# ~ ;. r • "' DWARKADAS MARFATIA & SONS v. BOARD OF TRUSTEES OF THE PORT OF BOMBAY APRIL 27, 1989

- **Citation:** [1989] 2 S.C.R. 751
- **Court:** Supreme Court of India
- **Decided:** 1989-04-27
- **Bench:** Saby Asachi Mukharji, M.H. Kania, S. Ranganathan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-dwarkadas-marfatia-sons-v-board-of-trustees-of-the-port-of-bombay-april-27-10312
- **Pages:** 18

## Headnote

Constitution of India, 1950: Articles 12, 14, 32 and 22~
'Bqmbay Port Trust'-Whether 'State'-Evicting its tenant and granting
the land in question to another tenant-Frontiers of judicial revie1t of
such action.
The respondent Board of Trustees of the Port of Bombay is a
statutory authority, and as such has been exempted from the operation
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of the .. Bombay Rents, Hotel & Lodging House Rates (Control) Act,
1947. The appellant has been the lessee of the respondent since about
1932 in respect of part of the original plot No. 4 (now plot SB) which
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adjoins plot No. 6 tenanted by M/s Bombay Bharat & Swadeshi Rice
Mills. In or about 1933-34, M/s Bombay Bharat & Swadeshi Rice Mills
took over the appellant, and a rice mill was started on appellant's part
of plot No. 4 and plot No. 6.
In December 19S7, the Town Planning Scheme No. ·1 in Bombay
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City came into force, and the original plot No. 4 was reconstituted into
final plot No. S. In or about 1963 the respondent sub-divided plot No. S
into final plot SA and final plot SB, and as a result of the sub-division
M/s Dhanji Mavji became the tenant/occupant of a major portion of
plot SB, In 1970'71 the respondent agreed to let the entire plot SB,
including the portion which had been let to and was in possession of the
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appellant since 1933, to Dhanji Mavji. The appellant objected to the
offer made to Dhanji Mavji but the respondent asserted that as Dhanji
Mavji had been in possession of the major portion of plot No. SB, it
agreed to let the entire plot to them. In the premise, the respondent
purported to terminate the tenancy of the appellant in respect of its
portion of plot SB, and later tiled snit for eviction. The Trial Court G
dismissed the suit holding that it would be legitimate to infer that the
letting was for a manufacturing purpose and hence the notice of termination was had. The appellate court reversed that decision.
Aggrieved thereby, the appellant tiled a writ petition under Article 227
of the Constitution. The High Court accepted the finding of the appellate court that the notice of ejectment was valid notice and there was no
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waiver of notice.
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SUPREME COURT REPORTS
[1989] 2 S.C.R.
Before this Court, it was contended on behalf of the appellant that
(1) the exemption from the operation of the Rent Act was given to the
Port Trust Authority on the assumption that it would act in public
interest and would not behave like ordinary landlords; (2) the action of
the respondent in terminatin! the appellant's contractual tenancy had a
public law character attached to it and was accordingly subject to
judicial review; (3) every action of the respondent which was 'State'
within Article 12 of the Constitution, whether it be in the field of contract or any other field, was subject to Article 14 of the Constitution and
must be reasonable and taken only upon lawful and relevant grounds of
public interest; (4) the respondent's established rational/policy was to
offer /allot a final/reconstituted plot for development to the existing
occupants thereof as joint tenants; and (5) the eviction of the appellant
was not necessary in the public interest for the proper development of
the plot as required by the Town Planning Scheme.
On behalf of the respondent it was contended that (1) the onus was
entirely on the appellant to establish that the Bombay Port Trust had
terminated the tenancy or taken the proceedings in eviction not in
public interest but for a collateral purpose or mala fide or that it had
acted ln a manner contrary to the provisions of Article 14; (2) since
there was no obligation or duty cast upon the Bombay Port Trust to
provide accommodation, there could be no question of acting in governmental character, and such a body stood on the same footing as any
other citizen and would, in respect of such activity, not be subjected to
public law duty; (3) the respondent's dealing with tenants was a contractual dealing and it was not a matter for public law doma

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DWARKADAS MARFATIA & SONS
v.
BOARD OF TRUSTEES OF THE PORT OF BOMBAY
APRIL 27, 1989,
[SABY ASACHI MUKHARJI, M.H. KANIA AND
S. RANGANATHAN, JJ.]
Constitution of India, 1950: Articles 12, 14, 32 and 22~
'Bqmbay Port Trust'-Whether 'State'-Evicting its tenant and granting
the land in question to another tenant-Frontiers of judicial revie1t of
such action.
The respondent Board of Trustees of the Port of Bombay is a
statutory authority, and as such has been exempted from the operation
A
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c
of the .. Bombay Rents, Hotel & Lodging House Rates (Control) Act,
1947. The appellant has been the lessee of the respondent since about
1932 in respect of part of the original plot No. 4 (now plot SB) which
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adjoins plot No. 6 tenanted by M/s Bombay Bharat & Swadeshi Rice
Mills. In or about 1933-34, M/s Bombay Bharat & Swadeshi Rice Mills
took over the appellant, and a rice mill was started on appellant's part
of plot No. 4 and plot No. 6.
