# MALPE VISHWANATH ACHARYA AND ORS v. STATE OF MAHARASHTRA AND ANR

- **Citation:** [1997] Supp. 6 S.C.R. 717
- **Court:** Supreme Court of India
- **Decided:** 1997-12-19
- **Case number:** Civil Appeal Nos. 2797-98 of 1992
- **Bench:** J.S. Verma, B.N. Kirpal, M. Srinivasan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/malpe-vishwanath-acharya-and-ors-v-state-of-maharashtra-and-anr-16031
- **Pages:** 31

## Headnote

Rellt Colltrol-Bombay Rellts, Hotel and Lodgillg House Rates Control
Act, 1947-Sectiolls S(JO)(B), 11(1), 12(3)-Stalldard Rellt-Fixatioll
of-Restrictioll oil the right of the /a11d/ords to increase rent by freezi11g rent
as Oil 1st September 1940 or at the time of the first letti11g-Validity of-Held
to be unreasonable; as rapid i11crease i11 the expe11ses for repair and other
outgoi11gs a11d the decreasi11g 11et amount of rent remainillg with the la11dlord,
with the passage of time, is leading to arbitrary results-However it is llOt
11ecessary to stlike dow11 the said provisiolls as the existi11g Act elapses oil 31st
March 1998.
Social legislation-Rent Control Acts-Periodic revisio11 of-Necessity
f 01-Held, Pe1iodic revision ill social legislatio11 like Rent Control Act is
11ecessary to suike a balallce betweell 1ival illterests-lts absellce results it
increasillg injustice to olle sectio11 of the society leadi11g to increase in
lawlessness and undennining of the auth01ity of law-Continuance of such
law becomes unreasonable, disoimi11ato1y and ultra-vires A1ticle 14-Constitutioll of India, 195(}-Aiticle 14.
Legislatioll-Lapse of time--Reasonable11ess of -Held, with the passage of time a legislation which was justified when enacted may become
arbitra1y alld Ullreasollable with the challge in circumstallces.
Legal Maxims :
'Lex injusta llOI! est lex-Applicability of.
A
B
c
D
E
F
Two writ petitions mi behalf of several landlords were filed in the G
High Court of Bombay challenging the constitutional validity of Sections
5(10)(B), Section 11(1) and Section 12(3) of the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1947 inter alia, on the ground that the
said provisions pertaining to standard rent were ultra vires Articles 14, 19
& 21 of the Constitution of India and consequently void. The Bombay High
Court dismissed the writ petition. Aggrieved, the landlords filed the H
717
718
SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
A present appeals which were heard alongwith the connected writ petitions
bearing numbers 17/96 and 824/96.
On behalf of the appellants, it was contended that the restriction on
the right of the landlords to increase rents, which had been frozen as on 1st
· September 1940 or at the time of the first letting, was no longer a reasonable
B restriction and the said provisions had with the passage of time, become
arbitrary, discriminatory, unreasonable and consequently ultra vires Article
14 of the Constitution; and in view of the constant escalation in prices due
to inflation and corresponding fall in the value of Rupee, ceiling on rentals,
such as the one imposed by Sect.ion 5(10)(a) and (b) read with Sections 7
C and 11 of the Bombay Rent Act, was totally arbitrary, unrealistic and
unreasonable.
On behalf of the respondents it was submitted that the State was
aware about the problem of the landlords and was proceeding in the right
direction to obviate their difficulties by introducing certain amendments
D in the Bombay Rent Act in 1987. By virtue nf these amendments, a landlord
was allowed to increase the rent for an improvement or structural alteration of the premises. Further the provisions relating to standard rent were
not to apply for a period of five years to any premises, the construction or
reconstruction of which was completed on or after the appointed date,
namely 1-10-87. The landlord could also increase the rent in case he was
E required to pay fresh rates, charges etc. to the Government.
Disposing of the matters, this Court
HELD : 1. The High Court erred in upholding the validity of the
F
impugned provisions relating to standard rent. Taking all the facts and
circumstances into consideration, there is on doubt that the existing
provisions of the Bombay Rent Act relating to the determination and
fixation of the standard rent can no longer be considered to be reasonable.
The said provisions would have been struck down as having now become
unreasonable and arbitrary but it is not necessary to

## Text

_Characters 0–39,990 of 68,950. This is a partial read: ask again with offset=39990 for what follows._

MALPE V!SHWANATH ACHARYA AND ORS.
v.
STATE OF MAHARASHTRA AND ANR.
DECEMBER 19, 1997
[J.S. VERMA, CJ., B.N. KIRPAL AND M. SRINIVASAN, JJ.]
