L. Balmokand vs Parma Nand Jain

Bhandari, J.—The only point for decision in the present case is whether a certain order made by the Rent Controller of Delhi without affording a reasonable opportunity to the tenants to have their say in the matter offends against the principles of natural justice and should be set aside. It appears that on 22-2-1919 one L. Parma Nand Jain, a retired Assistant Comr. of Income Tax and at present a Deputy Custodian of Evacuee Property submitted an application to the Rent Controller at New Delhi requesting him to fix the fair rent of house No. 7''/47, Kamla Nagar, Sabzi Mandi which had beer recently constructed by him. After a due consideration of the facts and circumstances presented before him by the landlord the Controller fixed the rent at a sum of Rs. 1,074 on 28-8-1949. On the 7th June L. Balmokand Shah a refugee from the Rawalpindi District submitted a similar application. in which he alleged that he was an occupier of certain rooms on the first floor of the building, that ho had taken the said rooms on rent on 15-10-1948 and was the first tenant thereof, and that the landlord was charging rent at the rate of Rs. 400 per mensem for the said accommodation. It was accordingly prayed that as the rent charged by the landlord was excessive and wholly incommensurate with the accommodation let to tho tenant an enquiry be made in accordance with the provisions of Section 7-A, Delhi and Ajmer Merwara Rent Control Act of 1947. No action was taken on this application and on 17th September L. Balmokand Shah submitted another application in which the above statements were repeated. The Controller sent a notice of this application to the landlord and the landlord replied that the rent of the accommodation in question had already been fixed at Rs. 221 per mensom. In view of this communication the Controller sent a copy of his order dated 23-3-1949 to the tenant and informed him that no further action could be taken in the matter. The tenant preferred an appeal to the learned Dist. J., Delhi but the learned Dist. J. declined to interfere with the order of the Controller. The tenant has come to this Court in revn. and the question for this Court is whether the learned Dist. J. came to a correct determination in point of law.

Before the learned Dist. J. it was contended that the proceedings taken by the Rent Controller in connection with the fixation of rent on the motion of the landlord were wholly incompetent as at that time there was no complaint before the Rent Controller that the rent actually charged was excessive, that the order of 23-3-1949 fixing the rent was not, therefore, a proper order under the Rent Control Act at all, that if that particular order were ton be ignored then the Bent Controller was bound-in law to make an enquiry into the merits of the case when the tenant approached him in June 1949, that the proceedings taken by the-Rent Controller in February and March 1949-should be ignored and should be taken to be nonexistent and that as the Rent Controller had! made no other enquiry on the complaint of the) tenant he should be directed to make an enquiry under the provisions of the Act. The learned Dist. J. agreed that if the technicalities of the matter alone were concerned there could be some force in the arguments addressed to-him by the counsel for the tenant, but held that as far as the substance of the matter was concerned it was wholly futile to reopen the matter. It was true that in February or March 1949 no one had specifically complained to the, Controller that the rent charged was excessive-and that the tenants in any case had not moved in the matter but the Dist. J. held that in view of the provisions of the Fourth Schedule to the Act, a Rent Controller is not bound to wait till some one makes a complaint to him and that, ho has sufficient power to initiate proceedings as soon as he has reason to believe that the rent of any newly constructed premises is excessive. The learned Dist. J. admitted that the proceedings by which the fair rent was fixed were taken behind the back of the tenant but he was unable to find any provision in the Fourth Schedule which required the Controller to call and hear the tenant interested in the matter and SC long as it appeared that the Controller had otherwise proceeded in a reasonable manner and had arrived at his conclusion on a sound basis it would not be proper to interfere merely because the tenant or tenants were not allowed an opportunity of being heard. In the present, case the Controller had inspected the building, had noted the various details including the. quality of the material used and the amenities provided in the building, had formed an estimate-of the total cost of construction and the value of the site and had then allowed the landlord a return of six per cent, per annum on his total; investment. As the basis adopted for fixing the rent was reasonable the learned Dist. J. held-that the Controller was not bound to look into the matter afresh when he was approached by the tenants, for it would have meant going over the same ground once again and arriving at more or less the same conclusion. In these circumstances he found that no useful purpose would be served by his interference and he accordingly dismissed the appeal.