In December 19S7, the Town Planning Scheme No. ·1 in Bombay
E
City came into force, and the original plot No. 4 was reconstituted into
final plot No. S. In or about 1963 the respondent sub-divided plot No. S
into final plot SA and final plot SB, and as a result of the sub-division
M/s Dhanji Mavji became the tenant/occupant of a major portion of
plot SB, In 1970'71 the respondent agreed to let the entire plot SB,
including the portion which had been let to and was in possession of the
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appellant since 1933, to Dhanji Mavji. The appellant objected to the
offer made to Dhanji Mavji but the respondent asserted that as Dhanji
Mavji had been in possession of the major portion of plot No. SB, it
agreed to let the entire plot to them. In the premise, the respondent
purported to terminate the tenancy of the appellant in respect of its
portion of plot SB, and later tiled snit for eviction. The Trial Court G
dismissed the suit holding that it would be legitimate to infer that the
letting was for a manufacturing purpose and hence the notice of termination was had. The appellate court reversed that decision.
Aggrieved thereby, the appellant tiled a writ petition under Article 227
of the Constitution. The High Court accepted the finding of the appellate court that the notice of ejectment was valid notice and there was no
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waiver of notice.
751
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752
SUPREME COURT REPORTS
[1989] 2 S.C.R.
Before this Court, it was contended on behalf of the appellant that
(1) the exemption from the operation of the Rent Act was given to the
Port Trust Authority on the assumption that it would act in public
interest and would not behave like ordinary landlords; (2) the action of
the respondent in terminatin! the appellant's contractual tenancy had a
public law character attached to it and was accordingly subject to
judicial review; (3) every action of the respondent which was 'State'
within Article 12 of the Constitution, whether it be in the field of contract or any other field, was subject to Article 14 of the Constitution and
must be reasonable and taken only upon lawful and relevant grounds of
public interest; (4) the respondent's established rational/policy was to
offer /allot a final/reconstituted plot for development to the existing
occupants thereof as joint tenants; and (5) the eviction of the appellant
was not necessary in the public interest for the proper development of
the plot as required by the Town Planning Scheme.
On behalf of the respondent it was contended that (1) the onus was
entirely on the appellant to establish that the Bombay Port Trust had
terminated the tenancy or taken the proceedings in eviction not in
public interest but for a collateral purpose or mala fide or that it had
acted ln a manner contrary to the provisions of Article 14; (2) since
there was no obligation or duty cast upon the Bombay Port Trust to
provide accommodation, there could be no question of acting in governmental character, and such a body stood on the same footing as any
other citizen and would, in respect of such activity, not be subjected to
public law duty; (3) the respondent's dealing with tenants was a contractual dealing and it was not a matter for public law domain and was
not subject to judicial review; and (4) it was the policy of the respondent
to allot the entire re-constituted plot to one person who was occupying
the major portion of such plot, for its proper development.
Disn1issing the appeal, it was,
HELD: Per Sabyasachi Mukharji, J., (Kania, J. agreeing)
(I) Bombay Port Trust being a public body, even in respect of its
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dealing with its tenants, it must act in public interest, and an infraction
of that duty is amenable to examination either in civil suit or in writ
jurisdiction. [761G]
Rampratap Jaidayal v. Dominion of India, [1952] 54 Born. L.R.
927; and Baburao Shantaram More v. The Bombay Housing Board,
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[1954] V SCR 572, referred to.
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DWARKADAS '· BOARD OF TRUSTEES
753
(2) Where any special right or privilege is granted to any public
or statutory body on the presumption that it must act in a certain
manner, such bodies must make good such presumption while acting by
virtue of such privilege. Judicial review to oversee if such bodies are so
acting is permissible. [762D-E]
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Radhakrishna Agarwal & Ors. v. State of Bihar & Ors., [1977] 3 B
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(
.SCR 249 and Life Insurance Corporation of India v. Escorts Ltd. &
~rs., [1985] 3 Supp SCR 909, referred to.
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(3) The field of letting and eviction of tenants is normally
governed by the Rent Act. The Port Trust is statutorily exempted from
the operation of the Rent Act on the basis of its public/Governmental C
character. Every action/activity of the Bombay Port Trust which con-
' )-.. stituted "State" within Article 12 of the Constitution in respect of any
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right conferred or privilege granted by any statute is subject to Article
14 and must be reasonable and taken only upon lawful and relevant
grounds of public interest. [762E-F; 763A-B]
S.P.
R~khi v. Union of India,
[1981] 2 SCR 111 and
M.C. Mehta & Anr. v. Union of India & Ors., [1987] I SCC 395,
referred to.
