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Judgment
V.A. Mohta, J.—Following the ratio in the case of motor General Traders and another v. State of andAndhra Pradesh AIR 1984 Sc 121 , a Dicision Bench of this Court in the case of the Prabjakar tanbaji Prabhakar and Another etc. Vs. State of Maharashtra and Others, has declared as unconwstitutional the notification dated 6th Feb. 1952 issued under Cl 30 of the Central Provinces and Berar Letting of Houses and Rent Control Order 1949 (The HRC Order ") by which houses used for residential purposes constructed on a site lying vacant on 1st Jan. 1951 or on a site made vacant on or after that date by demolition of such structure standing onsuch site were exempted from the operation of the HRC Order on the ground that indefinte ocnunuationof discriminatory and, therefore, hit by Art. 14 of the Constitution Point is whether the ratio of those dicisions can be extended also to indefinte continuation of outer limits in the matter of fixation of fair rent withrelation to cut off date - 1st April 1940 - mentioned in Clas 6 (1) and 7 (1) of the HRC Order.
We will first notice the principle laid downinthec ase of Motor General Traders AIR 1984 SC 121 (supra) and its background Sec. 32 (B) of the A, P. Buildings (Lease Rent and Eviction) Control Act (15 of 1960) exempted from the provisions of the Said Act any building constructed after 26-8-2957. Point arose as towhether there was any valid justificationofr continuation of that exemption for years together despite changed conditions. Accepting that when the Act was brought into force 1960 exemption to houses constructed 3 years before was valid, it is held.
"What may be unobjectionable as a transitional or temporary measure at an intitual stage can still become dicriminatory and hence violative of Art. 14 of the Constitution if it is persisted of over a long period without any justification............ The long period that has elapsed after thepassing of the Act itself serves as a crucial factor in deciding the question whether the impugned law has become dicriminatory ornot because thh grouond no which the classification of buildings intotwo categories is made is not a historical or geographical one but is an economic one.......... After, giving our anxious consideration ot the learned arguments addressed before us, we are of the view that clause (b) of Seec. 32 of the Act should be declared as violative of Art. 14 of the Constitution because the contnuance of that provision of the Privileged class of landlords without any rational basis as the incentive to build which provided class of landlords without any rational basis as the incentive to build whichprovided a nexus for reasonable classification of such class of landlord no longer exists by lapse of time in thecase of the majority of such landlords. There is no reason why after all these years they should not be brough at par with other landlords who are subject to the restrictions imposed bythe Act in the matter of eviction of tenants and control of rents." (para 16, 23, and 30)
the passage in pra 30 has been quoted withapproval in the recent case of Mohinder Kumar and Others Vs. State of Haryana and Another,
In the case of Prabhakar and Another etc. Vs. State of Maharashtra and Others, shor t legislative history of the C. P. & Berar Regulation of Letting of Accommondation Act 1946 (the Act) under which the HRC order is made has been noticed It is stated.-
"To appreciate this point is would be necessary first to trace in short the background of this legislation. The following Statement of Obects and Reasons of the Central Provinces and Reasons of the Central Provinces and Berar Regulation of Lettering of Accomodation Bill 1946 (Bill No,. 7 of 1946) prepared on 15 the Aug 1946 and which emerged as the Act Speaks for itself:
"The influx of a large population to towns as a result fo wasr condition necessitated the promulgation of the Central Provinces and Berar House Rent Control Order 12942, under the Defence of India Rules. The Defence of India Rules, will laps at the end of sept, 1946 The abnormal conditions created by the war still persit and are not likely tosubside for some time. Rent Control measures willtherefore continue tobe neccessay and Government proposes to take powers for regulating house rents inurban areas by new legislation. I tis proposed to keep the law in operation for a limited period of three years. If normal conditions return erlier, steps will be taken to repeal it.''
Essentially and clearly the Act is a war time measure intended to operate ofr a limted period. Conditions favourable toits repeal were never restored with the result the Act became a permanent feature. Sec 2 of the Act empowers the Provincial government to provide by general or special Order for regualtion the letter and subleting of any accomdation or class of acommodation inareas of the specified and in particular-
for controlling the rents for such accommodation either generally or when let to specified persons of class of persons or inspecified circumstances.
for preventing the eviction of tenants of sub-tenants form such accommodation in specified circumstances.
for requiring such accomodation to be let either generally or to specified persons or in specified circumstances and.