Rellt Colltrol-Bombay Rellts, Hotel and Lodgillg House Rates Control
Act, 1947-Sectiolls S(JO)(B), 11(1), 12(3)-Stalldard Rellt-Fixatioll
of-Restrictioll oil the right of the /a11d/ords to increase rent by freezi11g rent
as Oil 1st September 1940 or at the time of the first letti11g-Validity of-Held
to be unreasonable; as rapid i11crease i11 the expe11ses for repair and other
outgoi11gs a11d the decreasi11g 11et amount of rent remainillg with the la11dlord,
with the passage of time, is leading to arbitrary results-However it is llOt
11ecessary to stlike dow11 the said provisiolls as the existi11g Act elapses oil 31st
March 1998.
Social legislation-Rent Control Acts-Periodic revisio11 of-Necessity
f 01-Held, Pe1iodic revision ill social legislatio11 like Rent Control Act is
11ecessary to suike a balallce betweell 1ival illterests-lts absellce results it
increasillg injustice to olle sectio11 of the society leadi11g to increase in
lawlessness and undennining of the auth01ity of law-Continuance of such
law becomes unreasonable, disoimi11ato1y and ultra-vires A1ticle 14-Constitutioll of India, 195(}-Aiticle 14.
Legislatioll-Lapse of time--Reasonable11ess of -Held, with the passage of time a legislation which was justified when enacted may become
arbitra1y alld Ullreasollable with the challge in circumstallces.
Legal Maxims :
'Lex injusta llOI! est lex-Applicability of.
A
B
c
D
E
F
Two writ petitions mi behalf of several landlords were filed in the G
High Court of Bombay challenging the constitutional validity of Sections
5(10)(B), Section 11(1) and Section 12(3) of the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1947 inter alia, on the ground that the
said provisions pertaining to standard rent were ultra vires Articles 14, 19
& 21 of the Constitution of India and consequently void. The Bombay High
Court dismissed the writ petition. Aggrieved, the landlords filed the H
717
718
SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
A present appeals which were heard alongwith the connected writ petitions
bearing numbers 17/96 and 824/96.
On behalf of the appellants, it was contended that the restriction on
the right of the landlords to increase rents, which had been frozen as on 1st
· September 1940 or at the time of the first letting, was no longer a reasonable
B restriction and the said provisions had with the passage of time, become
arbitrary, discriminatory, unreasonable and consequently ultra vires Article
14 of the Constitution; and in view of the constant escalation in prices due
to inflation and corresponding fall in the value of Rupee, ceiling on rentals,
such as the one imposed by Sect.ion 5(10)(a) and (b) read with Sections 7
C and 11 of the Bombay Rent Act, was totally arbitrary, unrealistic and
unreasonable.
On behalf of the respondents it was submitted that the State was
aware about the problem of the landlords and was proceeding in the right
direction to obviate their difficulties by introducing certain amendments
D in the Bombay Rent Act in 1987. By virtue nf these amendments, a landlord
was allowed to increase the rent for an improvement or structural alteration of the premises. Further the provisions relating to standard rent were
not to apply for a period of five years to any premises, the construction or
reconstruction of which was completed on or after the appointed date,
namely 1-10-87. The landlord could also increase the rent in case he was
E required to pay fresh rates, charges etc. to the Government.
Disposing of the matters, this Court
HELD : 1. The High Court erred in upholding the validity of the
F
impugned provisions relating to standard rent. Taking all the facts and
circumstances into consideration, there is on doubt that the existing
provisions of the Bombay Rent Act relating to the determination and
fixation of the standard rent can no longer be considered to be reasonable.
The said provisions would have been struck down as having now become
unreasonable and arbitrary but it is not necessary to strike down the same
G in view of the fact that the present extended period of the Bombay Rent
Act comes to an end on 31st March 1998. It is hoped that a new Rent
Control Act will be enacted with effect from 1st April, 1998 keeping in view
the observations made in this judgment in so far as fixation of standard
rent is concerned. The Government's thinking reflected in various documents itself shows that the existing provisions have now become unH reasonable and, therefore, require reconsiderations. [747-B]
MALPE VJSHWANATI-1 ACHARYA v. STATE
719
2.1. As far as Section 5(10) is concerned the standard rent of the A
premises let out after 1.9.1940 is that rent at which the premises were first
let. Even so with the rapid increase in the expenses for repair and other
outgoings and the decreasing net amount of rent which remains with the
landlord, clearly shows that the non provisions in the Act for reasonable
increase in the rent, with the passage of time, is leading to arbitrary
results. A statute which when enacted was justified may, with the passage
of time, become arbitrary and
unreasonable. The record clearly
demonstrates that since the last two decades the authorities themselves
seem to be convinced that the pegging down of the rents to the pre war
stage and even thereafter, is no longer reasonable. [742-E]
2.2. It is true that one of the reasons for enacting the rent control
legislation is to prevent exploitation of the tenants by the landlords. One
B
c
of the protections which has been provided to the tenants in the rent
legislation throughout the country is the concept of Standard Rent. In the
Bombay Rent Act, the standard rent as on lst September, 1940 or the first D
rent of the premises which was let out thereafte1· is the standard rent.