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(4) Where there is arbitrariness in State action, Article 14 springs
and judicial review strikes such an action down. Every action of the
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Executive authority must be subject to rule of law and must be informed
by reason. So, whatever be the activity of the public authority, it should
meet the test of Article 14. [763C]
(5) All exercise of discretion or power by public authorities as the
respondent, in respect of dealing with tenants In respect of which they
have been treated separately and distinctly from other landlords on the
assumption that they would not act as private landlords must be judged
by that standard. [763H; 764A]
( 6) If a governmental policy or action even in contractual
matters fails to satisfy the test of reasonableness, it would be unconstitutional. [764A-B]
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E.P. Royappa v. State of Tamil Nadu, [1974] 2 SCR 348; Maneka
Gandhi v. Union of India, [1978] 2 SCR 621; R.D. Shettv v. The
International Airport Authority of India & Ors., [1979] iscR 1014;
Kasturi Lal Lakshmi Reddy v. State of J & K, [1980] 3 SCR 1338 and
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SUPREME COURT REPORTS
[1989] 2 S.C.R.
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Ajay Hasia v. Khalid Mujib Sehravardi, [1981] 2 SCR 79, referred to.
(7) Governmental Policy would be invalid as lacking in public
interest, unreasonable or contrary to the professed standards and this is
differen1 from the fact that it was not done bona fide. [764B-C]
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(8) There is always a presumption that a governmental action is
reasonable and in public interest. It is for the party challenging its
validity to show that the action is unreasonable, arbitrary or contra;}
to the professed norms or not informed by public interest, and the
burden is a heavy one. [764C-D]
(9) Judicial review is not concerned with the decision, but with
the decision making process. Unless this restriction on the power of
the court is observed, the court under the guise of preventing the
abuse of power, would be itself guilty of usurping power which does not
belong to it. [765E-F]
(10) The Court cannot really substitute a decision reached by a
fair procedure keeping the policy of the respondent in mind by a different decision only on the ground that the decision which appeals to the
court is a better oue. [ 765G I
Council of Civil Service Unions v. Minister for the Civil Service,
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[1984] 2 AER 935; Chief Constable of the North Wales Police v. Evans,
[1982] 1 WLR 1195; In re Preston v. l.R.C., [1985] 2 WLR 336 and
Regina v. Chief Constable of the Merseyside Police, [1986] 2 WLR 144,
referred to.
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(11) The Bombay Port Trust, perhaps, was justified in coming to
the conclusion that the only possible way to develop the properties of the
Bombay Port Trust in compliance with the Town Planning Scheme was
by allotting plots to holders of major portions thereon. Such a decision
cannot be faulted. [766E-F]
(12) Upon the facts of the instant case, there was an implied
obligation in respect of dealings with the tenants/occupants of the Port
Trust Authority to act in public interest/purpose. That requirement is
fulfilled if it is demonstrated that the Port Trust authorities have acted
in pursuance of a policy which is referable to public purpose. Once that
norm is established whether that policy is the best policy or whether
another policy was possible, is not relevant for consideratfon. [767E-F]
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DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.]
755
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(13) Under the constitutional scheme of this country, the Port
Trust Authorities were required by relevant law to act in pursuance of A
public purpose. This Court is satisfied that they have proceeded to so
act. [767G)
Per S. Ranganathan, J. (Concurring)
r )
On the facts of the instant case, the action of the Port Trust was
not improper and there are no grounds for interference. [768F)
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2036
f ).--·. of 1987.
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From the Judgment and Order dated 19.11.1986 of the
Bombay High Court in W.P. No. 710of 1984.
Aspi Chinai, R.F. Nariman, Miss Darshna Bhogilal, K.K.
Lahiri, R. Karanjawala, Ejaz Maqbool and Mrs. Manik Karanjawala
for the Appellant.
K.K. Singhvi, Brij Bhushan and Anil Kumar Gupta for the
Respondent in C.M.P. No. 19447 of 1988.
G. Ramaswamy, Additional Solicitor General, U.J. Mukhija,
B.S. Basania, Mrs. A.K. Verma, Arnn Banga and D.N. Misra for the
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...., Respondent.
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~ The Judgment of the Court was delivered by
SABYASACHI MUKHARJI, J. This ·is an appeal by special
leave from the judgment and order dated 19th November, 1986 of the
learned Single Judge of the Bombay High Court. In this appeal this
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Court has been asked to examine theJrontiers of judicial review of the
action of a statutory authority, i.e. the Board of Trustees of the Port of
Bombay, in evicting its tenant and granting the land in question to
another tenant. However, in order to appreciate the controversy it is
necessary to have a conspectus of the facts involved.
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756
SUPREME COURT REPORTS
(1989] 2 S.C.R.
The respondent Board of Trustees of the Port of Bombay is a
statutory authority. Vast areas of South Bombay which are completely
tenanted, are owned by the respondent. Being a statutory authority,
the re.spondent has been exempted from the operation of the relevant
Rent Act. The respondent is a statutory corporation constituted under
the Major Port Trust Act, 1963 as amended by the Major Port Trust
(Amendment) Act, 1974.