For collecting any information or statistics with a view to regulating any of the aforesaid matters.
The Act has barely nine section In exercise of the authority conferred bythe above provisions, the Central Provinces and Berar Collection of Information and Letting of Houses Order, 1946 and Central Provinces and Berar House Rent Control Order, 1947, and in 1949 the HRC Order came to be issued under the General Adminstration Department No. 3730-3141- 11 dated 26th July 1949."
In these matters it is necessary also to notice the provisions relating tofixation of fair rent right from the year 1942 when the first Order Known as "the C. P. & Berar House Rent Control Order 1942 was made under R. 18 of the Defence of India Rules, 1939. Cls 3 to 7 of the said Order dealt with the subject of determination or fair rent. They read as under:--
When on a writtn complant or otherwise, the Controller had reason to belive that the rent of any house within the area to which this order is extended is excessive he shall hold a summary enquiry and record a finding.
If an a consideration of all the circumstances of the case including anyamount paid or the be paid by the tenant by way of premium or any other like sum in addition to rent the Controller finds that the rent of the house is excessive he shall determine the fair rent tobe charged for the house.
In fixing the fair rent under clause 4 the Controller shall have due regard to the prevailing rates of rent of the same of simiar accomodation insimilar circumstances during the twelve months prior to the 1st April 1940 and to the rental value as entered in the municipal or local board assessment registers as the case may be relating to that peirod, and in the case of a house which has been constructed after that date, also to any general increase in the cost of sites and building construction.
When the Controller the determined the fair rent of a house-
the landlord shallnot charge any rent inexcess of such fair rent.
any agreement for the payment of rent in excess of such fair rent shall be nullan viod in respect of such excess and shall be construed as if it was an agreement for payment of the said fari rent:
any sum in excess of such fair rent paid, whether before or after the commencement of this Order, in respect of residence after the commencement of this Order shallbe refunded to the person bywhom it was paid, or at theoptin of such person. Otherwise adjusted.
(a) After the commencement of this Order an increase in rent shallbe permissible only where some additional improvement or alteration. No included in necessay repair or repairs which are usually made to houses in the area to which this order is extended, had been carried out at the landlord''s expense since the rent was fixed.
(b) Any such increases inrent shallnot exceed 7 per cent per annum on the cost of such addition imporvement or alteration. And shall not be chargeable until such addtition improvement or alteration had been completed.
If a lanlord of a house had no the date on which this Order comes into force been charging rent for such inclusive of (a)latrine or conservancy tax (b) a tax for the costruction and maintenace of publif latrine or 9c) a water rate and if the amount of any such tax or rate is enhanced on or after theaforesaid date, then the landlord my notwithstanding anyting contained in subclaues (a) and (b) increase the amount of the rant so charged byanamount equal to the sum by which such tax or rate is enhanced.
Any dispute between the landlord and the tenant in regard toany increase or rent claimed under this clause shall be decited bythe Controller.
That Order was published in C. P. and Berat Gazette Extraordinary dated 31 st March 1942 and the brought intoforce at once. In Oct. 1942, there were minor amendmets to Cl.6 which need not benoticed. Sec 3 of the Act provided for continuation of orders made under the Denternce of India Rules. In exercise of power econfered by S. 2 of the Act the C. P. and Berar Collection kof Informantion and letting of Hourse Order, 1946 was made and published in the C. P. and Berar Gazette dated 18-10-1946 Part 1. Second Order under the Act known as te c. P. and Bear House Rent control Order 1947 was published in C. P. and Bear Gazetter Extrodeinary dated 11-1-1947 The HRC Order is the thrid order under Act By. Ci 31 (1) of the HRC Order the two earlier Orders of 1946 ad 1947 were repelaed with usual saving provision conttained in Cl 312 (2) the HRC Order was amended in 21-11-1952 by which Cls. 3-A and 7-A were added and conseqentila amendments made in ''Cl. 5 Cls 3 to 9 as they stand today read thus:--
For any area within his jurisdiction towhichthis chapter is extended the collector shall appiont an officer being a gazetted officer to be acontroller.
A-0n or after steh 1sr Dec 1952 no landlord shall demand or receive and no tenantshall pay and premium is cash or kind as a condition precedent ot letting a house or taking of a house on rent.
