Judgment
As delivered
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 671 of 1957.Appeal from the judgment and order dated February 5, 1954,of the Madras High Court in Writ Appeal No. 28 of 1953.Sachin Chaudhuri, N. A. Palkhiwala, J. B. Dadachanji, S. N.Andley and P. L. Vohra, for the appellant.B.K. Gopalakrishnamachar and T. M. Sen, for therespondent No. 1.A. V. Viswanatha Sastri, R. Ganapathy Iyer andG. Gopalakrishnan, for respondent No. 2.1961. April 21. The Judgment of Sinha, C. J., Ayyangar andMudholkar, JJ. was delivered by Ayyangar, J. The Judgment ofS. K. Das and Sarkar, JJ., was delivered by Sarkar, J.AYYANGAR, J.-This is an appeal against a judgment of aDivision Bench of the High Court of Madras on a certificateunder Arts. 132 and 133(1) of the Constitution, and raisesfor consideration the constitutionality of s. 13 of theMadras Buildings (Lease & Rent Control) Act, 1949; and thelegality of an order of the State Government passedthereunder.The facts giving rise to the appeal are briefly as follows:The dispute relates to promises No. 1, Blackers Road, MountRoad, Madras-a property which was originally owned by oneSir Haji Ismail Sait. In or about the year 1914 oneVenkayya obtained a lease of this property from Sir HajiIsmail Sait and constructed a cinema-theatre thereon172which he ran under the name of "the Gaiety Theatre".Venkayya was adjudicated an insolvent and the OfficialAssignee of Madras in whom his estate, including theleasehold interest in the suit site vested, obtained afurther lease of the property from the representatives ofSir Haji Ismail Sait who had by then died, for a period of 9years from March 1926. Thereafter the Official Assigneesold the super-structure of the theatre to one Mrs. Madan towhom he also assigned the unexpired portion of the lease.Mrs. Madan, subsequently, obtained a further lease of theproperty from the representatives of Sir Haji Ismail Sait'sestate for a further period of 7 years from June 1935. Mrs.Madan was thus the owner of the superstructure and thelessee of the site, with a term which would expire in orabout May 1942. While one T. S. PL. P. Chidambaram Chettywho is the second respondent before us obtained a conveyanceof all the rights which Mrs. Madan possessed in the super-structure and in the lease for a sum of Rs. 36,000 under aregistered deed dated January 4, 1937, and he ran the cinemahouse from then.There was litigation between the heirs of Sir Haji IsmailSait, pending on the original side of High Court of Madras,and by interim orders passed in two suits (C. S. Nos. 280and 286 of 1939), the High Court appointed two advocates asJoint-Receivers to administer' the property in suit. In theearly months of 1940, one J. H. Irani, the father of P. J.Irani-the appellant before us-had negotiated with the Recei-vers for a lease of a property adjacent to No. 1 BlackersRoad with a view to construct a cinema theatre whereon.That lease was for a period of 21 years and would haveexpired in or about April-May 1961. Irani offered to theReceivers to take a lease also of the property now indispute and on which the Gaiety-theatre stood, also tillApril-May 1961. The Receivers then moved the Court fordirections regarding the grant of the lease. The secondrespondent, whose term of lease would have expired in 1942,was offered by the Court the option of taking a lease for 21years from the 1st of May 1940 but he expressed his173unwillingness to take a lease for such a long term. He was,however, willing to have the lease continued for a period of7 years from the 1st of May 1940, i.e., for 5 years beyondthe term of his then existing lease. The Court thereuponpassed an order on May 2, 1940 reading:"The lessee of the Gaiety Theatre (ChidambaramChetty) will be given a lease of seven yearsfrom this date. They will not be given anyfurther option. On the expiry of that period,i.e., from 2nd May 1947 the same may beincluded in the lease of J. H. Irani at thesame rate of rent at which it is being leasedto the lessee of the Gaiety Theatres."In accordance with this order the Receivers of the estate ofthe late Sir Haji Ismail Sait executed two lease deeds (1)in favour of the second respondent for a period of 7 yearsfrom May 1, 1940 and (2) a reversionary lease in favour ofJ. H. Irani for a period of 13 years-11-1/2 monthscommencing from May 1, 1947, i.e., on the expiry of thelease in favour of the second respondent, this term beingfixed so as to be coterminous with the lease of theneighbouring property which Irani was being granted.The term of the lease in favour of the second respondentwould, therefore, have ended on May 1, 1947 but before thatdate Madras Buildings (Lease & Rent Control) Act 1946(Madras XV of 1946) came into force under which tenants inpossession who continued in occupation of residential ornon-residential buildings could not be evicted therefromexcept by proceedings taken under the Act before designatedofficers and on stated grounds which did not include themere expiry of the term. It is now common ground that thisenactment covered the second respondent's possession of thepremises now in dispute and that notwithstanding thetermination of the term he was statutorily entitled tocontinue in possession even after the expiry of the lease onMay 1, 1947.This is the result of decisions rendered in certainproceedings between the parties to which we shallimmediately refer. Irani, the, reversionary lessee calledupon the second respondent to surrender possession in174accordance with the conditions of his lease, but the latterdeclined to do so relying upon the Act and the protectionwhich it conferred upon him. Thereupon the 'presentappellant-P. J. Irani- as representing the estate of hisfather who had by then died, filed a suit on the originalside of the Madras High Court (C. S. 479 of 1947) forevicting the second respondent from the property. It may bementioned that the suit was based upon the allegation thatwhat had been leased to Venkayya originally was a vacantsite without any buildings and that consequently Madras ActXV of 1946 which