Between about 1906 and 1932, one Jhunjhunwala was the Jessee:t,'
of plot No. 6 (which adjoins plot SB which is the suit plot) and a
building was existing on plot No. 6 which was tenanted to M/s Bombay
Bharat & Swadeshi Rice Mills, and the said Mills were desirous of
operating a rice mill on plot No. 6 but could not get the licence from
the Municipality for the operation of the said rice mill unless satisfactory arrangement was made for the removal and storage of rice
husk in a separate chamber/structure.
Since about 1932, the appellant had been the Jessee of the
respondent in respect of part of the original plot No. 4 (now plot SB)
which adjoins plot No. 6 of the suit plot measuring 113.4 sq. mts. In or
about 1933-34, with a view to acquire the suit plot and using the same
for the rice mill/dust room, M/s Bombay Bharat & Swadeshi Rice
Mills took over the appellant. The dust room structure was constructed on the suit plot. The rice mill on pl<\lt No. 6 and the dust room
on the suit plot had a common wall and were inter-connected by ducts.
It was stated that the respondent's inspectors had regularly
visited the premises in question but had never objected to the user of
the rice mill/dust room. In December'S7, the Town Planning Scheme
No. 1 in Bombay City came into force. The original plot No. 4 was
reconstituted into final plot No. S but continued to belong to the
respondent. The Scheme also stipulated that all rights of lessee/tenants
in the original plots stood transferred to the final plots. It may be
noted that in December'S7 original plot No. 4 comprised of 113.4 sq.
mts. let to the appellant, 390 sq. mts. let to M/s Dhanji Mavji, 453 sq.
mts. let to two associate firms (M/s Gordhandas Ranchoddas and M/s
Chunilal Gupta) and 19S sq. mts. let to M/s Vassanji Hirji. Hence, of
the final plot No. S, the appellant and their associates, it was asserted,
held S69 sq. mts., Dhanji Mavji held 390, Vassanji Hirji held 195 sq.
mts. and the balance lSS sq. mts. was with the respondent/others.
Total area of final plot S was 1309 sq. mts. From 1957-72, the respondent, it is asserted, continued the tenancies of the appellant and its
associate firms. In or about 1963, however, the respondent applied for
and got final plot No. S sub-divided into final plot SA (659 sq. mts.)
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DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.J
7S7
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and final plot SB (6SO sq. mts.). The suit plot and M/s Dhanji Mavji's
plot fell entirely in final plot SB and as a result of the sub-division,
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Dhanji Mavji became the tenant/occupant of a major portion of plot
SB. It is asserted that appellant's associate firm and Chunilal Gupta
fell in plot No. SA and became the tenants/occupants of a major portion of plot No. SA. In 1971 the Municipality renewed the mill licence
re
covering both the structures.
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).
It is the case of the appellant that in 1970-71, the r~pondent
arbitrarily agreed to let the entire plot SB including the portion which
had been let to and in the possession of the appellant since 1933 to
M/s. Dhanji Mavji, and thereby agreed to give him 6S0.6 sq. mts.
against his existing 390 sq. mts. Also the appellant offered to develop
final plot SB jointly with Dhanji Mavji in 1972-76. The appellant, c
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however, asserted that it had offered to pay the revised rent that might
be fixed by the respondent. The appellant objected to the offer made
to Dhanji Mavji exclusively and pointed out that the established
practice of the respondent was to continue the existing tenants/
occupants on the final plots. The respondent, however, asserted that
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as Dhanji Mavji had been in possession of the major portion of plot
No. SB (390 sq. mts. vis-a-vis 113.4 sq. mts.), they agreed to let the
entire plot to Dhanji Mavji and, therefore, could not entertain the
appellant's request. In the premises, by notices issued in 1971-73, the
respondent purported to terminate the tenancy of the appellant. In
1973-74, the Municipal Corporation auctioned the right, title and
interest of Jhunjhunwala and the respondent in plot No. 6 for nonE
payment of property taxes. An associate firm of the appellant M/s.
Natwar Parekh & Sons purchased plot No. 6 and became the owner
thereof. The case of the appellant was that the respondent got the
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Corporation to wrongfully exclude the respondent's interest from the
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conveyance. The said Natwar Parekh challenged such exclusion by
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filing writ petition No. 52/74 in the High Court. On 26.7.1976, the writ
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petition was allowed, and Natwar Parekh are now the owners of plot
No. 6. This, according to the appellant, caused resentment to the
respondent, and it offered Plot No. SA to the existing tenants, i.e. the
petitioner's associates who held 4S3 sq. mts. and Vassanji Hirji, who
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held 19S sq. mts. The petitioner's associates who held 70% of the plot
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SA, pointed out that the said Vassanji Hirji was not interested and that
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the entire plot should accordingly be given to them. The respondents
declined and instead commenced eviction proceedings against all the
three holders. In or about October 1977, the respondent issued one
month's notice to the appellant to terminate the tenancy.