[744-A]
The pegging down of rent, coupled with the inability of the landlord
to evict the tenants, has given rise to unlawful tendencies. The tenants are
by and large, now getting an unwarranted benefit or windfall. What. was
E
reasonable on 1st Septe~ber, 1940 or in 1950s or in 1960s can no longer
be regarded as reasonable at this point of time. It is true that some
amendments wer~ made in 1987 which clearly indicate that the State
<; ..
Legislature was conscious of the fact that there was a need to increase the
standard rent. But no effective steps have been taken so far to strike a
balance between the interests of the landlords and the tenants. [745-A]
3. The legislature itself has taken notice of the fact that puggrie
system has become prevalent in Mumbai because of the Rent Restriction
.Act. In view of the unreasonable low rents which are being received by the
landlords, recourse is being taken to other methods to seek redress. These
methods which are adopted are outside the four corners of the law and are
slowly giving rise to a state of lawlessness where, it is feared, the courts
F
G
may become irrelevant in deciding disputes between the landlords and
tenants. This should be a cause of serious concern because if this extra
judicial back lash gathers momentum the main sufferers will be the H
720
SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.
A tenants, for whose benefit the Rent Control Acts are framed. [745-D-EJ
B
4.1. Enactment of special provisions such as the Rent Control Act
may be necessary in the larger interest of the society as a whole, but the
1Jenelit which is given initially, if continued, results in increasing injustice
to one section of the society and an unwarranted largess or windfall to
another, without appropriate corresponding relief, then the continuation
of such a law can no longer be regarded as being reasonable. [7 45-C]
4.2. In so far as social legislation, like the Rent control Act is
concerned, the law must strike a balance between the rival interests and it
C should try and be just to all. The law ought not to be unjust to one and
give a disproportionate benefit or protection to another section of the
society. When there is shortage of accommodation it is desirable, nay
necessary that some protection should be given to the tenants in order to
ensure that they are not exploited. At the same time such a law has to be
revised periodically so as to ensure that a disproportionately larger benefit
D than the one which was intended is not given to the tenants. [745-G]
4.3. When enacting socially progressive legislation the need is greater
to approach the problem from a holistic perspective and not to have a
narrow or short sighted parochial approach. Giving a greater than due
E emphasis to a vocal section of society results not merely in miscarriage of
justice but in abdication of responsibility of the legislative authority. Social
legislation is treated with deference by the courts not merely because the
legislature represents the people but also because in representing them the
entire spectrum of views is expected to be taken into account. It is also the
responsibility of the court~ to look at legislation from the altar of Article 14 of
F the Constitution. TI1is Article is intended, as is obvious from its words, to check
this tenancy of giving undue preference to some over others. [746-C-D]
State of M.P. v. Bhopal Sugar Indust1ies, [19641 6 SCR 846; Narottam
Kishore Dev Venna & Others v. UOI & Anr., [1964] 7 SCR 55; H.H. Shri
Swamiji of Slui Admar Mutt Etc. v. The Commissioner, Hindu Religi,ous and
G Chmitable Endowments Department & Others, [1980] 1 SCR 368; Motor
General Traders and Another Etc. v. State of Andhra Pradesh & Ors. Etc.
Etc., [1984] 1SCR594; Bhaiyalal Shukla v. State of Madhya Pradesh, [1962]
Suppl. 2 SCR 257; Rattan A1ya v. State of Tamil Nadu & Anr., [1986] 3 SCC
385; Synthetics & Chemicals Ltd. & Ors., v. State of U.P. & Ors., [1990] 1
H sec 1119, relied on.
..
' -
MALPE VISHWANATH ACHARYA v. STATE [KIRPAL, J.]
721
Sant Lal Bharti v. State of Punjab, [1988] 2 SCR 107, distinguished.
A
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2797-98
of 1992.
From the Judgment and Order dated 16.11.90 of the Bombay High
Court in W.P. Nos. 2337/86 and 2587 of 1990.
B
F.S. Nariman, Mulraj Shah, P.H. Parekh, Jagdish Karia, Subhash
Sharma, Ms. Dhun Chapgar, Ms. Sunita Sharma, Nikhil Sakhardande and
Sameer Parekh for the Appellants.