did not apply to leases of mere vacantsites did not apply to protect the second respondent'spossession. The suit was, however, dismissed by judgmentrendered on April 22, 1948, on the finding that a buildingas well as the site had been included in the lease, whichbrought it within the scope and protection of the Act. Theappellant filed an appeal against this judgment (OriginalSide Appeal 37 of 1948) which was also dismissed on July29,1951, on the same finding. Even while the appeal wasstill pending before the High Court, Irani applied to theGovernment of Madras for exemption of the premises from theoperation of the Act. By the date of this applicationMadras Act XV of 1946 had been repealed and its provisionssubstantially re-enacted in the Madras Buildings (Lease &Rent Control) Act, 1949, but as the provisions of the twoenactments on the points which arise for decision in thisappeal are identical it is sufficient if reference is madeto those of the later Act. A provision for exemption beinggranted from the operation of the Act by the State Govern-ment was contained in s. 13 of the Act (Madras Buildings)Lease & Rent Control Act., 1949), to which we shallhereafter refer as the Act, in the following terms:"Notwithstanding anything contained in thisAct the State Government may by a notificationin the Fort St. George Gazette exempt anybuilding or class of buildings from all or anyof the provisions of this Act."The Government, however, by their order dated June.1754, 1951, rejected this application for exemption on theground that the matter was then sub-judice. After thedismissal of the appeal by the Division Bench the appellantIrani moved the Government afresh by a further petitionfiled in or about December, 1951, praying for the samerelief. The Government, by their order dated June 4, 1952,granted the exemption sought and the relevant notificationwhich appeared in the Fort St. George Gazette ran:"In exercise of the powers conferred bysection 13 of the Madras Buildings (Lease &Rent Control) Act 1949 (Madras Act XXV of1949) His Excellency the Governor of Madrashereby exempts the building No. 1 BlackersRoad, Mount Road, Madras (Gaiety Theatre) fromall the provisions of the said Act."And it was authenticated by the Chief Secretary toGovernment. The second respondent thereupon made a petitionto the High Court under Art. 226 of the Constitutionchallenging the legality and propriety of this order ofexemption on the principal ground that the provisioncontained in s. 13 of the Act enabling the Government toexempt particular buildings from the operation of the Act,vested in them an unguided and arbitrary discretion whichwas unconstitutional as violative of the equal protection ofthe laws guaranteed by Art. 14 of the Constitution. In theaffidavit in support of the petition, the second respondentfurther averred that in the order impugned "no justificationhas been shown for depriving the petitioner of thebeneficial provisions of the Rent Control Act". Both theState of Madras whose order was impugned as well as theappellant Irani for whose benefit the order was passed weremade respondents to this writ petition. The writ petitionwas dismissed by a learned Single-Judge of the High Court byorder dated March 12, 1953, on the ground that theconstitutional validity of s. 13 of the Act had already beenupheld by a Division Bench of the Court in another case.The second respondent thereafter took the matter in appealunder cl. 15 of the Letters Patent. At the time this appealwas heard the Bench had before it, two other appeals inwhich also the question whether s. 13 of the176Act violated Art. 14 of the Constitution hadbeen raised. The three appeals were heardtogether and this common point was firstdecided by a judgment pronounced on October23, 1953. The learned Judges held that s. 13of the Act did not offend Art. 14 of theConstitution but that individual ordersgranting the exemption might be examined tofind out whether such orders were within thepolicy and purpose of the Act or whether theywere discriminatory and therefore offendedArt. 14. In this view the grounds upon whichexemption was granted in each of the threecases before them were separately consideredand in the appeal by the second respondent thelearned Judges, after examining the reasonsdisclosed by the Government as to why theygranted exemption in the particular case, heldthat those reasons were not germane to thepurpose for which the,power of exemption hadbeen vested in them and quashed the order ofexemption.Irani feeling aggrieved by the decision of theHigh Court applied to and obtained a certificate under Arts.132 and 133(1) of the Constitution and has filed the presentappeal before us. The State of Madras has not appealed butas a respondent has filed a statement which was repeated byCounsel on their behalf, that they were not interested indisputing the correctness of the judgment of the High Courtbut left the matter to be decided between the rivalcontestants, viz., Irani and the second respondent.Mr. Sachin Chowdhary, learned Counsel for theappellant Irani, urged substantially twopoints before us: (1) that the impugned orderof the Government exempting the buildingsunder s. 13 of the Act was executive oradministrative in its nature and not quasi-judicial as wrongly held by the High Court,and was, therefore, not amenable to be quashedby the issue of a writ of certiorari, (2)assuming that the order was quasi-judicial,still it could be quashed or set aside only ifit were mala fide or proceeded upon groundswholly extraneous for the purpose of theenactment and that in the instant case neitherof these conditions was fulfilled and the HighCourt was177therefore not justified in setting it aside.He further submitted that the High Court haderroneously converted itself, as it were, intoa Court of appeal, put itself in the place ofthe Government and decided the case on thebasis of what the Court itself would have doneif it were the exempting authority. LearnedCounsel urged that this went beyond thesupervisory jurisdiction of the High Court