In December, 1977 the respondent filed suits Nos. 447 & 603/77
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against the appellant in the Court of Small Causes, Bombay. The
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SUPREME COURT REPORTS
[1989] 2 S.C.R.
appellant filed its written statement and pleaded that the proceedings
had been instituted ma/a fide and just to benefit Dhan ji Mavji and to
harass the appellant's associates, who had acquired the respondent's
title to plot no. 6. Secondly, it was asserted that the premises had been
acquired and used for rice mill for 40 years and accordingly it could not
be terminated by one month notice. The lease was for manufacturing
purposes. Thirdly, it was assert~d, that the notice of termination, in
any event, had been waived by demanding and recovering rent/
enhanced rent.
It is asserted that at the hearing the witnesses of the respondent
had admitted that the plot would be given to Dhanji Mavji if the
appellant was evicted therefrom. It also agreed that the respondent
was under no statutory obligation to give the entire plot to Dhanji
Mavji.
On or about 31st March, 1981 the Trial Court dismissed the suit,
holding that the appellant was admittedly using the plot for a rice mill
for over 50 years to the knowledge of the respondent; and it would be
legitimate to infer that the letting was for a manufacturing purpose.
Hence, the notice of termination was bad. The Trial Court did not deal
with the question of ma/a fide. On or about 13th January, 1984 the
appellate court reversed that decision and also held that the issue of
ma/a fide or arbitrariness was not relevant on the legality of the eviction proceedings. Aggrieved thereby, the appellant filed a writ petition
No. 710/84 under Article 227 of the Constitution. The High Court
dismissed the said writ petition by the judgment under appeal and
upheld the order of eviction. The High Court accepted the finding of
the appellate court that the notice of ejectment was valid notice and
there was no waiver of notice. In our opinion, the High Court was right
on this aspect and in any event under Article 227 of the Constitution
the High Court could not have gone into this question. We, in an
appeal under Article 136 of the Constitution cannot re-appraise that
ques~ion.
The question that survived after the finding of the appellate
court and which was urged mainly before the High Court and also in
this appeal, was whether the action of the respondent in evicting the
appellant and granting the premises in question to M/s Dhanji Mavji
was proper and right. It was contended on behalf of the appellant that
the action of the respondent in terminating the appellant's contractual
tenancy had a public law character attached to it and was accordingly
subject to judicial review. It was asserted that every action of the
respondent which was 'State' within Article 12 of the Constitution,
whether it be in the field of contract, or any other field, was subject to
Article 14 of the Constitution and must be reasonable aJ\d taken only
\ )-
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DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.[
759
upon lawful and relevant grounds of public interest. In that light, it
was urged that if the eviction of the appellant was not necessary in the
public interest and-if it had been taken pursuant to any norm or policy
which does not permit eviction of the appellant, then the action .is
arbitrary and discriminatory and not in accordance with any policy
which the respondent was enjoined to follow.
In the aforesaid background it was contended that the eviction of
the appellant was not necessary in public interest. It appears that the
eviction of the appellant was only in pursuance of a .policy of the Port
Trust to let out a reconstituted plot to the person who occupied the
major portion and who could use it for development It was urged that
the decisipn of the Port Trust to allot the entire plot to M/s Dhanji
Mavji to the exclusion of the appellant (although the appellant was
also the existing tenant and in occupation of a portion thereof for the
past 40 years) was an arbitrary and discrimina~ory departure from the
established policy of the Port Trust, which was to offer the plot to the
existing tenants (where two or more tenants were in occupation of one
plot) as joint-tenants. It was contended that the impugned termination
was ultra vires and arbitrary. It was contended that the exclusive allotment of the entire plot SB to M/s Dhanji Mavji and the consequent
termination of the appellant's tenancy was not necessary to enable
proper development of the plot as required by the Town Planning
Scheme. There was no policy requiring the entire final/reconstituted
plot to be allotted exclusively to the person occupying the major portion thereof or requiring the other existing occupants ~ be evicted.
Nor, it was submitted, was the allotment of the entire plot, pursuant to
any such alleged policy. On the other hand, the appellant contended
that the respondent's established policy was to offer/allot a final/
reconstituted plot for development to the existing occupants thereof as
joint tenants. It was contended that this rational policy which, according to the appellant, would have fulfilled the public interest of
development in accordance with the regulations of the Town Planning
Scheme and at the same time would not have required or necessitated
the eviction of the existing occupants.
Contrary to the established rational policy of accommodating
tenants by offering/allotting a new plot jointly to the existing
occupants/tenants, the respondent arbitrarily, it was contended, and
discriminatingly did not offer the new plot SB to Mis Dhanji Mavji and
the appellant (both of whom were existing tenants/occupants of the
plot) as joint tenants, but instead wrongfully decided to give the entire
plot to M/s Dhanji Mavji to the exclusion of the appellant.