M.S. Nargolkar, D.M. Nargolkar and S.M. Jadhav for the Respondents.
M.N. Shroff for K. V. Sreekumar for the Intervenor.
The Judgment of the Court was delivered by
KlkPAL, J. 'Lex injusta 11011 est lex', unjust, laws are not laws, is what
is being contended by the landlords in their challenge in these appeals, and
c
D
the connected writ petitions, to the validity of the relevant provisions of the
Bombay Rent, Hotel and Lodging House Rates Control Act, 1947
(hereinafter referred to as 'the Bombay Rent Act') in so far as it provides E
that landlords cannot charge rent in excess ofthe standard rent.
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 Section 5(10)(B), Section 11(1) and Section 12(3)
F
of the Bombay Rent Act, inter alia, on the ground that the said provisions
pertaining to standard rent were ultra vires Articles 14, 19 and 21 of the
Constitution and consequently void. The main challenge to the said
provisions was on the ground that the restriction on the right of the
landlords to increase rents, which had been frozen as on 1st September, G
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 Article 14 of the
Constitution. By the impugned judgment the High Court dismissed the writ
petitions, illter alia, holding that the object of the Bombay Rent Act was H
722
SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.
A 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 prices 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.
B
The Bombay Rent Act came into force on 13th February, 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 this behalf. This Act has been extended from time to time
at least on twenty occasions and the present extension remains in force
C upto 31st March, 1998. Sections 5(10), 7, 9(b) and ll(l)(a) which are being
D
E
F
G
H
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,
th! rent at which they were last let before that day, or
(iii) where they 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-section (lA) of section 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
-·
MALPE VISHW ANA TH ACHAR YA v. STATE [KIRPAL, J.]
723
(iv) on any of the cases specified in section 11, the rent fixed by A
the 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 receive 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 this Act (either
before or after the commencement of the Bombay Rent, Hotel and
Lodging Ho'.lse Rates Control (Amendment) Act, 1986).
(2)(a) No person shall claim or receive on account of any license
B
c
fee or charge for any premises or any part thereof, anything in D
excess of the standard rent and permitted increase (or as the case
may be, a proportionate part thereto), for such premises if they
had been let, and such additional sum as is reasonable consideration for any amenities or other services supplied with the premises.
(b) All the provisions of this Act in respect of the standard rent
and permitted increases in relation to any premises let, or if let,
to a tenant, shall mutatis mutandis apply in respect of any license
fee or charge and permitted increases in relation to the premises
given on license; and accordingly, the licensee. or licenser may
apply to the Court for the fixation of the license fee or charge and
permitted increases and the additional sum mentioned above.
9.(b) Before making any increase, under (a), the landlord shall
obtain a certificate from the local authority that he was required
E
F
by it to make or to provide such additions, alterations, improveG
ments or amenities and has completed them in conformity with its
requirements.
11.(l) (Subject to the provisions of section llA in any of the
following) cases the Court may, upon an application made to it for H
A
B
c
D
E
F
724
SUPREME COURT REPORTS [1997) SUPP. 6 S.C.R.
that purpose, or in any suit or proceedings, fix the standard rent
at such amount as, having regard to the provisions of this Act and
circumstances of the case, the Court deems just -
where any premises are first let after the first day of September
1940 and the rent at which they are so let is in the opinion of the
Court excessive; or
where the Court is satisfied that there is no sufficient evidence to
ascertain the rent at which the premises were let in any one of the
cases mentioned in paragraphs (i) to (iii) of sub-clause (10) of
section 5; or
where by reasons of the premises having been; let at one time as
a whole or in parts and at another time in parts or as a whole, or
for any other reason, any difficulty arises in
giving effect to this
Part or
where any premises have been or are let rent-free or at a nominal
rent or for some consideration in addition to rent; or
without prejudice to the provisions of sub-section (IA) of section
4 and paragraph (iii-a) of sub-clause (b) of clause (10) of Section
5, where the Court is satisfied that the rent in respect of the
premises referred to therein exceeds the limit of standard rent laid
down in the said paragraph (iii-a); or
where there is any dispute between the landlord and the tenant
regarding the amount of standard rent.
Section 10 provides for an increase in rent where after the commencement of the Bombay Rents, Hotel and Lodging Housing Rates Control
(Amendment) Act, 1986 a landlord is required to pay any fresh rate, cess,
G charges, tax, land assessment, ground rent of land or any other levy on
lands and buildings. Section lOA enables the landlord to make an increase
in the rent of the premises by a percentage specified therein in respect of
those premises which were let on or before the first day of September 1940.
