose of levy of rents
either as 'Non-Home Occupation' or as 'Home Occupation' as
defined in the Development Control Regulations on the basis of
actual use.
(iii) Letting rates for 'Non-Home Occupation' per sq, metre of floor
space per month of built up area (as derived from valuation by
Kirloskar Consultants) shall be as under for the period 1.10, 1982
to 30.9.1992.
(a) Sassoon Dock Estate : Rs. 22.03
(b) Wellington & Apollo Reclamation Estates : Rs. 26.91
(c) Ballard and Mody Bay Estates : Rs. 24.00
(d) Elphinstone Estates (TPS) : Rs. 14.44
(e) Sunders South : Rs. 21.38
(f) All other Estates : Rs. 12.66
Letting rate for 'Home Occupation' may be at 20 per cent
of the above rates,
E
F
G
H
}._
I
494
SUPREME COURT REPORTS
[2004] I S.C.R.
t
A
Letting rates for future years from I. I 0.1992 to 30.9.2012
"t--
for 'Non-Home Occupation' and 'Home Occupation' shall
be as given in the Annexures".
Notwithstanding the fixation of letting rates for 20 years for
good and sufficient reasons, Board may review and revise
B
the letting rates.
(iv) Minimum rent may be for built up area upto 0.5 FSI irrespective
of whether the area is built up or not. Minimum rent from
I. I 0.1982 to 30. 9.1992 for non-hazardous trade/use will be Rs.
6.33 per sq. metre per month and for POL and hazardous trade/
c
use will be Rs.8 per sq. metre per month or for 0.5. FSI of built
up area, whicJ1ever is more. The rent will increase proportionately
to the built up area but maximum rent may not exceed the rent
that would have ~en payable on the basis of Fair Market Rents
recommended by K1rloskar Consultants Ltd.
D
(v) In case of letting of BPT structures, the revised rate of rent per
sq. metre of floor space may be at 2.5 times the letting rates. The
;"<,
repairs and maintenance of the structure shall be done by the
tenant/lessee. For this purpose the lessee/tenant shall retain 0.5
times the rent and pay to BPT a net rent at twice the letting rates·.
E
(vi) Rent in respect of occupations having mixed use may be in
proportion of the floor space under use for 'Home Occupation'
and 'Non-Home Occupation'. In case of change of use from
'Home Occupation' to 'Non-Home Occupation' rents will be
regulated at the letting rate for 'Non-Home Occupation' for the
F
floor space so changed with effect from date of change of use.
(vii) Rents shall be increased by 4 per cent every year over the rent
)r
~
in the previous year from 1.10.1992.
(viii)Arrears for the period from 1.10.1982 upto 30.9.1991 in the case
of monthly tenancies and 15 monthly lease would be recovered
G
respective of the built up area at a flat rate of Rs.6.33 per sq.
metre per month in case of non-hazardous trade/use or at a rate
of Rs.8 per sq. metre per month in case of POL and hazardous
~
trade/use with simple interest at 8 per cent per annum.
(ix) Arrears in respect of structures would be recovered at the
H
applicable rate from 1.10.1987 upto 30.9.1991 with simple interest
J.H. WADIA v.BOARDOFTRUSTEES, PORT OF MUMBAI [LAHOTl,J.]
495
at 8 per cent per annum.
A
(x) In case of monthly tenancies/15-monthly leases where the prerevised rent is more than the rent under above terms or where
allotments have been made through auction/tender at rates higher
than the rate applicable under the ·above terms, the rents will
continue at the earlier rates till the applicable letting rate for a B
year exceeds that rate of rent where after the rent will increase
to the applicable letting rate and will further increase at 4 per
cent annum.
(xi) In case of expired lease, fresh lease 0:1 new terms shall be at the
sole discretion of the Board. Grant of fresh lease may be C
considered taking into account restructuring requirements for the
City's Development Plan, BPT's Master Plan and the
Development Control Regulations. Where a fresh lease is granted,
arrears may be recovered in the form of premium at the applicable
letting rate for respective use with simple interest at 15 per cent
per annum from the date of expiry of lease till grant of fresh D
lease. In case of expired leases without a renewal clause,
additional premium may be recovered at 12 months' rent at the
applicable letting rate.
