Central Bank of India vs VIth Addl. District and Sessions Judge and Others

S.R. Singh, J.—The writ petition arises out of a proceeding u/s 21(8) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (in short U.P. Act No. 13 of 1972) for enhancement of rent in respect of building No. 4/282, Parwati Bagla Road, Kanpur.

The Rent Control and Eviction Officer by its order dated 20.12.1993 allowed the application ex parte and enhanced the rent from Rs. 3,211.52 to Rs. 11,000 per month. The tenant Petitioner filed an appeal which was allowed and the matter remanded vide judgment and order dated 13.1.1995 to the Rent Control and Eviction Officer for decision afresh. During the pendency of the appeal aforestated, the buildings with the monthly rent exceeding Rs. 2,000 were taken out from the purview of the Act as per Clause (g) of Section 2(1) inserted in the principal Act vide Section 2 of the U.P. Act No. 5 of 1995 with effect from 26.9.1994, the date on which the Ordinance preceding U.P. Act No. 5 of 1995 was promulgated. The tenant Petitioner moved an application dated 11.4.1995 before the Rent Control and Eviction Officer and raised a preliminary objection that in view of U.P. Act No. 5 of 1995, the building stood exempted from the purview of the Act and, therefore, the application u/s 21(8) was liable to be rejected as not maintainable and prayed that the issue regarding maintainability and jurisdiction be decided as a preliminary issue. The Rent Control and Eviction Officer refused, vide order dated 15.5.1995, to decide the issue as a preliminary one and directed the Petitioner to file his reply in respect of the application u/s 21(8) so that the issues involved in the case be decided together. The appeal preferred against the said order having been rejected by the learned Additional District Judge, Kanpur Nagar vide order dated 9.1.1996 as not maintainable, the tenant has filed the instant writ petition for quashing the orders aforestated.

Learned Counsel for the Petitioner urged that after insertion of Clause (g) in Section 2(1) of U.P. Act No. 13 of 1972 {vide Section 2 of U.P. Act No. 5 of 1995), the proceedings pending u/s 21(8) of the Act for enhancement of rent in respect of buildings fetching monthly rent exceeding Rs. 2,000 automatically came to an end in that such buildings stood exempted from the provisions of the Act with effect from 26.9.1994 and the Rent Control and Eviction Officer thereafter ceased to have any Jurisdiction to proceed with the application u/s 21(8) of the Act. Learned Counsel for the Petitioner placed reliance upon a decision rendered by learned single Judge of this Court in Civil Misc. Writ Petition No. 12537 of 1996, Punjab National Bank Branch K Block, Govind Nagar, Kanpur and another decided on 21.8.1996 holding that even pending proceedings u/s 21(8) in respect of a building fetching monthly rent exceeding Rs. 2,000 would come to an end upon insertion of Clause (g) in Section 2(1) of the Act. Learned Counsel for the Respondents urged that U.P. Act No. 5 of 1995 would not affect the pending proceedings u/s 21(8) of the Act and that such proceedings would continue to be disposed of as if the Amending Act had not come into force.

I have carefully examined that question raised at the Bar as also the decision relied on by the learned Counsel for the Petitioner. Normally a petition, against an interlocutory order which does not decide any controversy between the parties, is not entertained, but the counsel for the parties insisted for a decision on the question raised at the Bar in that the question raised is jurisdictional one and therefore, they persuaded the court to entertain the petition.

The Act was enacted by the State Legislature in the interest of general public, to provide for regularisation of letting and rent of, and the eviction of tenants from, certain classes of buildings situated in urban areas, and for the matters connected therewith. Section 20(1) of the Act bars civil suit for eviction of a tenant, save as provided in Sub-section (2), from a building governed by the Act notwithstanding the determination of his tenancy by efflux of time or on expiration of a notice to quit or in any other manner and in this way it abrogates the common law rights of a landlord.