When on a written applicant by te landlord or tenant the Controller has reason tobelieve thet the rent of any house within his jurisdiction is insufficient or excessive as thecase any he shall hold such enquire as may be an sary and record a finding.
If, on a consideration of the circumstances of the case, including any amount paid (before the 1st Dect 1952) by the tenant by way of premium or any other like sum an addition totrent the controller finds that the rent of the house is insufficinent or excessive as thecase may be he shall determine thefair reent tobe charged for the house.
6(1) In determining thernet under cl. 5 oif a house constructd before the 1st April 1940 and occupied wholly or mainly for purpose of residence the contorller shall have due regrad to te previling rates or rent for the same or similar house in similar circumstances during the tweleve months immediately before te that and to the rentalvalue as entered ini the Municipal or Local Board Assessment Registers as the case may be, relating tothat period ans shall increase the rent so determined by 12 per cent if the issatisfied that the house has been maintaned by the landlord in a proper state of repair.
(2) In determinaing the fari rent under clauser 5 of the house constructed after the 1st April 1940 and occupied wholy or mainly for purpose of resident theecontroler shallhave due regard to the prevaililng rates of rent of the same or a similar house in similar circusmstances and also toany general increase in thecost of sisters and building construction.
7(1) In determining the fair rentunder claues 5 of house ocnstructed before the 1st April 1940 and occupied whollyand minly for non-residential purpose, the Controler shallhave sue regard totheprevailing rates of rent for the same or asimilare house in similare circumstances during the twelve months immediately before that date and may after considering any gernal rise in therentalvalues for business or othere similar purpose increase the rent so determined up to 50 per cent if heris satisfied that thehouse had been maintained bythe landlord in a proper state of repair;
Provided that that where a house had been let for edcational purpose the increase shall not exceed 12 per cent.
(2) the determining the fair rent under clause 5 of house constructed after the 1st April 1940 and occupied wholly or maintly for residertial purpose, the Controller shallhave due regard to the prevailing rates of rent for the same or a simlar house for similar purpose andalso any gerneral increase in the cost insite and building construction.
7-A In the case of a house constructed before the 2st April 1940 of whichthefair rent has not been dtermined the landlord may with the consent of the tenant increase ther rent within the limits of the increase allowed under sub-clause (1) of clause 6 or clause 7, as the case may be, and the rent so agreed shal subject toany order that may be made by the Controller in pursuance of claues 4, 5, 6, 7 and 8, be deemed to be fair rent for the purposes of this order.
subject to the provisions of clauses 9, 10 any 11, when thecontroller had determined the fair rent of the a house.
the landlord shallnot claim or receive anypremium of other like sum inaddition torent, or any rent in excess of such fair rent; bu the landlord may stipulante for the payment of such rent in advance each month;
any agreement for the payment of any sum in addition to rent or of rent in excess of such fair rent shall be null and void in respect of such addition or excess and shall be construcedas if it were an agreement for the payment of the fair rent.
anay sum paid in excess of or short of fair rentformthedate of thefiling of application before t Copntroller to the date on which the farirent in determined shall be refunded bytheelandlore or paid bythetenant as thecasemay be, or may otherwise be adjusted by mutual agreement.
After an order dterming a fari rent had been passed, thelandlord mayincrease therent so determained aonly where some addition improvement or alteration no included in necessay reparirs or repairs which are usually made to houses in thearea to whichthis chapter is extended has been carried out at the landlord''s expencse:
Provided that such increase shallnot exceed 7 per cent per annum onthe cost of such addition improvement or alteration and shall be chargeable only form thedate such addition improvement or alteration is complete.
We may mentionn that Cls. 6 and 7 of the HRC Oder are virtual reproduction of the relevant provisions of Order of 1947 but which first time distinctinobetween houses constructed prior to 1st April 1940 and after was made for the purposes of determinationof fair rent also concept of different permissible hourses amd 50% inrespect of residential houses wasintroduced. Permissible increase in respect of houses let out for edcational purposes which was 200% in the Orde fof 1947 was however reduced reduced to12 unde the HRC Order.
What follows formthe above legislative backgroundis.
That the Defence of India Rules under which the Order of 1942 was made were to lapse at theend of Sept. 1946 in operation intitially for a limited period or three years only and that outer limit for fixation of fair rent was for the first time provided tintheOrder o 1947.