Section 12, inter alia, provides that ordinarily there shall be no ejectment
of a tenant if he is ready to pay or is willing to pay the standard rent with
H permitted increase in the manner provided therein.
..
MALPEVISHWANATHACHARYAv. STATE[KIRPAL,J.]
725
From the aforesaid provisions it is clear that in so far as the question A
of fixation of standard rent is concerned when the Act was enacted the
premises fell into two categories; (a) those let on 1st September 1940 and;
(b) those let out for the first time after 1st September 1940. According to
Mr. Nariman these provisions provide as under :
A.
Premises let out before 1st September, 1940.
In respect of (a) i.e. premises let out on or before 1.9.1940
rent paid on that date is the standard rent
B
(i)
and thus the rent is pegged at the rent paid as on 1.9.1940, C
subject to the increases mentioned below.
(ii) Those increases are of three types :
(a) those permitted U/s lOA
in respect of premises let on or before 1.9.1940; increases are
permitted to the extent of 5% to 7.5% over the standard rent
for residential premises :
and 7.5% - 12.5% in respect of non-residential premises -
This is a one time permitted increase.
(b) Increase on account of heavy repairs, additional amenities and
repairs required to be carried out under requisition from local
authorities; increase in monthly rent permitted to the extent of
15% per year on the actual cost incurred without interest (Section
9).
( c) Increase in ground rent, in respect of leasehold premises paid
D
E
F
to the government, local authority and statutory authority is allowed to be passed on to the tenant by a proportionate increase G
in monthly rent (Section 10).
( d) Increase in amount of property taxes after 13.2.1948 is allowed
to be passed on to the tenant by proportionate increase in monthly
rent (Section 10).
H
726
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
The costs which have to be absorbed and borne by the
landlord (without entitlement to pass on to tenants) are
therefore :
entire cost of "tenantable" repairs U/s. 23, which if the
landlord does not carry out, and the tenant carries out the
same, the tenant is permitted to deduct and recover the same
from the landlord from year to year to the extent of 3 months
rent in a year together with interest at the rate of 15% p.a.;
under Section 23 as amended in 1987 by Maharashtra Act
No. 18 of 1987.
Landlord had to bear the repair cess from 1.1.1970; first
levied under the Bombay Building Repair and Reconstruction Board Act, 1969 replaced by Maharashtra Housing and
Area Development Act, 1976 (MHADA) - to the extent of
10% of the "ratable" value (8.5 % of actual rent in a year),
which in effect, works out to one month's rent in a year.
50% of the total tax levied in lieu of the abolition of the Inami
tenures (w.e.f. 1.4.1971) under Bombay City (Inami & Special
tenures) Abolition and Maharashtra Land Revenue Code
(Amendment) Act, 1969 : Sections 7, 8, 10.
In case of leasehold land, the increase in gronnd rent paid by
the landlord to private parties i.e., parties other than Govern-.
ment, local authority, st.atutory authority, etc. the entire increase is to be borne by the landlord and no part of it can be
passed on to tenant. (This is the effect of Section 10 as
amended by Maharashtra Act No. 18 of 1987).
B. Premises let out for the first time after 1.9.1940 -
such premises fall into 2 categories :
(a) Where the landlord is himself the owner of the building in
which flats are let to different tenants mostly from 1940- 1950.
(b) where the landlord is himself a member of a co-operative
housing society and holds the plate as owner member, bul
has let out the flat to a tenant - the rent will stand frozen at
•
MALPE VISHWANATH AC HAR YA v. STATE [KIRPAL, J.]
727
the amount paid on the date of the first letting by reason of A
the definition of "standard rent" under Section 5(10)(b)(iii)
of the Act ("where they were first let after the first day of
September, 1940 the rent at which they were first let"). These
are "ownership flat" in "cooperative society buildings" constructed in the post - 1950 period. Almost all constructions
after 1950 are on this pattern.
(c)
In the decades of the fifties, siA1ies and seventies, the landlord
member is invariably out of pocket as the ever increasing
amounts of the outgoings and maintenance paid to the Society
are invariable more than the actual amount of rent received
(which had been frozen at first letting)
In the decade of the eighties and nineties however, the
amount of the first letting being considerable higher, this
incidence does not occur. Since increase in maintenance
charges is absorbed in the amount of rent fixed.
In both classes of cases i.e. the premises let on or before 1st
September, 1940 and premises let on or after 1.9.1940, there
are no statutory provisions which entitle the landlord to move
the Court for an increase in standard rent. The Scheme of
the Act negatives any such right [see Section 5(10) read with
Sec. ll(l)(a)].