(xii) In the case of monthly tenancies the applicable rates used to be
more than the above rates to cover general property taxes. E
However, in view of the restrictive tenure, the tax liability is to
be borne by BPT.
(xiii) In the case of subsisting leases, assignments and consequent grant
of lease on new terms would be at the prevailing letting rate at
the relevant time and in relation to use. However, in case of p
amalgamation revised rent would be at the letting rate prevailing
at the time of amalgamation subject to a ceiling that the revised
rent will not be more than 12 times the earlier rent. Where lessee
is already paying rent at the prevailing letting rate, assignment
would be permitted on levy of revised rent at 25 per cent over
the applicable letting rate or on levy of premium at 12 months G
rent at the applicable letting rate as may be desired by the lessee/
tenant.
(xiv)Subletting, change of user, transfer, occupation through an
irrevocable power of attorney and any other breaches may be
regularized by levy of revised rent at the applicable letting rate H
A
B
c
D
E
496
SUPREME COURT REPORTS
[2004) l S.C.R.
at the time of such breach from the date of breach. Where lessee/
tenant is already paying rent at the prevailing letting rate, such
regularization be permitted on levy of revised rent at 25 per cent
over the applicable letting rate or a levy of premium at 12 months'
rent at the applicable letting rate as may be desired by the lessee/
tenant.
(xv) In case of hardship where effect of the terms is. harsh, such cases
may be brought up before the Board for consideration on merits.
(xvi) The above proposals are applied to properties falling outside the
port limits which is within the Board's power to sanction. For
properties falling within the port limits, proposals on the above
lines may be made to Government for approval.
These proposals are made with deference to the suggestions by the
Division Bench consisting ofHon'ble Chief Justice and Hon'ble Justice
Sukumaran for acceptance of the respondents in the pending appeals.
As regards the proposals which do not affect the pending appeals, the
Board may, after the result of these appeals, consider extending the
benefit of these proposals to the other affected tenants. If the present
proposals are not accepted, the Board reserves the right to withdraw
them. The proposals are without prejudice to the appeals. The proposals
do not ipso facto create any right in the tenants to the fresh tenancy/
lease but confine to only rents to be charged in the event of grant of
fresh tenancy/lease."
Proceedings under Order I Rule 8 of the CPC were initiated putting all the
lessees of the Board on notice through publication in newspapers. Several
F lessees filed applications for intervention and were permitted to make
submissions in respect of the compromise proposals. It appears that in spite
of the indulgence shown by the Court, the writ petitioners and the interveners
were not agreeable to accept the proposals. The Division Bench (M.L. Pendse
& A.A. Cazi, JJ) heard the Board, the writ petitioners and the interveners at
length. The Division Bench rightly formed an opinion that the decision by
G the learned single Judge did not bring to an end the entire controversy inasmuch
as merely striking down the action of the Board based on Kirloskar
Consultants' report was not a solution to the problem. The Division Bench,
on a review of the case law, formed an opinion that if the action of the Board
satisfied the test of being fair and reasonable, it was to be accepted. Leaving
H aside the grievances made by the lessees in respect of individual properties
-~
J.H WAD!A 1·.BOARDOF TRUSTEES, PORT OF MUMBAI [LAHOTI, J]
497
as in the opinion of the Division Bench it was not permissible to expand the A
ambit of enquiry in the proceedings pending before it and to determine whether
a particular lessee was entitled to some other advantage or not, the Division
Bench concentrated on the issue as to the right of the Po11 Trust to increase
the rentand the modalities adopted by it in determining the rates at which the
rent would be increased. On behalf of the Board a chart was tendered before
the Division Bench indicating the rents which were paid by the lessees (who
had filed petitions before the Court) prior to October J, l 991, and the revised
rent as suggested by Kirloskar Consultants and the modified rent fixed by the
Port Trust in pursuance of the directions of the Division Bench with a view
B
to demonstrate the fairness and reasonableness writ in the proposals. The
chart was taken on record and annexed as exhibit 'B' to the judgment dated C
11.3.1993 of the Court. The Port Trust made it clear to the Division Bench
that it was not insistent on levying and recovering rents as was initially
suggested by Kirloskar Consultants and was satisfied with the revised formula
placed before the Court. Taking an overall view of several relevant factors
brought to the notice of the Court on behalf of the Port Trust as also on
behalf of the lessees, the Division Bench formed an opinion that in their
judgment "the revised proposals submitted by the Port Trust are extremely
reasonable and fair". The document entitled "revision of rents of monthly
tenancies/15 monthly leases - compromise proposals" was marked as exhibit
'A' and annexed with the judgment. The Division Bench put its seal of
approval on the compromise proposals.