Now, it is apparent that in the year 1942 intention was tobring all old houses constructed prior to 1st Aprol 1940 at par for detemination of theie rental value for the puposes of fixtion of fair rent. The reason must bethat rents prior to that date were meagreand uneconnomic andthelanlords should be permitted toget fair rent fixed at higher rate. After all right to get fair rent determined is given both of landlord and tenant. In 1947 concept of permissible increase up toan outer limit (12 or 50 as the fase may be depending upon the use) in respect of houses constructed on or before 1st "April 1940 wa introduced. It is quite obvious that not of then increase in rental value of thae urbanproperties had been taken. Periodf subsequent to 1st April 1940 had been a period in inflation inrental values of urban properties. Between s1947 ands 1949 increase was not much as a result the same outer limit continued. Orginally the Act was tolast only for a limted period of three years. Conditions favouravle toits repealdid not return as a result the Act has continued and so also theHRC Order made under it. The graph or rental values of real estate ingeneralandurban areas in paticular has been continuoulay showing upward trend and intherent past it has reached unimaginably high level.Judicial notice of these notoriusly be taken Indeed that position is farily not disputed before us. Now legalposition asit emerges today is that all houses are govered bythe HRC Order as aresult fair rent of a house contructed in 1986 can be determined on the basis of its today''s rental value whereas today''s rentalvalue is totally irrelevant of fixation rental value is totoally inreelevant for fixation of fair rent in respect of houses constructed on or before thecut off date under thecicumstances does not indefinite contilnuation of the old rates of outer limit in the matter of fixation of fair rent with relation to houses constructed onor before the cut off date mentioned in a measure which was essentially intended to be transitory and for a fixed period found arbitrary and without any justification whatsover? It may be mentioned in this connection that even the maintenance of old houses formthe rent received or recoverable within permissible limits isnearly an impossibility in many cases. In this connection mandatory obligations cast on lanlord tomaintaina house in proper state of affairs cast By Cl. 16 of the HRC Order may be noticed Cl 16 reads:--
"(1) If a landlord fails tomake necessary reparis to a house electric installation or water connections within a reasonable time after notice given by the tenant the Controller may, by anorder made an application bythe tenant containning, inter alia an approximate estimate of exepencses required for the repairs. Direct the such reparis as my be specified in the order may be made bythe tenant and the cost thereof deducted form the rent payable by him to the landlord.
(2) If the Controller on an applicationby the tenant is satisfied that the house requires reqpirs urgently he may, after due notice to the landlord direct that such repairs as may be specifiee in the order may be made bythe tenant and the cost thereof deducted form the rent payable by him to the landlord,
(3) No application under Sub-clause (1) or sub-clause (2) shall be enterained by the Controller from a tenant who is in arrears of rent for an aggregate period ofthree months."
In Prabhakar and Another etc. Vs. State of Maharashtra and Others, it has been already noticed that the HRC Order had become completely outdated and contiunes to...... into account the changed conditions after 1949 and the felt necessities of time. In our judgement therefore the ratio of Motor General Trader AIR 1984 121 applies to Cls. 6 (1) ansd 7 (1) of the HRC Order also and hence they are declared violative of Art 14 and are struck down as such.
We must make it clear that we see noting basically wrong in initial fixing of a particular outer limit with relation to a particular cut off date. What gives blow to the validity is indefinite continuation of the formula without any justification despite wholly changed circumstances during a long span of time or which judicial notice can be taken, There was debate before us as towhat point of time does the terminology "prevailing rate of rent" use in Cl. 6 and 7 connote. This Court in Special Civil ApplicationNo. 150 of 1970 decided on26 the July 1971 Gulabrao v. Devidas Wakare 1971 Mh Lj 75 has taken a view that it connotes thedate of application for fixation of fair rent. We consider it unnecessary to go into that controversy. Equally unnecessary is the controversy as to whether 12 and 50% iincrease mentioned in the caluses represent thecost of repairs or thegeneral rise of rental values; though in out prima facie view the increase representsthe irse in rental value andnot thecost or raparis. That percentage has no nexus with the cost of reparis. Maintenance in a proper state of affairs of the property is mentioned merely as a condition precedent of entitlement to increase. In this connection useful reference may be made to Cls 9 and 10 which provide for additional permissible increases-one in thecase of amount etc andtheotherin case of increase in taxes in a given set of circumstances.