Mr. F.S. Nariman, learned senior counsel on behalf of the appellants
submitted that a legislation which, when enacted, was justified on
considerations of necessity and. expediency may, with the passage of time,
become arbitrary and unreasonable in changing circumstances. In view of
the constant escalation in prices due to inflation and corresponding fall in
the value of the rupee, ceiling on rentals, such as the one imposed by
Section 5(10)(a) and (b) read with Sections 7 and 11 of the Bombay Rent ·
Act, is totally arbitrary and unrealistic and, therefore, unreasonable.
In reply it was submitted by Mr. N.S. Nargolkar, learned senior
co•msel for the respondent that the writ petitions which were filed by the
appellants did not give sufficient details as regards the rents which they
were receiving from the tenanted premises. It was, therefore, contended
B
c
D
E
F
G
that the claims made were hypothetical as there was no sufficient material H
A
B
c
D
E
F
G
7'28
SUPREME COURT REPORTS (1997) SUPP. 6 S.\.R.
to decide the truth of the assertions made by the appellants as regards
negative returns from their rented properties. It was further submitted by
the learned counsel that the respondent - State has become aware of the
rising prices at least since 1986 and this had resulted in Maharashtra Act
18 of 1987 being passed whereby the Bombay Rent Act was amended. It
was contended that an important concession which was made by the
Amending Act was the introduction of Section 4(1)A, which provided that
the provisions relating to standard rent and permitted increases was not to
apply for a period of five years to any premises the construction or
reconstruction of which was completed on or after the appointed date,
namely, l.10.1987. This Amending Act also introduced Section 9 which
allowed a landlord to increase the rent for an improvement or structural
alteration of the premises, excepting repairs under Section 23 of the
Bombay Rent Act. Furthermore, it was submitted that the amended Section 6 also entitled a landlord to increase the rent by addition of an
amount not exceeding 15 per cent of the expenses incurred on account of
special additions or special alterations or additional amenities, improvements or structural alterations. The landlord was further entitled to temporarily increase the rent at a rate not exceeding 18 per cent of the
standard rent for special or heavy repairs. Reference was also made to
Section 10 and lOA introduced by the Amending Act of 1986 whereby
landlord could increase the rent in case he was
required to pay fresh
rates, charges, etc. to the Government or if he was required to cover the
increase in water and electricity charges. The learned counsel reiterated
that the State was aware and conscious about the problem of the landlords
and was proceeding in the right direction to obviate their difficulties. In
this connection the attention of the Court was ;nvited to the constitution
of a committee headed by Mr. V.K. Tembe in 1979 for the purpose of
preparing a Unified Rent Control Act for the entire State. The State Law
Commission had examined the recommendations of the Tembe Committee
and submitted its report. The Cabinet Sub-Committee had considered this
report as well as the Model Rent Control Bill, forwarded to it by the
Central Government, and this had resulted in a new Rent Control Bill
being introduced in the upper house of the State Legislature in July, 1993.
This bill has been referred to the Select Committee and it was accepted
that the reading of the bill clause by clause will be commenced in the State
Legislature.
There is considerable judicial authority in support of the submission
H
of learned counsel for the appellants that with the passage of time a
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MALPE VISHWANATH ACHARYA v. STATE [KIRPAL, J.]
729
legislation which was justified when enacted may become arbitrary and A
unreasonable with the change in circumstances. In the State of Madhya
Pradesh v. Bhopal Sugar Industries, [1964) 6 S.C.R. 846 dealing with a
question whether geographical classification due to historical reasons
would be valid this Court at page 853 observed as follows :
"Differential treatment arising out of the application of the laws
so continued in different regions of the same reorganised, State,
did not therefore immediately attract the clause of the Constitution
prohibiting discrimination. But by the passage of time, considerations of necessity and expediency would be obliterated, and the
grounds which justified classification of geographical regions for
historical reason may cease to be valid. A purely temporary
provision which because of compelling forces justified differential
treatment when the Reorganisation Act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate
B
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that treatment without a rational basis to support it after the initial D
expediency and necessity have disappeared.
In Narottam Kishore Dev Venna and Ors. v. Union of India and Anr.,
(1964) 7 S.C.R. 55 the challenge was to the validity of Section 87B of the
Code of Civil Procedure; which granted exemption to the rulers of former
India State from being sued except with the cnsert of the Central Govt. E
dealing with this question it was observed at page 60 as follows :
"If under the Constitution all citizens are equal, it may be
desirable to confine the operation of s. 87B to past transactions
and nor to perpetuate the anomaly of the distinction between the
F
rest of the citizens and Rulers of former Indian States. With th-;
passage of time, the validity of historical considerations on which
s. 87B is founded will wear out and the continuance of the said
section in the Code of Civil Procedure may later be open to serious
challenge."