Section 21 which gives right of re-entry to the landlord and permits eviction of a tenant from the building under his tenancy on grounds specified therein is quoted below in so far as it is relevant for the purposes of discussion in the present case:

Proceedings for release of building under occupation of tenant. -- (1) The prescribed authority may, on an application of the landlord in that behalf, order eviction of a tenant from the building under tenancy or any specified part thereof if it is satisfied that any of the following grounds exist namely:

(a) that the building is bona fide required either in existing form or after demolition and new construction by the landlord for occupation by himself or any member of his family, or any person for whose benefit it is held by him, either for residential purpose or for purpose of any profession, trade or calling, or where the landlord is the trustee of a public charitable trust, for the objects of trust;

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(8) Nothing in Clause (a) of Sub-section (1) shall apply to a building let out to the State Government or to a local authority or to a public sector corporation or to a recognised educational institution unless the Prescribed Authority is satisfied that the landlord is a person to whom Clause (ii) or Clause (iv) of the Explanation to Sub-section (1) is applicable:

Provided that in the case of such a building the District Magistrate may, on the application of the landlord, enhance the monthly rent payable therefore to a sum equivalent to one-twelfth of ten per cent of the market value of the building under tenancy, and the rent so enhanced shall be payable from the commencement of the month of tenancy following the date of the application:

Provided further that a similar application for further enhancement may be made after the expiration of a period of five years from the date of the last order of enhancement.

It is evident from the provisions quoted above that the landlord of a building let out to the State Government or to any other authority or body mentioned in Sub-section (8) of Section 21 has no right, unlike the landlord of other categories of buildings, to seek release of the building on the ground of his bona fide personal requirement -- a right recognised by Clause (a) of Section 21(1) of the Act. But the proviso to Sub-section (8) gives a right to such landlord to seek enhancement in rent payable for such building to a sum equivalent to one-twelfth of 10% of the market value of the building under tenancy and it makes the enhanced rent "payable from the commencement of the month of tenancy following the date of the application." The landlord of such building can avail himself of the right to enhanced rent after expiration of the period of every five years from the date of last order of enhancement as visualised by the second proviso to Section 21(8) of the Act. The right available to a landlord under the provision aforestated is a special statutory right in the nature of "property right" acquired by setting the law into motion albeit at the initial stage it is a mere right to apply which may be called an inchoate right. The right to seek enhancement of rent under the proviso crosses the domain of a "mere right to take advantage" of the provisions of the Act and enters the realm of a "right accrued" or "right acquired" under the Act immediately upon the law being set into motion and once the law is set in motion by moving an application before appropriate authority, the right to enhanced rent becomes a "vested right" or "right acquired" or "right accrued" under the existing statute and it cannot be taken away by a subsequent amendment in the existing statute unless the amendment is, expressly or impliedly, given retrospective effect. Keeping in view the provisions of Section 6 of the U.P. General Clauses Act it may be stated as a rule of law, that if once a statutory right comes in the realm of a "right acquired" or "right accrued", normally it carries with it the remedy for its enhancement unless the right itself is taken by the Amending/Repealing Act by giving it retrospective operation. It can even be asserted independently of the Statute under which it was acquired but an alternative remedy for its enforcement has to be provided.

It cannot be gainsaid that as a result of insertion of Clause (g) in Section 2(1) which exempted certain class of buildings from the operation of the Act, the building let out on monthly rent exceeding Rs. 2,000 ceased to be governed by the Act with effect from 26.9.1994. In a sense the Act stands repealed and statutory rights and liabilities of landlord and the tenants of such buildings stood abrogated subject, of course, to principles embodied in Section 6 of the U.P. General Clauses Act, 1904.

Clauses (c) and (e) of Section 6 of the U.P. General Clauses Act, 1904 provide that, unless different intention appears, the repeal shall not:

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

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(e) affect any remedy, or any investigation, or legal proceeding commenced before the repealing Act shall have come into operation in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;

and any such remedy may be enforced and any such investigation or legal proceeding may be continued and concluded, and any such penalty, forfeiture or punishment imposed as if repealing Act had not been passed.

In Sutherland Statutory Construction (3rd Edition Vol. I) by Horack the principle has been stated as thus:

Under common law principles of construction and interpretation all rights, liabilities, penalties, forfeitures and offences which are of purely statutory derivation and unknown to the common law are effaced by the repeal of the statute which granted them, irrespective of their accrual. Likewise where a common law principle is abrogated, its effective existence is destroyed both as to past actions and to pending proceedings. However, a right of a common law nature which is further embodied in statutory terms exists as an enforceable right exclusive of the statute declaratory of it, and therefore, the right is not expunged by the repeal of the statute.