inthe exercise of its powers under Art. 226 evenwhen dealing with a quasi-judicial order.Before dealing with these points it isnecessary to mention that obviously thesearguments proceed upon the basis that thepower conferred by s. 13 of the Act on theState Government to exempt "buildings or classof buildings from the operation of the Act isconstitutionally valid. We are saying thisbecause Mr. Viswanatha Sastri-learned Counselfor the second respondent disputed before usthe correctness of the decision of the HighCourt dated October 23, 1953, upholding thevalidity of s. 13 of the Act. It is manifesttherefore that the point urged by Mr.Viswanatha Sastri should first be decidedbefore considering the points urged in supportof the appeal.Learned Counsel for the appellant, however,raised an objection, to Counsel for therespondent being permitted to contest thevalidity of s. 13 of the Act. He pointed outthat the question of the validity of s. 13 hadbeen decided by a judgment rendered on October23, 1953, and that as the respondent did notprefer an appeal to this Court from thatjudgment, he was precluded from agitating thisquestion in the appeal now before us. Weconsider this objection as without substance.By its order dated October 23, 1953 writappeal 28 of 1953 against the decision inwhich this appeal has been brought was notdisposed of but was still kept pending beforethe High Court for further consideration andas observed by the learned Chief Justice inthat judgment:"In this view we cannot strike down s. 13 ofthe Act as inconsistent with the Constitutionand void but we shall have to examine eachcase on its merits".23178Writ Appeal 28 of 1953 was thereafter dealt with on itsmerits and it was this examination which resulted in itsbeing allowed. In our opinion, therefore, the two judgmentshave to be read together and as really part of oneproceeding, though for convenience and with a view to definethe scope of the arguments the Court expressed its opinionon the Constitutional point at an earlier stage. We alsoconsider that it is doubtful if an appeal would have lainfrom the judgment of the High Court dated October 23, 1953,and even assuming that it did in view of the matters whichwe have set out earlier, the respondent cannot be precludedfrom contesting the correctness of the conclusion of theHigh Court, by reason of his not having moved this Courtunder Art. 136 of the Constitution. We therefore considerthat the respondent is entitled to support the judgment inhis favour by attacking those portions of that judgmentwhich are against him.The submission of Mr. Viswanatha Sastri was that s. 13 ofthe Act conferred an unguided and arbitrary power onGovernment to discriminate between one building and anotherand choose at their will and pleasure particular buildingswhich would be subject to the provisions of the Act andothers which would not be so subject, the tenants in thelatter being deprived of the protection conferred on othertenants similarly situated. He further urged that whetheror not a power to exempt a class of buildings was valid,because in such a case there might possibly be an element ofclassification based on rational grounds grounds germane tocarry out the policy or purpose of the Act-the same couldnot be predicated of the power to grant exemption forindividual buildings because in the latter case it would bemerely an arbitrary exercise of power discriminating betweenone building and another, or one tenant and another andwhich would, therefore, render the very conferment of thepower invalid as in violation of the equal protection of thelaws guaranteed by Art. 14.The arguments addressed to us were the same as bad beenurged before the learned Judges of the High179Court and had been repelled by them. They pointed out thatit was not correct to say that the enactment did notsufficiently disclose the policy and purpose of the Actwhich furnished adequate guidance for the basis of theexercise of the power of exemption. The preamble to the Actran:"Whereas it is expedient to regulate theletting of residential and non-residentialbuildings and to control the rents of suchbuildings and to prevent unreasonable evictionof tenants therefrom in the State".This meant that the legislation was enacted for achievingthree purposes: (1) the regulation of letting, (2) thecontrol of rents, and (3) the prevention of unreasonableeviction of tenants from residential and non-residentialbuildings. The Act was the latest in the series ofenactments and orders dating back to the period of theSecond World War when due, inter alia, to large scalemovement of populations to urban areas, there was an acuteshortage of accommodation in the principal towns, as aresult of which tenants ousted from buildings occupied bythem on the termination of their tenancies could not findalternative accommodation and were thrown on the streets,and thus owners of house-property could, if left unchecked,unfairly exploit those who sought accommodation. Theenactment in terms protected the rights of tenants inoccupation of buildings from being charged unreasonablerates of rent and from being unreasonably evicted therefrom.Tenants who required this protection included, of course,those whose duration of tenancy under the ordinary law hadexpired and who would, therefore, have been liable to beejected from the buildings occupied by them. Accordingly,the definition of a "tenant" included those who continued inpossession notwithstanding their term of tenancy had expiredand even those against whom decrees for eviction had beenpassed by Civil Courts but under which eviction had nottaken place.Though the enactment thus conferred these rights on tenants,it was possible that the statutory protection could eitherhave caused great hardship to a180landlord or was the subject of abuse by the tenant himself.It was not possible for the statute itself to contemplateevery such contingency and make specific provision thereforin the enactment. It was for this reason that a power ofexemption in general terms was conferred on the StateGovernment