1. The short question that arises for consideration in this writ appeal is whether the exemption granted under Section 26 of the Andhra Pradesh Buildings (Lease, Rent and Eviction) Control Act, 1960 (hereinafter referred to as 'the Act') in respect of building bearing Nos. 3-4-249, 250 and 251 situated at Gunj Bazar, Secunderabad, is vitiated for non-observance of the principles of natural justice.

2. The respondents herein purchased the building bearing the above numbers for a sum of Rs. 1 lakh. It is their case that they spent a sum of over Rupees 72,000/- for large scale improvements and alterations. It is their further case that they had purchased the building for their family business and for expansion of that business. At the time of the purchase, the tenants (writ petitioners) agreed to vacate the premises whenever the purchasers wanted. The respondents-landlords made substantial additions and alterations in the other portion and requested the tenants to vacate so that additions and alterations could be made in the premises occupied by them so that they could expand their business. They accordingly requested the tenants to vacate. They then applied to the Government for grant of exemption of that building from the application of the provisions of the Act on the ground they required the building for their family business and for expansion of the said business. The Government, after considering all the facts and circumstances, granted exemption under G. O. Ms. No, 270, General Administration (Accom.-A) Department dt, 2-4-1977, which is impugned in this writ appeal. The tenants of a portion of the building questioned the exemption by way of writ petition which was dismissed by our learned brother Chennakesav Reddy, J. The Government order is attacked firstly on the ground that if the building in question is a new building to which the provisions of the Act do not apply, then the Government has no power to grant exemption under Section 26 of the Act and that (2) in any event, the exemption granted without notice to the tenants who were the persons affected by the order, is violative of the principles of natural justice and, therefore, unsustainable.

3. So far as the first contention is concerned, it is nobody's case that tha building is one constructed on or after 26-8-1957. It is on that footing that the respondents applied for grant of exemption under Section 26 of the Act. If it was the case of the respondents that the building was one constructed after 26th August, 1957, they would not hava applied for exemption under Section 26 of the Act for the Act itself does not apply to buildings constructed after to 26th August, 1957. They would have straightway terminated the tenancy by issuing notice under the Transfer of Property Act and obtained eviction of the appellants-tenants. In making the application under Section 26 of the Act, tha landlords proceeded on the footing that notwithstanding the vast improvements made by them, the building was one constructed prior to 26th August, 1957, to which the Act applied. It is on that basis that the Government considered the application, The Government, in issuing the impugned Government order, has taken note of the fact that tha building was purchased for a consideration of Rs. 1 lakh and that major alterations and additions involving certain new constructions were made by the purchasers at a further huge cost of Rs. 72,462-41. But the Government did not come to the conclusion that on account of these new constructions, the building had become a 'new building' to which the provisions of the Act did not apply. The Government merely observed that the landlords have effected substantial additions and alterations. In the next paragraph, the Government sought to exercise the power vested in it under Section 26 of the Act to exempt the building with a view to remove the doubt whether the provisions of the Act apply or not. If the landlords were to proceed to file an eviction petition under the provisions of the Act, the tenants may, having regard to the additions and alterations, very well have taken an objection that it is a new building. On the other hand, if the landlords were to file a suit for eviction in a Civil Court treating it as a new building, the tenants may well hava raised objection that the building is an old building. In this situation to avoid all doubts, the landlords themselves made an application for grant of exemption under Section 26 of the Act. The Government, having regard to the facts and circumstances of the case, rightly considered it to be an old building and granted exemption under Section 26 of the Act. Even now, the tenants do not claim that it is a new building. When that is the position, the exercise of power under Section 26 of the Act must be deemed to have been made only on the footing that the building in question is an old building. Neither from the facts nor from the wording of the Order can it be construed that the Government came to a conclusion that it is a new building and yet granted exemption under Section 26 of the Act, We have no doubt that, as it stands, the building in question is an old building to which the provisions of tha Act applied and the Government was competent to exercise the power under Section 26 to exempt it from the operation of all or any of the provisions of the Act The first contention of the writ petitioner-appellant is unsustainable and is accordingly rejected,