Since the effect of repeal is to oblitrate the statute and to destroy its effective operation in future, or to suspend the operation of the common law when it is a common law principle which is abrogated, any proceedings which have not culminated in a final judgment prior to the repeal are abated at the consummation of the repeal. When, however, the repeal does not contemplate either a substantive common law or statutory right, but merely the procedure prescribed to secure the enforcement of the right the right itself is not annulled but remains in existence enforced by applying the new procedure.

Effect on vested rights.

Under the common law principles of construction and interpretation the repeal of a statute or the abrogation of a common law principle operates to divest all the rights accruing under the repealed statute or the abrogated common law, and to halt all proceedings not concluded prior to the repeal. However, a right which has become vested is not dependent upon the common law or the statute under which it was acquired for its assertion, but has an independent existence. Consequently, the repeal of the statute or the abrogation of the common law from which it originated docs not efface a vested right, but it remains enforceable without regard to the repeal.

In order to become vested, the right must be a contract right, a property right, or a right arising from a transaction in the nature of a contract which has become perfected to the degree that the continued existence of the statute cannot further enhance its acquisition.

Effect on inchoate rights.

Right of action which are dependent upon a statute, and which are still inchoate and not reduced to possession or perfected by final judgment, are lost by the repeal of the statute from which they stem. This rule of construction is simply a restatement of the common law principle of construction that the repeal of a statute operates to divest all rights accruing under the repealed statute and all proceedings not concluded prior to the repeal. Since inchoate rights are by definition not vested rights such as to escape the common law rule of effacement. The inchoate rights are but an incident to the statute and fall with its repeal.

The observation that all rights which are of purely statutory derivation and unknown to the common law are effaced by the repeal of the statute which granted them irrespective of their accrual occurring in the aforestated passage would be of no avail to the Petitioner in view of the provisions of Section 6 of the U.P. General Clauses Act which save not only the rights acquired under the existing Statute but also pending proceedings unless of course intention of the Amending Act is otherwise. See Gajraj Singh etc. v. State Transport Appellate Tribunal etc. JT 1996 (8) SC 3 74.

In Satya Deo Singh v. State Transport Appellate Tribunal and Ors. 1996 (1) JCLR 97, this Court held that the right to preferential treatment in the matter of grant of permit by way of renewal as recognised by the proviso to Clause (b) of Section 58(2) of the Old Motor Vehicles Act, 1939 could be acquired by moving an application for renewal of permit under the old Act. As to the effect of repeal on pending proceedings this Court held as under:

What is unaffected by the repeal of a statute is a right acquired or accrued under it and not a mere "hope or expectation of", or liberty to apply for acquiring the right. A right to apply for renewal and get preferential treatment u/s 58 of the Old Act was a mere right to take advantage of the enactment and therefore, without any act done by an individual permit holder towards availing himself of that right, it cannot properly be deemed a "right accrued". In The Gujarat Electricity Board Vs. Shantilal R. Desai, , a right to purchase an electricity undertaking on expiration of its period of licence by giving two years prior notice conferred by original Section 7 of the Electricity Act, 1910 was held to be a right accruing after notice of option. In Abbot v. Ministry of Land 1895 AC 425 (PC), the option given to a grantee to make additional purchases of Crown Land on fulfilment of certain conditions under the provisions of the Statute could not, it was held, be taken as an accrued right under the repealed statute before the exercise of the option. Similarly in Reynold v. A.G. Cornoha Sotia (1896) AC 420 (PC), it was held that a privilege to get an extension of a licence under an enactment is not an accrued right and no application can be filed after the repeal of the enactment for renewal of the licence. On the basis of the above authorities, I am of the considered view that the right to preferential treatment in the matter of grant of permit by way of renewal as recognised by Clause (b) of the proviso to Section 58 (2) of the old Act could not accrue nor could it be said to have been acquired under the old Act, if the application for renewal had not been made under the old Act. Since the applications for renewal of permits in these writ petitions were admittedly moved after the enforcement of the new Act, the provisions of Clause (c) of Section 6 of the General Clauses Act cannot be pressed into service to support the contention advanced by the learned Counsel appearing for the Petitioner. See Director of Public Works v. Hopo Sang (1961) 2 All ER 72 (PC); Abbot of Ministry of Land 1895 AC 425 (PC) 431; Principles of Statutory Interpretation (5th Edn. pp. 388-91) by Justice G. P. Singh, Former Chief Justice. M. P. High Court.