which, however, could be used not for the purposeof discriminating between tenant and tenant, but in order tofurther the policy and purpose of the Act which was, in thecontext of the present case, to prevent unreasonableeviction of tenants. The learned Judges of the High Court,therefore, held that while s. 13 of the Act wasconstitutionally valid, any individual order of exemptionpassed by the Government could be the subject of judicialreview by the Courts for finding out whether (a) it wasdiscriminatory so as to offend Art. 14 of the Constitution,(b) the order was made on grounds which were germane orrelevant to the policy and purpose of the Act, and (c) itwas not otherwise malafide.We find ourselves in complete agreement with the approachand conclusion of the learned Judges of the High Court tothe consideration of the question of the constitutionalvalidity of s. 13 of the Act.The meaning and scope of Art. 14 of the Constitution hasbeen the subject of several decisions of this Court, anumber of which have been considered by us in some detail inJyoti Pershad v. Administrator of Union Territory (WritPetition 67 etc. of 1959) in which we have pronouncedjudgment today. In view of this we find it unnecessary totraverse the same ground except to say that in the casebefore us enough guidance is afforded by the preamble andoperative provisions of the Act, for the exercise of thediscretionary power vested in Government so as to render theimpugned section not open to attack as a denial of the equalprotection of the laws. In our judgment, the provision nowimpugned belongs to the class numbered (v) in the analysisof the decision on Art. 14 by Das C. J. in Ram KrishnaDalmia v. Justice Tendolkar (1).(1) [1959] S.C.R. 279, 300.181"A statute may not make a classification of-the persons or things to whom their provisionsare intended to apply and leave it to thediscretion of the Government to select orclassify the persons or things for applyingthose provisions according to the policy orthe principle laid down by the statute itselffor guidance of the exercise of discretion bythe Government in the matter of such selectionor classification. If the Government inmaking the selection or classification doesnot proceed on or follow such policy orprinciple...................... the executiveaction but not the statute should be condemnedas unconstitutional."Possibly even a more apt precedent is that furnished bySardar Inder Singh v. State of Rajasthan (1) where, amongothers, the validity of s. 15 of the Rajasthan (Protectionof Tenants) Ordinance, 1949, was upheld. That sectionauthorised the Government to exempt any person or class ofpersons from the operation of the Act, and it was urgedbefore this court that this offended Art. 14. The argumentwas repelled, observing:"It is argued that that section does not laydown the principles on which exemption couldbe granted, and that the decision of thematter is left to the unfettered anduncanalised discretion of the Government, andis therefore repugnant to Art. 14. It is truethat that section does not itself indicate thegrounds on which exemption could be granted,but the preamble to the Ordinance sets outwith sufficient clearness the policy of theLegislature; and as that governs s. 15 of theOrdinance, the decision of the Governmentthereunder cannot be said to be unguided.Vide Harishanker Bagla v, The State of MadhyaPradesh."The learned Judges of the High Court were therefore, correctin their conclusion that s. 13 of the Act wasconstitutionally valid but that individual orders ofGovernment passed under that section could be the subject ofjudicial review in the manner already indicated.(1) [1957] S.C.R. 605, 621.182We shall now proceed to consider the points. urged bylearned Counsel for the appellant contesting the correctnessof the decision of the High Court setting aside the order ofGovernment exempting the premises in dispute for the reasonthat it was passed on grounds not germane to the purpose forwhich the power was conferred. As already stated, the firstpoint urged was that the order granting the exemption was anexecutive or an administrative order which was not amenableto being quashed by the issue of a writ of certiorari. Weconsider there is no substance in this objection. If theHigh Court were right in their view that the order ofexemption was passed for reasons which did not fall withinthe purpose for which the power was conferred by s. 13 ofthe Act the order itself would be one discriminatory of thesecond respondent as violating his fundamental right toequal protection of the laws. In such an event Art. 226would certainly be available to set aside such an orderwhich affected the fundamental right of the petitionerbefore the Court. Indeed, it was on the ground thatindividual orders passed by Government by virtue of thepower conferred upon it by s. 13 of the Act were examinableby the Court for their violating Art. 14 that theconstitutionality of s. 13 was upheld and in thecircumstances no objection could, therefore, be taken to ajudicial review of such individual orders. Besides, even ifthe order did not violate Art. 14, still if the High Courtwere right in the view that the same was beyond the powersconferred on Government by s. 13 of the Act, we see nosubstance in the contention that the Court lacks power underArt. 