G
In H.H. Slui Swamiji Shri Admar Mutt Etc. v. The Commissio1w;
Hindu Religious & Chmitable Endowments Depaltment and Ors., [ 1980] 1
S.C.R. 368 this Court was called upon to consider the validity of the
continued application of the provisions of the Madras Hindu Religious
Endowment Act, 1951 in the area which had formerly been part of State H
730
SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.
A of Madras and which had latter become part of the new State of Mysore
(now Karnataka) as a result of the State Re-organisation Act, 1956. In this
connection at page 387-388 it was observed by this Court as follows :
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D
An indefinite extension and application of unequal laws for all
time to come will militate against their true character as temporary
measures taken in order to serve a temporary purpose. Thereby,
the very foundation of their constitutionality shall have been
destroyed the foundation being that section 119 of the State Reorganisation Act serves the significant purpose of giving reasonable
time to the new units to consider the special circumstances obtaining in respect of diverse units. The decision to withdraw the
application of unequal laws to equals cannot be delayed unreasonably because of the relevance of historical reasons which
justify the application of unequal laws is bound to wear out with
the passage of time. In Broom's Legal; Maxim (1939 Edition, page
97) can be found a useful principle "Cessante Ratione Legis Cessat
Ipsa Lex", that is to say, "Reason is the sour of the law, and when
the reason of any particular law ceases, so does the law itself'.
This Court in Motor General Traders and Anr. Etc. Etc. v. State of
E Andhra Pradesh and Ors. Etc. Etc., [1984] 1 S.C.R. 594 had to consider the
validity of Section 32B of the Andhra Pradesh Buildings (Lease, Rent and
Eviction) Control Act, 1960. This section provided that the Act would not
apply to buildings constructed after 26th August, 1957. This exemption had
continued for merely a quarter of a century and it was argued that because
F
of shortage of housing accommodation since the section had been valid
from the commencement of the Act, therefore, it could not be struck down
at any time after it came into force. While referring to earlier decisions in
Bhaiyalal Shukla v. State of Madhya Pradesh, [1962] Suppl. 2 S.C.R. 257
and Bhopal Sugar Industries Ltd. (supra) it was observed at page 606 as
follows "what may be unobjectionable as a transitional or temporary
G measure at an initial stage can still become discriminatory and hence
violative of Article 14 of the Constitution if it is persisted in over a long
period without any justification". Dealing \vith the contention that the
impugned provisions had been in existence for over 23 years and had once
been held to be valid by the High Court and, therefore, this Court should
H not pronounce upon its validity at this late stage, it was observed at page
MALPEVISHWANATHACHARYAv. STATE [KIRPAL,J.]
731
614 that "what was justifiable during a short period has turned out to be a A
case of hostile discrimination by lapse of nearly a quarter of century .......... .
We are constrained to pronounce upon the validity of the impugned
provision at this late stage because of grab of constitution which it may
have possessed earlier has become worn out and its unconstitutionality is
now brought to a successful challenge".
In Rattan A1)1a and 010» v. State of Tamil Nadu and Anr., [1986] 3
SCC 385 this Court had to consider the validity of Section 30(ii) of the
Tamil Nadu Buildings (Lease and Rent) Control Act, 1960 which provided
that tenants of residential building paying monthly rent exceeding Rs. 400
were exempted from the protection of the Act whereas no such restriction
was imposed in respect of tenants of non-residential buildings under the
said Act. Holding that the tenants of the residential buildings required
greater protection and that there was no justification in picking out the
class of tenants of residential buildings paying a rent of more than Rs. 400
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per month and to deny them the right conferred generally on all tenants D
of buildings, residential or non-residential, and for this reason holding
Section 30(ii) of the said Act as being violative of Article 14 at page 389
and 390 it was observed as follows:
"It certainly cannot be pretended that the provision is intended E
to benefit the weaker section of the people only. We must also
observe here that whatever justification there may have been in
1973 when Section 30(ii) was amended by imposing a ceiling of
Rs. 400 on rent payable by tenants of residential buildings to entitle
them to seek the protection .of the Act, the passage of time has
F
made the ceiling utterly unreal. We are entitled to take judicial
notice of the enormous multifold increase of rents throughout the
country, particularly in urban areas. It is common knowledge today
that the accommodation which one could have possible got for Rs.
400 per month in 1973 will today cost at least five times more. In
these days of universal, day to day escalation of rentals any ceiling G
such as that imposed by Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this
court in Motor General Trade10· v. State of A.P. a provisions which
was perfectly valid at the commencement of the Act could be
challenged later on the ground of unconstitutionality and struck H
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SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
down on that basis. What was once a perfectly valid legislation,
may in course of time, become discriminatory and liable to challenge on the ground of its being Violative of Article 14."