4. The next contention of the petitioners-appellants is that as tenants of an old building, they were afforded protection by the Act against eviction by the landlord. That protection has been withdrawn as a result of the exercisa of the power vested in the Government under Section 26 of the Act by exempting the building from operation of all the provisions of the Act. That vitally affects the rights vested in them under the Act, It is argued by Sri. G. V. R. Mohan Rao that the Government acted against all principles of fair play and natural justice in taking away the statutory protection afforded to the applicants by granting exemption under Section 26 of the Act even without notice to them and without giving an opportunity to make a representation against withdrawal of the protection afforded to them by the Act. It is urged that on this ground alone, the impugned order deserves to be quashed. On the other hand, it is pointed out by the learned Advocate-General appearing for the landlord-respondents that the Government, in granting exemption under Section 26 of the Act, is acting purely in an administrative capacity and no civil consequences flow as a result of grant of exemption. Under the general law, the landlord is entitled to seek eviction of the tenant by issuing notice of termination of tenancy and if necessary, by filing a suit. The protection afforded to the tenants is only in respect of certain buildings constructed prior to 26th Aug., 1957 and even among them, only the tenants of such buildings in respect of which the Government does not choose to exercise its power under Section 26 of the Act, the protection from eviction and certain other benefits are afforded by the Act and the Legislature, in its wisdom, has sought to vest the power in the Government to withdraw the protection or benefit, having regard to the facts and circumstances of each case. When the Government withdraws such protection or benefit, in exercise of that statutory power, no civil right of the tenant is violated so as to require the observance of principles of natural justice before tha power is so exercised. In this behalf, the learned Advocate-General places strong reliance on the decision of the Madras High Court in Dr. K. C. Nambiar v. State of Madras, , wherein specifically dealing with the exemption granted under the Madras Buildings (Lease and Rent) Control Act (25 of 1949), Subba Rao, J., as he then was, held as under (at p. 352) :--

The act of the Government in exempting a building under Section 13 from the operation of the Act is not a Judicial act. The power conferred on the Government under this section is very wide and does not depend upon any prescribed objective considerations. They are not bound to give reasons. Neither the section nor the rules framed under the Act prescribe a judicial procedure for exercising the power conferred on the Government under the section. It is in the discretion of the Government to exempt a building or not.

5. Reliance is also placed on the decision of that Court in Globe Theatres Ltd. v. State of Madras, , wherein, while rejecting the contention that exemption from operation of the Madras Buildings (Lease and Rent Control) Act (25 of 1949) is not violative of Article 14 of the Constitution and that that provision is not void, the Court observed (at p. 648) :--

It would have been impossible for the Legislature to give an exhaustive list of cases in which it would be just and equitable to prevent the Act from applying. There may be cases in which the application of the provisions of the Madras Buildings (Lease and Rent Con trol) Act, might amount to unreasonable restriction on the exercise of the right of enjoyment of property conferred by Article 19(1)(f) of the Constitution.

In the course of the judgment, the Court observed (at p. 698) :--

"The policy and object of the enactment have been sufficiently indicated so as to enable the Government to exercise the power conferred by Section 13 of the Act (corresponding to Section 26 of the A. P. enactment), in specific cases not inconsistent with and in furtherance of such policy and object. The discretion given to the Government is not, therefore, an unguided and arbitrary discretion. It is a guided and controlled discretion. Evidently, it is a discretion liable to be abused. But if it be shown in any given case that the discretion has been exercised in disregard of the standard or contrary to the declared policy and object of the legislation OP arbitrarily or mala fide, then such exercise can be challenged and declared void under Article 14.'' Thus, the vesting of the power in tha Government to grant exemption was itself held to be valid and so long as the Government in granting exemption, did not contravene the policy and object of the enactment in exercise of that power, would not be violative of Article 14. It would, therefore, be necessary to Judge whether the particular order of the Government granting exemption furthers the policy and object of the Government. If that be the matter to be considered by the Government, it would have to be seen how far the parties that may be affected one way or the other, should be given an opportunity to be heard.