226 to set aside an ultra vires order vitally affectinga person's right to statutory protection against eviction.We do not consider that immunity from interference by theCourts could be sought for order,% which are plainly ultravires merely because they were passed bona fide in the senseof being without indirect motive. Particularly so when thepower of the High Court under Art. 226 of the Constitutionis not limited to the issue of writs falling underparticular groupings, such as the certiorari, mandamus,etc., as these writs183have been understood in England, but the power is general toissue any direction to the authorities, viz., forenforcement of fundamental rights as well as for otherpurposes.The second point urged was, and this was the main pointargued by learned Counsel for the appellant,that the learnedJudges of the High Court were in error in holding (a) thatthe reasons given by the Government were not germane to thepurpose or policy of the Act and, therefore, outside thepower conferred on them by s. 13 of the Act, and (b) in con-stituting themselves, as it were, as an appellate authorityand examining the reasons which induced the Government togrant the exemption, and pronouncing upon the correctness orotherwise of these reasons.Before considering this argument it is necessary to advertto a submission of the learned Counsel for the appellantsuggesting that the High Court were in error in calling forthe reasons which induced the Government to pass the ordersof exemption, though when the reasons were before the Courtit was in a position to examine the legality of the order.We do not consider this submission well-founded. The entirebasis for upholding the constitutional validity of s. 13 ofthe Act and considering that it did not offend the equalprotection of the law guaranteed by Art. 14 of theConstitution was, that the discretion or the power conferredupon Government was not unguided, uncanalised or arbitrary,but that it had to be exercised in accordance with thepolicy and object of the enactment gatherable from thepreamble as well as its operative provisions. The orderitself might on its face have shown that it conformed tothis requirement, in which event it would have been for theparty challenging the validity of the order to establish tothe satisfaction of the Court that it was malafide or hadbeen passed on grounds not contemplated by or extraneous to,the object and purpose of the enactment or the principleswhich should have governed the exercise of the power. Forinstance, if the exemption had been in favour of aparticular class of184buildings, say those belonging to charities-religious orsecular-the classification would have been apparent in thevery order of exemption. Where, however, the exemptiongranted is not of any class of buildings which would exfacie disclose a classification, but the exemption is of aspecified building owned by A or in which B is a tenant,then prima facie it would be discriminatory and when thelegality of the order is challenged, its intra virescharacter could be sustained only by disclosing the reasonswhich led to the passing of the order.In the present case, when the matter was before theappellate Court the Advocate-General filed a memorandumsetting out the reasons why exemption was granted in thethree cases before the Court. In regard to the exemptionwhich was the subject of controversy in writ appeal 28 of1953 with which we are concerned, the memorandum which theGovernment filed ran:"The Government exempted thebuilding................. for the followingreasons:-(1)When the High Court offered in 1940 tolease out the premises in question for aperiod of 21 years, Sri Chettiar elected totake it on lease only for a period of sevenyears, which expired in 1947. As per the HighCourt's order in C. S. Nos. 280 to 286 of1939, Sri J. H. Irani, father of Sri P. J.Irani took a lease of the promises for aperiod of 13 years 11-1/2 months from 1947 andhe deposited Rs. 10,000 towards the saidlease. He is therefore entitled for thebenefits from 1948 onwards.(2)Had not the Rent Control Act come intoforce, Sri P. J. Irani would have gotpossession in the ordinary course as per HighCourt's order and the terms of the lease deed.The operation of the Act is therefore really ahardship to him.(3)Sri Chettiar is only an absentee lesseeand he is having several other business inSouth India.(4)The conduct of Sri Chidambaram Chettiarin refusing to surrender the possession of thebuilding to Sri P. J. Irani who had taken avalid lease under185the orders of the High Court is that of a hardlitigant seeking to exploit the letter of thelaw without much regard to bona fides; and(5)Sri Chettiar had already managed to bein possession of the building for five moreyears than he was legitimately entitled tobe."The learned Judges of the High Court held that the reasonswhich led the Government to grant the exemption were notthose which were countenanced by the policy or purpose ofthe Act and that the order of exemption was, therefore,invalid. In doing so the learned Judges said:"Reasons 1, 2 and 4 go together and have refe-rence to the order of the High Court in 1940directing the Receivers to execute a lease forseven years to the appellant and after theexpiry of that period to grant a lease forfourteen years to the second respondentsfather. It is undoubtedly true that but forthe application of the Act, the second res-pondent's father would have obtainedpossession of the premises after the expiry oflease in favour of the appellant. That couldbe said of thousands of cases in which theleases in favour of tenants have expired and,but for the Act the owners would be entitledto obtain possession of the demised premises.If this circumstance alone is sufficient toexempt any premises from the operation of theAct, then the Act itself should berepealed.................. ......... There isno policy or principle involved in thiscircumstance."We agree with the learned Judges in the view here expressed.The mere fact that the tenant continued in possession afterthe termination of the tenancy is by itself no ground why heshould be evicted from the premises, because it is the verypolicy of the Act to protect the right of tenants tocontinue in possession of the premises after the terminationof their term because of the great difficulty of theirobtaining alternative accommodation. The circumstance,therefore, of the termination of the second respondent'stenancy cannot afford a justification for Government24186to say that he deserved to be evicted. If the term had notexpired the tenant would have been entitled to continue inpossession even if the exemption were granted.Learned Counsel for the appellant urged that the High Courthad failed to notice that the present case was one wherethere was a contest between two tenants and not