Lastly reference need be made to Synthetics and Chemicals Ltd. and
Ors. v. State of U.P. a11d Ors., [1990] 1 SC~ 109 where at pages 156-157 it
was observed that "restriction valid under one circumstance may become
invalid in changed circumstances" Reliance in support of this view was not
only placed on some American decisions but also on the decision of this
Court in Motor Gc11eral Traders case (supra).
Mr. Nargolkar referred to the decision of this Court in Sant Lal
C Bhmti v. State of Punjab, [1988] 2 S.C.R. 107 and contended that the ratios
of the said decision is clearly applicable to the present case. In Sant Lal's
case a two Judge Bench of this Court was called upon to consider the
validity of Section 4 of East Punjab Urban Rent Restriction Act. 1949,
which intra alia, provided that in determining the fair rent the Rent
D Controller shall fix the basic rent by taking into consideration the prevailing
rates of rent in the locality for the same or similar accommodation in
similar circumstances during a twelve months prior to lst January, 1939. It
was held in that case that the Act in question had been passed in 1949 and
it pegged the rent prevalent for similar houses in 1938 and as such it was
E not unreasonable per se. Even though, there was an increase in the rents
after the second World War and the partition of the country, it was held
that fixing of the rents at the 1938 level could not be regarded as unreasonable when one of the objects of the Act was to restrict the increase
by providing for certain provisions as to fixation of a fair rent. In that case
the main emphasis of the appellants was to assail Section 4 by comparing
F
the said law with the legislation of different states. There was no argument
raised or considered, as is being done in the present case, while relying on
the decision of a Three Judge Bench in the cases of Rattan Ary1a1 Motor
General Traders and Synthetics and Chemicals (supra) that with the passage
of time and with the consequent change of circumstances the continued
G operation of an Act which was valid when enacted may become arbitrary
and unreasonable.
The aforesaid decisions clearly recognise and establish that a statute
which enacted was justified may, with the passage of time, become arbitrary
and unreasonable. It is, therefore, to be seen whether the aforesaid prinH ciple is applicable in the instant case. Can it be said that even though the
•.
MALPE VISHWANATH ACHARYA v. STATE [KIRPAL, J.]
733
provisions relating to the fixation of standard rent were valid when the A
Bombay Rent Act was passed in 1947 the said provision, as amended, can
still be regarded as .valid now?
Reports of different Committees and Resolutions of the Ministers
have been placed on record in an effort to show that these official agencies
have, since over the last two decades, themselves felt that increase in rents
was called for. The correctness or the authenticity of this material has not,
in any way, been doubted and, therefore, we see no reason as to why this
cannot be taken into consideration in order to determine whether the
submission of Mr. Nariman merits acceptance. Reference may now be
made to some of this material :
1. A rent Act inquiry committee of 1977 commonly known as Tembe
Committee, was constituted by the Government of Maharashtra which in
its report submitted in the same year recognised that the pegging down of
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the rents to a date nearly thirty years back (at that time) had deprived the
property owners of a reasonable return on their properties commensurate D
with the increase in the cost of living and the cost of building materials. It
recognised that there were several small property owners all over the State
who had invested the life time savings in building houses partly for the
residence and partly for being let out in order to assure a steady income
in old age. As a result of Rent Control Act, the return they got is
inadequate even for subsistence because of the steep increase in the cost E
of living. In para 6( 10) it observed that "having regard to the general
increase in the cost of living the Committee is of the view that there is a
case for some general increase although not to the extent claimed by the
property owners as the period of twenty years has elapsed since the last
increase was allowed."
2. The Maharashtra State Law Commission which submitted its
report in the year 1977 recommended the increase in the rents in the
following terms "the Commission, feels that there is immediate need for
reasonable increase in standard rent."
3. In the 12th report of Maharashtra State Law Commission 1979
on the Rent Control Legislation, para 91 dealing with this aspect reads
as follows :
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"The Commission does not want the rents to be static for Jong. The
inflationary trend reflected by the rising consumer price index H
734
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SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.
numbers at all centres in the State makes it imperative to make on
objective assessment of the situation at regular intervals so that the
remedial action may be possible by periodical variation in rents
according to as the situation demanded. Suggestions for such
periodical survey was also made to the Commission by various
representatives in evidence. The Commission feels that such a
periodical survey would be much helpful in maintaining the balance
between the landlord and the tenant. The possibility of the inflationary trend receding in future - though such possibility is not
easy to entertain - cannot be totally ruled out, in which case the
rents could be brought down on a reasonable level.