The matter was taken to the Supreme Court by way of special leave. Approving of the view taken by this Court in case of Satya Deo Singh (supra) the Hon''ble Supreme Court has held as under:

There is a distinction between right acquired or accrued, and privilege, hope and expectation to get a right, as rightly pointed out by the High Court in the impugned judgment. A right to apply for renewal and to get a favourable order would not be deemed to be a right accrued unless some positive acts are done before repeal of Act 4 of 1939 or corresponding law to secure that right of renewal. In The Gujarat Electricity Board Vs. Shantilal R. Desai, , this Court had pointed out that before Section 71 of the Electricity Supply Act was amended, the Appellant had issued a notice u/s 7 thereof, exercising the option to purchase the undertaking. It was held that a right to purchase the electrical undertaking which had accrued to the Electricity Board was saved by Section 6 of the G. C. Act.

So if no action under the Repealed Act was set in motion before July 1, 1989, by a valid application for renewal of a permit, there was no right acquired or accrued to pursue the remedy under the Act. The privilege to obtain renewal of a permit is not an accrued right...(emphasis supplied) Gajraj Singh etc. Vs. The State Transport Appellate Tribunal and others etc., .

In my opinion, landlord''s right to apply for enhancement of rent under the proviso to Section 21(8) of the Act in the instant case ceased to be a mere "inchoate right" and it became a "vested right" or "right acquired" as soon as the law was set in motion for availing of the right given to the landlord under the proviso. It partook the character of a "property right" being a "right acquired" or ''right accrued'' much before 26.9.1994. Therefore, the proceeding would continue to be governed by the principal Act by virtue of Section 6 of the U.P. General Clauses Act as if the U.P. Act No. 5 of 1995 had not come into force in that there is nothing in the Amending Act which may arrest the operation of Clauses (c) and (e) of Section 6 of the U.P. General Clauses Act.

In Atma Ram Mittal v. Ishwar Singh Punia 1988 Supp (2) SCR 528. the suit was filed by the landlord for eviction of the tenant before the shop came to be within the purview of the relevant Rent Act due to expiration of the exemption period of 10 years which period expired during the pendency of the litigation. It was held by the Supreme Court that notwithstanding the coming into operation of the protection and in the absence of the provisions to the contrary, the proceedings already commenced on the basis of the "vested right" would not be defeated by mere passage of time consumed by the said proceedings. Same principle will apply to the facts of the present case. The only difference is that there the landlord had a "vested right" under the common law that is to say under the law of Contract and the law relating to transfer of property, whereas in the present case the right was acquired under U.P. Act No. 13 of 1972 as discussed hereinabove.

In Parripati Chandrasekharrao and Sons Vs. Alapati Jalaiah, , was a case where proceedings were launched by the tenant, (i) for direction to permit him to deposit rent in court; (ii) for fixation of fair rent; and (iii) to prevent inconvenience. These rights in fact were no more than the right to be governed by the relevant Rent Act. By moving applications for aforestated purposes the tenant acquired no ''vested right'' and it was in this perspective that the Hon''ble Court was pleased to hold that "where the tenant who undoubtedly had the rights and remedies under the Act to claim reliefs against landlord, lost the same, the moment the protection was taken away, the rights and remedies being not vested ones." The right which the tenant had in that case was no more than the right to be protected by the Act and that is why it was held; "when the protection does not exist, the normal relations of the landlord and tenant come into operation." And further that "the theory of vested right which may validly be pleaded to support the landlord''s case is not available to the tenant." The Supreme Court has clearly drawn a distinction between "the rights which accrue to a landlord under the common law and the protection which is afforded to the tenant by such Legislation as the Act." The case is not an authority to support the contention that only common law rights vested In landlord remain unaffected by repeal of an enactment and not the rights. if any, acquired under the repealed Act. In the instant case the landlord had, by moving the application, acquired a right to get enhanced rent with effect from the commencement of the month of tenancy following the date of the application. Hence the provisions of Clauses (c) and (e) of Section 6 of the U.P. General Clauses Act, 1904 are clearly attracted.