'Our attention was drawn to Section 4 of the Bombay Rents,
Hotel & Lodging House Rates (Control) Act, 1947, which enjoins that
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SUPREME COURT REPORTS
[1989] 2 S.C.R.
the Act would not apply to the premises belonging to the Govt. or to
the local authorities. By the provisions of the said Section 4, the Port
Authorities were exempted from the operation of the Rent Act. This
privilege was given to the Port Trust Authorities, it was submitted, on
the assumption that it would act in public interest, and would not
behave like ordinary landlords. The special privileges, powers and
benefits were statutorily conferred on the Bombay Port Trust by Section (4) of the aforesaid Act. It had those rights due to its statutory or
public character, as a local authority.
Our attention was also drawn to the decision in Rampratap
Jaidayal v. Dominion of India, [1952] 54 Born. LR 927 at 934 where
the Chief Justice Chagla observed as follows:
·
"It is not too much to assume, as the Legislature did in this
case assume, that the very Government whose object was
to protect the tenants and prevent rent being increased and
prevent people being ejected, would not itself when it was
the landlord do those very things which it sought to prohibit its people from doing, and therefore the underlying
assumption of this exemption is that Government would
not increase rents and would not eject tenants unless it was
absolutely necessary in public interest_ and unless a particular building was required for a public purpose."
This Court in Baburao Shantaram More v. The Bombay Housing
E Board & Anr., [1954] V SCR 572 had to consider Section 4 of the
Bombay Rents, Hotel & Lodging House Rates Control Act, 1947, and
so far as material for our present purposes explained the basis of
exemption under Section 4 as that the Govt. or local authority or the
Board would not be actuated by any profit making motive so as to
unduly enhance the rents or eject the tenants from their respective
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properties as private landlords are or are likely to be. In other words,
]
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this Court recognised that the basis of differentiation in favour of the
_
public authorities like the respondent, was on the ground that they
would not act for their own purpose as private landlords do, but must
act for public purpose.
Our attention was also drawn by Mr Chinai, learned counsel for
the appellant, to the observations on 'Administrative Law' by Wade,
5th Edn. at page 355. It was stated therein as follows:
"Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely-that is to say, it
can validly be used only in the right and proper way which
Parliament when conferring it is presumed to have
intended."
DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.]
761
It, therefore, follows that the public authorities which enjoy this
benefit without being hidebound by the requirements of the Rent Act
A
must act for public benefit. Hence, to that extent, this is liable to be
gone into and can be the subject-matter of adjudication.
Learned Addi. Solicitor General Mr Ramaswami contended that
the onus was entirely on the appellant and the burden lay on the
defendant to establish that the Bombay Port Trust had terminated the
B
r tenancy or taken the proceedings in eviction not in public interest but
), for a collateral purpose or ma/a fide or that it had acted in a manner
contrary to the provisions of Art. 14 of the Constitution. He is right in
so contending.
It was further urged by Mr Ramaswamy that public law duties
are owed to society at large and the nature of the body performing the
functions is not determinative of public law or private law character of
the action taken. He contended that since the provisions of the
Bombay· Rent Act did not apply to the premises" of the Bombay Port
Trust in the notice of termination no reason was required to be given
either in the notice itself terminating the tenancy or in the plaint for
evicting the appellant. He further contended that originally the
Bombay Port Trust was constituted as a body corporate under the
provisions of the Bombay Port Trust Act, 1889 and is now constituted
under the provisions of the Major Port Trusts Acts, 1988. In both these
Statutes the object for constituting the Bombay Port Trust was not to
pro~e accommodation to persons and, therefore, the object was
totally different from the object for which the Bombay Rent Act and
similar enactments have been enacted. It was, therefore, urged that
since there was no obligation or duty cast upon the Bombay Port Trust
to provide accommodation, there could be no question of acting in
Government character.
It was urged that the respondent did not enjoy any special
privileges/powers of benefits vis•a-vis such activities by virtue of its
being a local Body or Government character~ In the premises, it-Vv.'_as
contended that such a body stands on the same footing as any other
citizen and will, in respect of such activity, not be subjected t;i public
law duty.
We are unable to accept the submissions .. Being a public body
even in respect of its dealing with its tenant, it must act in public
·il1!erest, and an infraction of that duty is amenable to examination
either in civil suit or in writ jurisdiction.
Our attention was drawn to the observations of this Court in
Radhakrishna Agarwal & Ors. v. State of Bihar & Ors., [1977] 3 SCR
249, Reliance was also placed on the observations of this Court in Life
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SUPREME COURT REPORTS
[1989] 2 S.C.R.