6. In P.J Irani v. State Of Madras & Another, , the Supreme Court while holding that Article 226 would be available to set aside an order exempting certain premises, for reasons which did not fall within the purposes for which the power under Section 13 of the Madras Buildings (Lease and Rent Control) Act was conferred, on the ground that it was discriminatory, observed that when no reasons are disclosed by the order, the High Court was competent to call for the reasons which induced the Government to pass the order of exemption upon hearing the Government and finding that the reasons given by it in that case for granting exemption were not germane to the purpose or policy of the Act and, therefore, outside the power conferred on the Government by Section 13 of the Act, quashed the order granting exemption. Accordingly, the Supreme Court dismissed the appeal. It is thus clear from the above judgment that, the order of the Government made under Section 26 of the Act should be based on sufficient reasons, which when questioned before the High Court, must stand its scrutiny. If that be so, when the landlord makes an application for grant of exemption, though under the ordinary law, a tenant may not have a right to resist termination of tenancy and eviction from a building covered by the Act inasmuch as if any application for eviction is made by the landlord before the Rent Controller, the tenant has protection of the Act and such a protection is sought to be withdrawn, then the tenant's right secured to him under the Act is lost. As the tenant is directly affected by the order of the Government, he must be given an opportunity to submit the reasons or grounds which should also be taken into account by the Government before it exercises the power under Section 26 of the Act. The reasons which must support an order under Section 26 in order that it may be in accordance with the policy and object of the enactment, cannot be those that are stated by the landlord alone.

They must be reasons germane to the issue and whatever facts the landlord may place before the Government can best be met and contradicted only by the tenant who is in occupation of the building and is vitally interested in opposing the grant of exemption. It is therefore but just and equitable that in such a case, the tenant should be given an opportunity to make his representation before the protection given to him by the Act is withdrawn. This right of the tenant does not stem from any statutory provision or from any provision of general law. But when the Legislature, in its wisdom, has given protection to and conferred certain benefits upon the tenant of a building to which the provisions of the Act apply, such a protection or benefit is as much a right vested in such a tenant as is conferred by the general law. If under the general law, the tenant cannot be evicted except after a valid notice of termination and by a proper proceeding in a civil court, a tenant of a building to which the Act applies has a further protection not to be evicted except in accordance with the orders of the Rent Controller under the Act subject to orders made on appeal and revision as provided thereunder. This right is as much as a right which the tenant is entitled to claim as a tenant covered by the general law of Transfer of Property Act. The necessity to observe principles of natural justice, in our view, extends and covers not merely express rights conferred under the Act, but are required to be observed also where an existing rights is sought to be taken away even in exercise of a statutory power vested in any authority irrespective of whether the order is administrative or quasi judicial, there is a duty to act fairly.

7. In Maneka Gandhi v. Union of India, the Supreme Court observed thus (at p. 627) :--

"..... no distinction can be made between an administrative and quasi-judicial proceeding for the pupose of applicability of the doctrine of natural Justice. This position was fudicially recognised and accepted and the dichotomy between administrative and quasi-judicial proceedings vis-a-vis the doctrine of natural justice was finally discarded as unsound by the decisions In re. H. K. (An Infant), (1967) 2 QB 617 and Schmidt v. Secretary of State for Home Affairs, (1969) 2 Ch D 149, in England and so far as India is concerned, by the memorable decision rendered by this Court in A. K. Kraipak's case . Lord Parker, C. J., pointed out in the course of his judgment In Re : H. K, (An Infant), (1967) 2 QB 617 :--

"But at the same time, I myself think that even if an immigration officer is not in a judicial or quasi-judicial capacity, he must at any rate give the immigrant an opportunity of satisfying him of the matters in the sub-section, and for that purpose let the immigrant know what his immediate impression is so that the immigrant can disabuse him. That is not, as I see it, a question of acting or being required to act judicially, but of being required to act fairly. Good administration and an honest or bona fide decision must, as it seems to me, require not merely impartiality, nor merely bringing one's mind to bear on the problem, but acting fairly; and to the limited extent that the circumstances of any particular case allow, and within the legislative framework under which the administrator is working, only to that extent do the so-called rules of natural justice apply, which in a case such as this, is merely a duty to act fairly, I appreciate that in saying that it may be said that one is going further than is permitted on the decided cases because heretofore at any rate the decisions of the Courts do seem to have drawn a strict line in these matters according to whether there is or is not a duty to act judicially or quasi-judicially."