Our attention was invited tothecase of Roshan Lal Mehra Vs. Ishwar Das, in whichquestion arose astowhether providing two different forums for determination of fair rent in respect of old and new houses in the Delhi ans Ajmer Merwara Rent Control Act 1947 was violative of Art. 14, The said act was brought into force on 24-3-1947 and applies only to houses completed before that date. In Sept. 1947 Sec. 7-A along with Schedule IV was introduced by an amendment bringint into the purview of the Act even buildings constructed after 24-3-1947 While under the unamended Act the Courts were empowered to determine standard rent in respect of houses towhichit was orginally applicable, the authorizationtodetermine standare rent in respect of the new houses was given under Schedule IV to the Rent Controller. Supreme Court considered tha back ground and scheme of that Act and held that criteria for fixation of standard rent for both new and old houses wereby and large the same and hence Art, 14 and not attrached. Suprme Court inthis connection recorded approval to the following observations of the Full Bench of he Punjab High Court in the case of G.D. Soni Vs. S.N. Bhalla,
"For these reasons I am of the opinion that the criterion for the fixation of standard rent for new and old buildings is substantially the same the does not violate Art. 14 of the Consititution andthere is no valid reason for coming to the conslusion that thestandard rent of oldand new buildings of the same type and in the same llocality would necewssarily be different. The first ground therefore fails and is rejected.''
In this background it is difficult tosee how theaforesaid ratio can applytothe controversy at hand. In this case main issue is about validity of indefinite continuation of outer limt for fixation of fair rent inthecontext of cut off date of 1940.Morever we are not concerned with the forum and/or procedure but with the criterion for determination of fair rent which unlike the Delhi and Ajmer Merwara Rent Control Act is quite different in respect of the old that new houses in the HRC Order. The schemes of the tow enactmets are entriely different. It will not out be of place totakle not of the fact under HRC Order theterm "Fair rent" is not even defined.
It is contended that as a result of striking down Cls. 6 (1) and 7(1) violative of Art 14, the whole HRC Order or in any case whole Chapter relating to fixation of rent should be struck down. We do not agree. Thre HRC Order deals with meany facets of fair rent is but one of them and is a separate part of the scheme. Even different provisions relating to fixation of fair rent are separable. Cl. 4 refers to the width of power to detemine fair rent, Cl.5 to the mechanies of determination and Cls. 6 and 7 to the norms ont hebasis of whichdeterminaiton is totake place It is not our view that insuch a socil legislatino fair rent cannot be legally determined. Indeed in out view it is necessay todo so. We have found fault merely with the norms of fixation and nothing else. Those provisions are Cls. 6, 7 and 7-A However, it does seem touse that these provisions are inextricably mixed up witheach other and are inseparable. If Cls. 6(1) and 7(1) are expungedthe remainder cannot be enforced without making alterations and modifications. To make such alteration would mean judicial legislation which is impermissible. A an inevitable result. Cls. 6 (2) 7(2) and 7-A-Aare alsostruck down as unconstitutional along with Cls. 6 (1) and 7(1).
In the view we have taken it is unnecessary toconsider whether Art. 137 of the Limitation Act applies to proceedings for fixation of fair rent or whether applications can be dismissed on the sole ground of "staleness"
Undisputed positions of facts before us are that in respect of a house in Writ Petiiton No. 2694 of 1984, Cl 7 910 applies and inrespect of house in Letters Patent Appeal No. 15 of 1980 Cl., &9'') applies Writ Petition is against the preliminary order relating to maintainability or application for fixation of fair rent whereas Letter Patent Appeal arises out of an order of determination of fair rent. Needless to mentin that petitioners/applellants are landlords. As a necessary consequence of striking sown cls. 6, 7, 7-A as ultra vires the proceedings filed for determination of fair rent in both these matters and soalsotheorders passed therein are quashed andset aside. Both the writ petition as well LPA are allowed As. Pure question of law has beeb reaised inthese matters we choose not tomake any order as tocosts.
Needless to mention that the State Governments has ample power tofix appropriate norms for fixation of fair rent and subsititute Cls. 7 and 7-A by appropriate clauses. We do repear our hope and trust that decision in respect of the HRC Order ingeneral and relevant provisions in particular will be taken soon by the State Government.
Order accordingly.