Insurance Corpn. of India v. Escorts Ltd. & Ors., [1985] 3 Suppl SCR ~
909, in support of the contention that the public corporations' dealing
with tenants is a contractual dealing and it is not a matter for public
law domain and is not subject to judicial review. However, it is not the
correct position. The Escorts' decision reiterated that every acti1>n of
the State or an instrumentality of the State, must be informed by
reason. Indubitably, the respondent is an organ of the State under Art.
12 of the Constitution. In appropriate cases, as was observed in the last
"
mentioned decision, actions uninformed by reason may be question~d(_
as arbitrary in proceedings under Art. 226 or Art. 32 of the Constitution. But it has to be remembered that Art. 14 cannot be construed as
a charter for judicial review of State action, to call upon the State to
account for its actions in its manifold activities by stating reasons for
C such actions.
The contractual privileges are made immune from the protection
~.
of the Rent Act for the respondent because of the public position
occupied by the respondent authority. Hence, its actions are amenable
to judicial review only to the extent that the State must act validly for a
D discernible reason not whimsically for any ulterior purpose. Where
any special right or privilege is granted to any public or statutory body
on the presumption that it must act in certain manner, such bodies
must make good such presumption while acting by virtue of such
privileges. Judicial review to oversee if such bodies are so acting is
~
permissible.
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The field of letting and eviction of tenants is normally governed
by the Rent Act. The Port Trust is statutorily exempted from the
operation cif Rent Act on the basis of its public/Government character. The legislative assumption or expectation as noted in the observations of Chagla C.J. in Rampratap Jaidayal's case (supra) cannot make
such cond~ct it matter of contract pure and simple. These co'.porations J.
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must act m accordance with certam conslltut10nal conscience and
whether they have so acted, must be discernible from the conduct of
such corporations. In this connection, reference may be made on the
observations of this Court in S.P. Rekhi v. Union of India, [1981) 2
SCR 111, reiterated in M. C. Mehta & Anr. v. Union of India & Ors.,
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[ 1987] 1SCC395, wherein at p. 148, this Court observed:
"It is dangerous to exonerate corporati.ons from the need
to have constitutional conscience; and so, that interpretation, language permitting, which makes governmental
agencies, whatever their mien amenable to constitutional
limitations must be adopted by the court as against the
alternative of permitting them to flourish as an imperium in
imperio."
DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.]
763
Therefore, Mr Chinai was right in contending that every action
~ activity of the Bombay Port Trust which constituted "State" within
Art. 12 of the Constitution in respect of any right conferred or
privilege granted by any Statute is subject to Art. 14 and must be
reasonable and taken only upon lawful and relevant grounds of public
interest. Reliance may be placed on the observations of this Court in
E.P. Royappa v. State of Tamil Nadu, [1974] 2 SCR 348; Maneka
Gandhi v. Union of India, [1978] 2 SCR 621; R.D. Shetty v. The
(~ International Airport Authority of India & Ors., [1979] 3 SCR 1014;
.}-)(asturi Lal Lakshmi Reddy v. State of J & K & Anr., [ 1980] 3 SCR
1338 and Ajay Hasia v. Khalid Mujib Sehravardi & Ors. etc., [1981] 2
SCR 79. Where there is arbitrariness in State action, Art. 14 springs in
and judicial review strikes such an action down. Every action of the
Executive Authority must be subject to rule of law and must be
informed by reason. So, whatever be the activity of the public autho-
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rity, it should meet the test of Art. 14. The observations in paras 101 &
102 of the Escorts' case (supra) read properly do not detract from the
aforesaid principles.
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The High Court had relied on the observations of this Court in
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Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir & Anr.,
(supra) that the State was not totally freed of the duty to act fairly and
rationally, merely because it could do so under a contract. The High
Court stated that though it might be accepted that a public body like
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the respondent should not act unreasonably or unfairly but it did not
follow that everytime the)" decided to take action against the contractual tenants, they had to decide the said action in terms of fairness,
equity and good faith. In support of this proposition, reliance was
placed on the observations of this Court in L.l. C v. Escorts, (supra).
In this connection, Mr Chinai appearing for the appellant reiterated
E
before us as he did before the High Court, that the basis of the legitimate assumption or expectation of which the statutory exemption had
F
been granted by the Legislature to the Bombay Port Trust provided a
-. guideline or touch-stone by which the conduct of the public authority
which had been granted exemption, should be judged. And, according
to him, the necessity of eviction in the instant case, must have been
only in public interest. Reliance was placed on several decisions referred to hereinbefore.