8, In a more recent case in Swadeshi Cotton Mills v, Union of India, the Court observed :--

"The phrase 'natural justice' is not capable of static and precise definition. However, a duty to act fairly, i.e., in consonance with the fundamental principles of substantive justice is generally implied, irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial."

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Rules of natural justice are not embodied being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz., (i) aud alteram partem and (ii) nemo iudex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the alter of administrative convenience or celerity. The general principle -- as distinguished from an absolute rule of uniform application -- seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounts to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage, Conversely if the statute conferrring the power is silent with regard to giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature and no full review or appeal on merits against that decision is provided, Courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible with situational modifications. But the core of it must, however, remain namely that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.

9. In view of the above pronouncements of the Supreme Court, the contention of the learned Advocate-General that the power exercised by the Government under Section 26 of the Act is administrative and therefore, the tenant is not entitled to any notice or make any representation before the exemption is granted, cannot, in our opinion, be sustained. The result of the exercise of the Government's power under Section 26 of the Act, as the Advocate-General puts it, is that the benefit or protection given to the tenant under the Act is withdrawn. In our view, even for exercising the statutory power to withdraw such a benefit or protection, the principles of natural justice and fair play should be observed, that before it is withdrawn, the person who would be affected by such a withdrawal should be given an opportunity to make his representation. On account of exemption being granted, the protection given and/or benefit conferred on the tenant by the Act are taken away. That results in certain civil consequence. There is no appeal or revision provided against an order, made under Sec. 26 of the Act. A pre-decisional opportunity should therefore be given to the tenant so that he may make his representation. No distinction can be made on the ground that the order is an administrative order or made bona fide in exercise of statutory power vested in tha Government. Of course, the Government is not required to give elaborate reasons or record the same. Nonetheless, if, having regard to the facts and circumstances of the case, the power is exercised bona fide, that cannot be called in question if it furthers the object of the Act. The fact that the landlords have invested a large amount in purchase of the building and invested equally large amount in making additions and alterations, is certainly a valid consideration for the exercise of the power. The fact that the landlords intend to use it for their own business or residence, is also an additional factor. But nonetheless, the tenants who had the protection of the Act should also have been heard before arriving at the decision to grant exemption under Section 26 of the Act. The Government would then have an opportunity to know why exemption should not be granted. It may be relevant to note that while exercising the power vested under Section 26 of the Act, it has always been the practice of the respondent-Government to give notice to tha tenants. Suffice to refer to few of them, viz., Dr. (Miss) J. V. Raj v. Dr. P. Siva Reddy, (1966) I Andh LT 79 and Iqbal Singh v. State of A. P., (1971) 2 Andh LT 255.

10. No doubt, Subba Rao, J., (as he then was) sitting singly, has held that under the Act, it is entirely in the discretion of the Government to grant exemption to a building or not and that the power conferred under this Section is very wide and the exercise of the same does not depend upon any prescribed objective considerations, it is not bound to give reasons. Neither the Section nor the Rules framed thereunder prescribe a judicial procedure for exercising the power conferred on the Government under the Section. But having regard to recent decisions of the Court obliterating the distinction between administrative and quasi-judicial functions performed by the statutory authorities and the Government and having regard to the emphasis laid on the observance of principles of natural justice and fair play widely adumberated in the Maneka Gandhi's case Swadeshi Cotton Mills case , we are of the view that the Government even while bona fide exercising of the power conferred under Section 26 of the Act in taking away the protection or benefit conferred by the provisions of the Act, is bound to afford an opportunity to the tenants who are vitally affected to make a representation against the withdrawal of such protection or benefit. Inasmuch as the Government has not given any such opportunity in the instant case, and it is only on this ground, we hold that the order of the Government is unsustainable and accordingly quash it We, however, make it clear that by quashing the impugned order, we do not intend to restrict the discretion of the Government in any manner to either grant or refuse exemption under the Act. The Government may reconsider the application of the landlords-respondents for grant of exemption in the light of this judgment.