The two points which were argued before the learned Dist. J. in appeal were reagitated1 before mo in revn., namely: (l) that the Controller had no jurisdiction to fix the standard rent of the premises on the application of the land alone lord alone, and (2) that in any case the Controller''s order is void in the eye of law as no reasonable opportunity was afforded to the tenant of being heard before the standard rent was fixed.

The first point presents no difficulty whatsoever. Section 7-A, Delhi and Ajmer-Mer-wara Rent Control Act, 1947, declares that the provisions set out in the Fourth Schedule shall apply to the fixation of rent and other matters relating to the promises in Delhi, the construction of which was not completed before the commencement of the said Act. Para, 2, Schedule 4 is in the following terms:

If the Rout Controller on a, written complaint or otherwise has reason to believe that the rent of any newly constructed promises is excessive, he may after making such inquiry as ho thinks fit, proceed to fix the standard rent thereof.

This para. makes it quite clear that the power which has been conferred upon the Controller to fix the standard rent of a newly constructed building can be exercised only if he has reason to believe that the rent is excessive. If he entertains no such belief he cannot enter upon an enquiry for the fixation of rent, for the existence of that belief appears to be an essential prerequisite to an investigation of this kind. This belief may be derived from an oral or written complaint or may be derived from some other source but the belief must exist in the mind of the Controller before he can proceed to fix standard rent of the building. Can it be said that the application which was submitted by the landlord on 22-2-1949 gave rise to a belief in the mind of the Controller that the rent of the premises was excessive ? The answer is, in my opinion, clearly in the negative The landlord did not state the amount of rent that was being charged for the building or for the portions thereof and he could scarcely have complained that the rent charged by him was unreasonable. He prayed only that rent be fixed. There is nothing on the record to indicate that the Rent Controller obtained any information from any other source which led him to believe that the rent of this newly constructed building was excessive. In the absence of this belief the Rent Controller had no power whatsoever to enter upon an enquiry with the object of assessing the standard rent or of actually assessing the standard rent of the premises in question.

The second objection which has boon taken before me, namely, that no opportunity was afforded to-the tenant of being heard and consequently that the Controller''s order is void and of no effect appears to me to be even more sub-stantial. While there can be no doubt that an administrative agency is at liberty to choose its own way of coming to a decision it has boon held repeatedly that even such agencies must I act in accordance with the principles of natural justice. In the Board of Education v. Rice 1911 A.C. 179 : 80 L.J.k.B. 796, a local education authority refused to pay salaries to teachers in a non-provided school at the same rate as it paid the teachers in provided schools. The managers of the non-provided-school complained, and the Board of Education directed an inquiry, the result of which was a report that the local education authority had failed to maintain the school and keep it efficient. Two questions were to be determined by the Board of Education and the Board purported to give its decision in a document which failed to deal with the matters in issue. The House of Lords hold that inasmuch as the Board had not determined questions, the decision must be quashed by certiorari, and a mandamus must issue commanding the Board to determine the questions. The Lord Chancellor, Lord Lore-burn, observed as follows:

Comparatively recent statutes have extended, if they have not originated, the practice of imposing upon departments or officers of State the duty of deciding or determining questions of various kinds. In the present instance, as in many others, what comes for determination is some time a matter to be settled by discretion, involving no law. It will, I suppose, usually be of an administrative kind; but sometimes it will involve matter of law as well as matter of fact, or even depend upon matter-of law alone. In such cases the Board of Education will have to ascertain the law and also to ascertain the facts. I need not add that in doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything. But I do not think they are bound to treat such a question as though it were a trial. They have no power to administer an oath; and need not examine witnesses. They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their view. Provided this is done, there is no appeal from the determination of the Board u/s 7, Sub-section (8) of this Act. The Board have, of course, no jurisdiction to decide abstract questions of law, but only to determine actual concrete differences that may arise, and as they arise between the managers and the local education authority. The Board is in the nature of the arbitral tribunal, and a Court of law has no jurisdiction to hear appeals from the determination either upon law or upon fact. But if the Court is satisfied either that the Board have not acted judicially in the way I have described, or have not determined the question which they are required by the Act to determine then there is a remedy by mandamus and certiorari.