We are inclined to accept the submission that every activity of a
public authority especially in the background of the assumption on
which such authority enjoys immunity from the rigours of the Rent
Act, must be informed by reason and guided by the public interest. All
exercise of discretion or power by public authorities as the respondent,
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in respect of dealing with tenants in respect of which they have been
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treated separately and distinctly from other landlords on the assump-
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764
SUPREME COURT REPORTS
[1989) 2 S.C.R.
tion that they would not act as private landlords must be judged by that 'rstandard. If a governmental policy or action even in contractual-matters fails to satisfy the test of reasonableness, it would be unconstitutional. See the observations of this Court in Kasturi Lal Lakshmi
Reddy, (supra) and RD, Shettv v. The International Airport Authority
of India & Ors., [1979) 3 SCR 1014 at 1034,
Learned Additional Solicitor General reiterated on behalf of the
respondent that no question of ma/a fide had been alleged or proved in
these proceedings. Factually, he is right. But it has to be borne in mind'(,
that governmental policy would be invalid as lacking in public interest,
unreasonable or contrary to the professed standards and this is different from the fact that it was not done bona fide. It is true as learned
Addi. Solicitor General contended that there is always a presumption
that a governmental action is reasonable and in public interest. It is for
the party challenging its validity to show that the action is unreasonable, arbitrary or contrary to the professed norms or not informed by
public interest, and the burden is a heavy one.
In this background the contention of the appellant has been that
its eviction was not necessary in public interest, and further that the
eviction was only in pursuance of an alleged policy on the part of the
Port Trust to let out the reconstituted plot to the person who occupied
the major portion, which, according to the appellant, was not in consonance with the obligation of the Trust to take action only in public
interest. It was contended that eviction for development with least
dislocation, should have been the aim and that would have served the
public purpose better, On behalf of the appellant it was contended that
before the Trial Court it was established that both the appellant and
M/s Dhanji Mavji had been tenants of the Port Trust on the original
plot No. 4 since 1932, and in fact the appellant was older tenant. Our
attention was drawn to para 16 of the appellant's written statement,
Vol. 2 Paper Book, page 35. In this context, it was submitted that the
decision of the Port Trust was not based on public purpose/interest,
and as such was ultra vires of the powers of the Port Trust. It was
contended that such a plea was justiciable in all civil suits.
On behalf of the Port Trust authorities, however, the submission
G
was that there was no obligation under the Bombay Port Trust Act to
provide accommodation. So, there cannot be any governmental
character. This we have already dealt with ..
Learned Addi. Solicitor General submitted that in evidence it
has been mentioned by Katara (P.W, 1 at page 43, Vol. II) that the
H
plot had been allotted to Dhanji Mavji since it was the policy of the
Bombay Port Trust to allot a re-constituted plot to a person occupying
DWARKADAS v. BOARD OF TRUSTEES [MUKHARJI, J.]
765
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a major portion of such plot. There was no challenge to this evidence
.. in cross-examination. On the other hand, he contended that there was
A
no evidence on the alleged policy of \he Port Trust of giving plots on
joint tenancy to all occupants. According to him, in the letters addressed by the Port Trust at pp. 82, 123, 128 of Vol. 1 and in the letters by
and on behalf of the appellant and/or their alleged associate concerns
at pp. 141to147 they have specifically admitted that there was a policy
of the Port Trust to allot plots to the occupants of the major portions
.,.thereof and in fact a grievance has been made by them that in accordance with the said policy of the Bombay Port Trust, Plot No, SA was
not being allotted to the associates of the appellant. In that view of the
matter even under the scope of judicial review, it was contended,
whether it should have been given on joint-tenancies or not, is not a
matter which could be gone into by the Court. Reliance was placed on
the observations of Lord Justice Diplock in Council of Civil Service
Unions v. Minister for the Civil Service, [1984J 2 AER 935 at 950,
where the learned Lord Justice classified 8 grounds subject to control of
judicial review, namely, illegality, irrationality and procedural
impropriety. Learned Addi. Solicitor General is right, in our opinion,
in that we cannot really substitute a decision reached by a fair procedure keeping the policy of the respondent in mind by a different
decision only on the ground that the decision which appeals to the
court, is a better one. Reliance was placed on the observations of Lord
Chancellor Lord Hailsham in Chief Constable of the North Wales
Police v. Evans, [1982] 1WLR1155. Jn our opinion, it is necessary to
remember that judicial review, in the words of Lord Brightman in that
case, is not concerned with the decision, but with the decision making
process. As observed by Prof. Dias in 'Jurisprudence' (5th Edn. at p.
91) unless the restriction on the power of the court is observed, the
court would under the guise of preventing the abuse of power, be itself
guilty of usurping power which does' not belong to it. It is therefore
necessary to bear in mind the ways and means by which the court can
control or supervise the judicial action of any authority which is subject to judicial control. In this connection, it is necessary to refer to the
observations of Lord Justice Templeman in re Preston v .. I. R. C.,
[1985] 2 WLR 836 and the observations of Lord Justice May in Regina
v. Chief Constable of the Merseyside Police, [1986] 2 WLR 144. !tis not
within the purview of a court to substitute a decision taken by a constituted authority simply because the decision sought to be substituted
is a better one. Learned Addi. Solicitor General, in our opinion, is
therefore right in contending that the appellant should not be allowed
to contend that the decision of the Bombay Port Trust to allot the plot
to the major holder is not one of the feasible means of achieving the
objectives of development.