between alandlord and a tenant and that they erred in approximatingthe position of the appellant to that of the landlord. WeBee no force in this contention, because a lessee of thereversion stands in the same position as a landlord andcannot have any higher rights, nor can the appellant deriveany assistance from the fact that the second respondentdeclined to be a lessee for any term longer than seven yearswhen that option was offered to him by the High Court inApril-May, 1940. The position of the second respondentcannot be worse than if he had taken a lease for a definiteterm of seven years with a covenant to restore possession atthe end of the period. The fact that in May 1940, thesecond respondent had an option to take a lease for a longerterm, but of which he did not avail himself, does not makeany difference or render that a ground for withdrawing fromhim the protection of the statute.We also agree with the learned Judges of the High Court thatground No. 3 is not germane for granting an exemption. Aswas pointed out, "the important point to be considered bythe Government was whether the appellant had not othertheatres at which he could carry on the business which hewas carrying on at the Gaiety theatre", and this theyomitted to consider. The reason why the possession of thetenant whose term had expired was afforded statutory protec-tion was his inability to secure alternative accommodationin which either to reside in the case of residentialbuildings or to carry on the business which he was carryingon in the case of non-residential buildings. This wastherefore a relevant matter which the Government had failedto take into account. The High Court characterised reasonNo. 5 as really not a reason at all and we agree with thisobservation. The187statute had admittedly conferred upon tenants, such as thesecond respondent the right to continue in possession afterthe termination of the lease in their favour, and the factthat such a tenant had exercised the rights conferred uponhim by statute was certainly not an improper conductmeriting his being deprived of the statutory protectionafforded by s. 7.The learned Judges further pointed out that the order ofGovernment was defective, in that it had not taken intoaccount several relevant matters as for instance the secondrespondent expending considerable sums to carry outimprovements to the theatre in 1949 etc. which bore upon theexercise of their power, and which if taken into accountwould have weighed against the grant of the exemption. Inview however of the conclusion reached that the reasonsassigned by Government for their order were not germane tothe policy and purpose of the fact, we do not consider itnecessary to pursue the matter further.The further point urged regarding the learned Judges of theHigh Court having erroneously constituted themselves into aCourt of appeal need not detain us long. The short answerto it is that the learned Judges had not done so. Thesubmission ignores the distinction between findings on factswhich the Court in proceedings under Art. 226 must, save invery exceptional cases, accept as correct and the relevanceof those facts for considering whether their establishmentsatisfied the grounds necessary for the exercise of thepower vested in Government under s. 13 of the Act. Forinstance in the case on hand, no fact found by theGovernment or stated by them as the reason or reasons whichinduced them to grant the exemption were even challengedbefore the High Court, the only contention urged by thesecond respondent which was accepted by the High Court,being that these facts were irrelevant for justifying theorder.The appeal accordingly fails and is dismissed with costs tothe contesting second respondent.SARKAR., J.-In this judgment we propose to deal only withone of the two questions that arise in this appeal.188Of these two questions, the first is whether s. 13 'of theMadras Buildings (Lease and Rent Control)' Act, 1949,offends Art. 14 of the Constitution. That Act makesprovision, among other things, for controlling rentschargeable by landlords and for preventing unreasonableeviction of tenants. Section 13, the validity of which ischallenged, gives the State Government power to exempt anybuilding from all or any of the provisions of this Act. Thecontention was that this section gave arbitrary power to theGovernment to apply the law with unequal band as it did notfurnish any guidance as to how the power to exempt was to beexercised. This question has been discussed fully by ourbrother Ayyangar. We agree with the view taken by him thatthe section does not offend the article. We have nothingfurther to add to what he has said on this aspect of thecase. The other question is whether the power was dulyexercised in the present case. On this question we havearrived at a conclusion different from that which has foundfavour with our brother Ayyangar. This is the question thatwe propose to discuss in this judgment.The power was exercised by an order made by the Governmenton June 4, 1952. It exempted from the operation of the Actcertain premises used as a cinema house and called theGaiety Theatre. The second respondent who was a tenant ofthe premises, was thereby deprived of the protection fromeviction which he would have otherwise had under the Act.He, therefore, moved the High Court at Madras for a writ toquash this order. The High Court while upholding thevalidity of s. 13 which also had been attacked by the secondrespondent, took the view that the order had been passedfor,reasons not germane to the purpose for which the powerof exemption under s. 13 had been vested in Government, andquashed that order. This appeal is against this decision ofthe High Court.The circumstances in which the order came to be made werethese. One Sir Hajee Ismail Sait had a certain plot of landin the city of Madras. He granted a189lease of that land sometime in 1914 to one Venkiah forconstructing a cinema house on it. It is not clear whetherVenkiah himself constructed any cinema house. It appearsthat he became insolvent and his