BPT felt satisfied with the judgment of the Division Bench. However,
the grievances of some of the lessees persisted and resulted in filing of a few
SLPs in this Court. The principal appellant before us namely Jamshed Honnusji
Wadia too was one of the appellants. Mainly three grievances were raised
D
E
before th is Court:
F
(i)
That the High Court was in error in not permitting the individual
lessees to make their submissions about their complaint in the
matter of increase in rent in relation to their particular leases;
(ii) That no proper justification has been offered by the Port Trust in G
support of the 'compromise proposals'; and
(iii) That the Division Bench of the High Court has not considered
the matter of revision of rents on the basis of the report of the
Kirloskar Consultants on merits and there is no consideration of
the reasons that were given by the learned single Judge for setting H
A
498
SUPREME COURT REPORTS
[2004] I S.C.R.
aside the enhancement of the rates by the Port Trust on the basis
of the Kirloskar Consultants' report.
A Bench of two learned Judges of this Court granted leave in all the Special
Leave Petitions and disposed of the Civil Appeals by an order of remand
dated 31. I 0.1995. The judgment of the Division Bench was set aside and the
B case was remanded for decision afresh in the light of the following direction
made by this Court:-
c
D
E
F
"Having regard to the aforesaid submissions urged on behalf of
the appellants, we are of the view that it is necessary that the
'Compromise proposals' submitted by the Port Trust are considered
by the Division Bench of the High Court in the light of the reasons
given by the learned single Judge and submissions that are made by
the lessees in support of the said judgment to show that the said
'Compromise Proposals' for enhancement of rent suffer from the vice
of arbitrariness. Since this question has not been gone into by the
Division Bench of the High Court, we consider it appropriate to set
aside the impugned judgment of the Division Bench of the High
Court for reconsideration of the appeals in the light of the submissions
that are made by the appellant lessees as well as intervenors with
regard to the 'Compromise proposals' that are submitted by the Port
Trust and consider the same on merits. It will be open to the
respondents in the Letters Patent Appeals before the High Court as
well as the intervenors to agitate the points which were agitated before
the learned single judge and which have been decided against them
by the learned single judge. If any of the appellants in these appeals
had not intervened before the High Court in Letters Patent Appeals
still will be open to him to move the High Court for intervention."
(emphasis supplied)
The matter reached back and has been disposed of afresh vide the
impugned judgment dated 1.8.2000 by a Division Bench (N.J. Pandya & Dr.
D.Y. Chandrachud, JJ). This time the Division Bench has formed an opinion
G that so far as the exercise of the Port Trust to call consultants for determining
the fair market rate of that property is concerned, nothing wrong can be
found with that. The subsequent compromise proposals were only by way of
a softening blow to relieve the lessees of the hardship caused by revision of
rent. So far as the question of interest on arrears is concerned, the Division
H Bench thought that the rate of interest deserved to be confined to 6% per
...
' '
---' • -.....
)
"'
..,.,
J.H. WADIA v.BOARDOF TRUSTEES, PORT OF MUMBAI [LAHOTI, J J
499
annum only.