A similar view was taken in Local Govt. Board v. Arlidge (1915) A.C. 120 : 84 L.J.k.B. 72. A housing Act authorised and required a local authority to make a closing order in respect of any dwelling-house in their district if it appeared to them to be unfit for human habitation and to determine such order on being satisfied that such dwelling-house had been rendered fit for human habitation, and gave to the owner of the dwelling-house a right of appeal to the Local Govt. Board against the closing order and against the refusal to determine the same. The statute said that the procedure on such appeals should be such as the Board might by rules determine. On appeal the Board could make such order as it thought equitable and the order was to be binding and conclusive on all parties subject to the right to go to the H.C. on a question of law. The rules were to provide that the Board should not dismiss an appeal without holding a public local inquiry. In the course of his speech Viscount Haldane L.C. observed as follows:

My Lords, when the duty of deciding an appeal is imposed, those whose duty it is to decide it must act judicially ; They must deal with the question referred to them without bias, and they must give to each of the parties the opportunity of adequately presenting the oa3e made. The decision must be come to in the spirit and with the sense of responsibility of a tribunal whose duty it is to meet out justice. But it does not follow that the procedure of every such tribunal must be the same. In the case of a Court of law tradition in this country has prescribed certain principles to which in the main the procedure must conform. But what that procedure is to be in detail must depend on the nature of the tribunal.

Since the Rice and Arlidge cases were decided a conception of "natural justice" has been developed and administrative tribunals are warned of certain minimum conditions of fair-play which Courts of law will insist. In Errington v. Minister of Health (1935) 1 K.B. 249 : 101 L.J. K.B. 49, it was held that where a local authority has made a clearance order under the Housing Act, 1930, and has submitted the order to the Minister of Health for confirmation, and objections are made thereto by the owners, the Minister must cause a public local inquiry to be held, and consider any objections not with-drawn and the report of the person that held the inquiry. In deciding whether or not he shall confirm the clearance order the Minister occupies a quasi-judicial function and must not take into consideration any matters other than those mentioned in the statute. If the Minister holds a private inquiry to which the owners are not invitee or takes into consideration ex parte statements with which the owners have had no opportunity of dealing, he is not acting in accordance with correct principle of justice, and his confirmation of the clearance ordor would not be within powers conferred upon him by the Act, and the owners would be entitled as being persons aggrieved to have the confirmation order quashed. In tho course of his speech Lord Justice Maugham observed as follows:

I do not think it has'' been proved that the statements which were made-to the Ministry in fact affected the decision of the Minister or of his officials, and I certainly have no reason to doubt that the officials were acting in what they thought to be the public interest. On-the other hand, it seems to mo a matter of highest possible importance that where n quasi-judicial function is being exercised, under such circumstances as it had to be exercised here, with the result of depriving people of their property, especially if it is done without compensation, the persons concerned should be satisfied that nothing unfair has keen done in the matter, and that ex parte statements Have not been heard before the decision has been given without any chance for the persona concerned to refute those statements. That seems to me a matter of the greatest possible public importance, and if I am right in the view that I have expressed as to the functions of the Minister being of a quasi judicial character, I think it follows that in the special circumstances of this case, as I understand them to be, the Court has no option but to quash the order, as my brother has suggested.

Natural justice is founded in equity, in honesty and right and the two broad rules which must be observed by every person exercising judicial or quasi-judicial functions are, (l) that there must be no bias and (2) that no party should be condemned unheard. The distinguishing feature of the judicial power, said Bentham, is that an interested party must come to the Judge and require him to determine a matter in controversy ; and the. party to whom the order of the Judge may prove detrimental must have the right to oppose. Both sides should be heard and one side should not be heard in the absence of the other. If these conditions are not fulfilled the decision is almost certain to be quashed.

These conditions have not been fulfilled in the present case and I have no alternative but to set aside the order of the Rent Controller and to direct that a fresh enquiry be made in accordance with law.