assets, including theleasehold interest, vested in the Official Assignee whoobtained an extension of the lease for a period of nineyears from 1926 from the representatives of Sir Hajee IsmailSait, who had died in the meantime. One Mrs. Madanpurchased the lease-hold interest from the Official Assigneeand she later obtained a fresh lease from therepresentatives of Sir Hajee Ismail Sait for a period ofseven years from June 1935, expiring on May 30, 1942. Thislease gave Mrs. Madan the first option of refusal in casethe lessor desired to let out the land on lease after itsexpiry. On January 4, 1937, the second respondent purchasedfrom Mrs. Madan the lease-hold right, including thesuperstructure of a cinema house which had by that time beenconstructed on the land by one of the previous lessees.This is the cinema house which came to be known as theGaiety Theatre. The term of the lease was due to expire onMay 30, 1942.In or about 1939, certain suits appear to have beeninstituted in the High Court at Madras in its OriginalJurisdiction for the administration of the estate of SirHajee Ismail Sait. In those suits, orders had been passedappointing Receivers of that estate and the estate wasthereafter being administered by the High Court.It appears that by the side of the Gaiety Theatre premisesthere was another plot of vacant land belonging to the sameestate which was not bringing in any income. The High Courtpassed orders that that land should also be let out on along term lease. The father of the appellant offered totake a lease of that land at a rent of Rs. 450 per month fora period of twenty-one years with an option of renewal foranother ten years, for the purpose of constructing a show-house on it. This was sometime in 1940. At that time thelease of the adjoining Gaiety Theatre bad only about twomore years to run. The appellant's father did not like acompeting showhouse in close190proximity to his own, and therefore, he suggested to theReceivers that he should be given the lease of the GaietyTheatre premises also after the expiry of the secondrespondent's lease on May 30, 1942, at the same rent whichwas being paid by the second respondent and for a termending with his proposed lease in respect of the adjoiningpremises. The proposals were put up by the Receivers to theHigh Court for its consideration. The High Court thereuponcalled upon the second respondent to elect whether he wouldtake a fresh lease of the Gaiety Theatre premises for aperiod of twenty one years after the expiry of his leasethen current. This was done as he had the option under hislease. The second respondent was not prepared to take afresh lease for twenty-one years but he suggested that alease for another seven years might be given to him on hisagreeing to vacate the premises after the expiry of thoseseven years without claiming any extension or option. Theproposals from the appellant's father and the secondrespondent were then considered by the High Court and byconsent of parties orders were passed by it on March 21,1940, and the 2nd and 3rd of May, 1940. By these orders theReceivers were directed to grant a lease of the landadjoining the Gaiety Theatre premises to the appellant'sfather for twenty-one years commencing from May 1, 1940,with option for ten more years. These orders furtherdirected the Receivers to grant a lease of the GaietyTheatre premises to the second respondent for a period ofseven years from the same date without any option, and togrant a lease of these premises to the appellant's fatherfor a period of thirteen years and eleven months and a halfcommencing from the expiry of the seven years for which alease of them was going to be granted to the secondrespondent. The orders required the appellant's father todeposit a security of Rs. 10,000 in respect of the leases tobe granted to him and this he duly deposited. All theseleases were then granted by the Receivers under the ordersof the Court. Apparently, the second respondent surrenderedthe remaining term of his lease which191was to have expired on May 30, 1942. Relying on theaforesaid orders and leases and also on the secondrespondent's agreement to vacate the Gaiety Theatre premiseson the expiry of his lease, the appellant's fatherconstructed a showhouse on the land adjoining the GaietyTheatre premises which came to be known as the CasinoTheatre.
On October 1, 1946, the Act came into force and in view of its provisions, the second respondent could not be evicted from the Gaiety Theatre premises even after the expiry of his lease. Taking advantage of the Act, the second respondent refused to vacate the premises after the expiry of his lease on April 30, 1947, which he had expressly agreed to do. On May 1, 1947, the appellant's mother, his father having died in the meantime, deposited with the Receivers a further sum of Rs. 9,000 as rent in advance, as required by the terms of the lease. Thereafter the appellant ,seems to have succeeded to the estate of his father. He took various proceedings to eject the second respondent from the Gaiety Theatre premises but was unsuccessful. Thereupon he moved the Government and the Government after giving the second respondent a hearing, and fully considering the matter, passed the order of June 4, 1952.
The High Court had called upon the Government to state the reasons. why it had exercised its power under a. 13 exempting the Gaiety Theatre premises from the operation of the Act. The Advocate General appearing for the Government, the first respondent in this appeal, filed a memorandum setting out these reasons. The reasons were as follows:-
"(1). When the High Court offered in 1940 to lease out the premises in question for a period of 21 years, Sri Chettiar elected to take it on lease only for a period of seven years, which expired in 1947. As per the High Court's order in C. S. No. 280-286/1939, Sri J. H. Irani took a lease of the premises for a period of 13 years and 11-1/2 months from 1947 and he deposited Rs. 10,000 towards the said lease. He is therefore entitled for the benefits from 1948 onwards.