In Jenson and Nicolson (India) Ltd. Ghaziabad v. Ist Additional District Judge, Ghaziabad and Ors. 1996 (2) ARC 38. reliance on which was placed by the learned Counsel for the Petitioner has no application in that it arose from proceedings u/s 21(1)(a) of the Act under which provision no right to evict the tenant is acquired by the landlord merely by setting the law into motion by means of a valid application for release and for similar reason the decision in Punjab National Bank v. Rajendra Nath 1996 (1) ARC 438 , cannot be pressed into service to support the contention that pending proceedings u/s 21(8) of the Act would lapse upon insertion of Clause (g) in Section 2(1) of the Act. The decision in Writ Petition No. 12537 of 1996 Punjab National Bank and Anr. v. Rent Control and Eviction Officer and Ors. no doubt supports the contention of the Petitioner''s counsel, as it arose out of the proceeding u/s 21(8) of the Act, and holds that pending proceedings for determination of enhanced rent would also come to an end. But it appears that attention of the court was not invited in that case to the provisions of Section 6 of the U.P. General Clauses Act, 1904 and other relevant authorities on the point discussed hereinabove. Therefore, keeping in view the law laid down by the Supreme Court in State of U.P. and Another Vs. Synthetics and Chemicals Ltd. and Another, , I find myself unable to subscribe to the view taken by the learned Judge in Civil Misc. Writ Petition No. 12537 of 1996, decided on 21.8.1996.

Conclusions deducible from the observations aforesaid may be summed up as under:

(1) Effect of Clause (g) of Section 2(1) of the Act as inserted by Section 2 of the U.P. Act No. 5 of 1995 is that the buildings whose monthly rent exceeds two thousand rupees have been exempted from the application of the Act and the Act in relation to such buildings stands repealed or obliterated, as if it had never been passed, but the rights, if any, acquired by the landlord before insertion of Clause (g) in Section 2(1) as also remedy for enforcement of the right so acquired under the Act would be saved, by virtue of Section 6 of the U.P. General Clauses Act, 1904, in the absence of anything to the contrary contained in the Amending Act No. 5 of 1995.

(2) The provisions of Sub-section (8) of Section 21 of the Act confer a right and provide a remedy as well for enforcement of the right. It is an admixture of the two. Mere right to apply for enhancement of rent under the proviso is no doubt an "inchoate right" but it partakes of the character of "vested right" or "right acquired" once the law is set in motion by moving valid application for enhancement of rent and the enhanced rent is payable from the commencement of the month of tenancy following the date of the application. Such "vested right" or "right acquired" under the proviso is in the nature of "property right".

(3) Once the right under the proviso to Section 21(8) of the Act becomes "vested right" or "right acquired" or "right accrued", it would survive along with remedy by virtue of Clauses (c) and (e) of Section 6 of the U.P. General Clauses Act, 1904 notwithstanding the building being exempted from the purview of the Act as a result of insertion of Clause (g) of Section 2(1) thereof and, therefore, pending proceedings for enhancement of rent under the proviso would not lapse and they would be decided as if Clause (g) has not been Inserted in Section 2(1) of the Act in as much as there is nothing in the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction)(Amendment) Ordinance, 1994 or in the repealing Act No. 5 of 1995 which may be construed as taking away the rights acquired by the landlord under the principal Act as it stood before its amendment by Ordinance and the Act aforestated. Section 4 of the U.P. Act No. 5 of 1995 provides for repeal of the Ordinance and saves the acts done or the action taken under the principal Act as amended by Ordinance. It does not relate to any act done or action taken under the principal Act as it stood before its amendment by Ordinance. In other words, nothing in U.P. Act No. 5 of 1995 divests the landlord of his right already acquired under the proviso to Section 21(8) of the Act by setting the law into motion by means of a valid application before the relevant date, viz. 26.9.1994. Such proceedings already commenced would be concluded and decided as if Clause (g) has not been inserted in Section 2(1) of the Act.

In view of the above conclusions, the writ petition fails and is dismissed. In the facts and circumstances of the case the parties shall bear their own costs.