192 (2)Had not the Rent Control Act come into force, Sri P. J. Irani would have got possession in the ordinary course as per High Court's order and the terms of the lease deed. The operation of the Act is therefore really a hardship to him.
(3) Sri Chettiar is only an absentee lessee and he is having several other businesses in South India. (4) The conduct of Sri Chidambaram Chettiar in (4) Sri Chettiar had already managed to be in refusing to surrender the possession of th e building to Sri P. J. Irani who had taken a valid lease under the orders of the High Court is that of hard litigant seeking to exploit the letter of the law without much regard to bona fides; and (5)Sri Chettiar had already managed to be in possession of the building for five more years than he was legitimately entitled to be."
The High Court having considered the reasons came to the conclusion that they did not serve the purpose of the Act. We are unable to accept this view. It may be that some of the reasons given would not have justified the order but broadly, we think, they referred to facts which showed that the power had been exercised legitimately. Indeed, on the facts of this case which we have set out earlier, we think that it was unnecessary for the High Court to ask the Government to state the reasons for its order. In our view, these facts themselves sufficiently show that the order was within the objects of the Act and not extraneous to s. 13. We wish to observe before we proceed further, that in considering whether the reasons given by the Government are sufficient to bring the order within the objects of the Act, the High Court had no power to act as if it were sitting in appeal over the Government's decision. A court cannot set aside an order under s. 13 on the ground that it would not itself have made the order for the reasons for which the Government had made it. All that the Court has to see is whether the power was used for any extraneous purpose, that is to say, not for achieving the object for which the power had been granted. When it is alleged that the power was used for a purpose other than achieving the object for which the 193 power is granted, the initial onus must be on the party which alleges abuse of power and there must be prima facie evidence in support of the allegation. It is only then that the onus may shift.
However all this may be, was the power in this case in fact used for an extraneous purpose? It is not said that the power had been exercised for any ulterior purpose. Now, the purpose of the Act, quite clearly, is to prevent unreasonable eviction and also to control rent. These two purposes are intertwined. An eviction becomes unreasonable where the object is to exploit the situation arising out of the dearth of accommodation by letting out the premises at an unreasonably high rent and on realisation of extortionate premium. Often these are realised secretly, particularly so, the premium. Therefore, when there is no risk of an opportunity arising in which a landlord may be able to realise illegal rent or premium, an eviction may not be unreasonable; indeed, there may be circumstances which would justify the inference that the tenant is trying to take an undue advantage of the situation and in such a case, the Government would be justified and within its power to exempt the premises from the operation of the Act. That is the position here. The lease was granted at a point of time when the situation was normal, that is, when a landlord was not in a position to make an unconscionable bargain for himself by exploiting the situation, for the lease was granted in 1940 when there was no scarcity of accommodation.
Next, the lease was granted under orders of Court. It was granted by the officers of the Court. There is no question of either the Court or the officers using the situation for purposes of exploitation. Again, to refuse exemption under s. 13 in the present case would amount to preventing the Court from administering the estate in its charge in a manner which it has the power to do and which of course is its duty to do for the benefit of the parties entitled to the estate. There was nothing unfair to the second respondent in granting the exemption, for the second respondent had been given the 25 194 option to take up the lease. He had refused it. He is now objecting to the exemption only because he finds it more profitable to continue in the premises than he thought it would be at the time the offer had been made to him. The appellant and his father had been deprived for a long time of the use of a considerable sum of money which was paid in terms of the bargain to which the second respondent had freely entered. It may be that the appellant's father would not have gone in for the lease of the Casino Theatre premises and spent enormous sums of money for constructing a showhouse there if the second respondent had not given him to understand that he would leave the Gaiety Theatre premises on April 30, 1947. The fact that the second respondent spent money, if any, in improving the Gaiety Theatre premises is irrelevant.
He knew that he had undertaken to vacate the premises by April 30, 1947, and that the appellant was taking steps to recover possession of these premises.
We do not think that the difficulties of a tenant on eviction decide what is or is not "unreasonable eviction". One of the objects of the Act as stated in the preamble is "to prevent unreasonable eviction of tenants". The word "unreasonable" necessarily connotes a consideration of all the circumstances including the conduct of parties in order to find out what is unreasonable. It seems to us that under s. 13 it is the duty of the Government to take into consideration all the relevant circumstances of a particular case or class of cases in order to determine if the pro- tection of the Act given to the tenant or tenants concerned should be withdrawn. The section is applicable not merely to institutions like hospitals or schools, but may be applied to other cases also, where there is no question of any unreasonable eviction of the tenant, or where prevention of eviction itself may be unreasonable. We, therefore, think that the Government's action in exempting the Gaiety Theatre premises from the operation of the Act was within the scope of the Act, and the High Court does not seem to have considered the case from this point of view. For these reasons, in our view, the order of June 4, 195 1952, was a competent and legal order and no exception can be taken to it.
We would, therefore, allow the appeal and set aside the order of the High Court. The second respondent should pay the costs of the other parties throughout. By COURT. In accordance with the majority Judgment, the appeal is dismissed with costs to the contesting second respondent.
