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Messrs. Abdul Subhan Sahib v. State Of Madras
Judgment Summary: Appeal against G.O. exempting premises from Madras Buildings (Lease and Rent Control) Act, 1949
Factual and Procedural Background
This appeal challenges the judgment of Balakrishna Ayyar, J., in Writ Petition No. 275 of 1957. The writ petition was filed by the appellants, Abdul Subhan Sahib & Sons, seeking to quash an order of the State of Madras exempting premises No. 6, Varasiddhi Vinayakar Koil Street, Periamet, Madras, from the operation of the Madras Buildings (Lease and Rent Control) Act, 1949.
The appellants are long-term lessees (about 40 years' occupation). In 1952 the previous owner initiated eviction proceedings which ended in compromise under which the appellants continued in possession at a monthly rent of Rs. 170. In November 1954 Abdul Wahid (the second respondent) purchased the property, carried out repairs and demanded higher rent. When the parties could not agree, on 14 February 1956 the second respondent petitioned the Minister in charge of accommodation to exempt the premises from the Act. After objections by the appellants and an inspection by the Minister on 15 December 1956, the Government issued G.O. Ms. No. 380, Home, dated 12 February 1957, exempting the premises.
The Government order recorded that the property was bought by M.R. Abdul Wahid for Rs. 25,000 for the specific purpose of re-starting his commission mandi business; that the appellants occupied most of the property but had sublet one-third and were effectively paying only Rs. 20 per mensem for two-thirds of the building; and that the owner required the premises for his own occupation for business. The High Court (Balakrishna Ayyar, J.) refused to quash the Government order. The present appeal was directed against that judgment.
Legal Issues Presented
- Whether the Government's exercise of discretion under Section 13 of the Madras Buildings (Lease and Rent Control) Act, 1949, in exempting the premises was made in disregard of statutory standards or policy, or was arbitrary or mala fide.
- Whether the landlord's asserted need to occupy the premises to re-start a business (commission mandi) — when he already occupied other non-residential premises in the city — falls within the scope of power vested in the Government under Section 13 so as to justify exemption from the Act.
Arguments of the Parties
Appellants' Arguments
- The opinion records the appellants' principal contention that the Government had exercised the discretion under Section 13 in disregard of the standards or contrary to the declared policy and object of the legislation, or that the exercise was arbitrary or mala fide.
Second Respondent / Landlord's Arguments
- The second respondent (landlord) submitted that he purchased the premises for Rs. 25,000 to re-start his commission mandi business and that his then-current premises were unsuitable; he therefore needed the purchased premises for his own occupation and use.
- Counsel for the second respondent argued that the Act did not provide for a case where the landlord already occupied another non-residential building in the city but found it insufficient for his requirements, and that the Government could therefore properly exercise Section 13 to afford relief in such circumstances.
- It was also mentioned (as a factual contention advanced by the landlord and his counsel) that the appellants had sublet part of the building and thereby obtained an unconscionable advantage, and that the landlord had offered alternate accommodation which the tenants unreasonably refused; the Government's order did not expressly rely on the latter point.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Globe Theatres v. State of Madras (1954) 2 M.L.J. 110; I.L.R. (1954) Mad. 616 | Established that power conferred on the Government by Section 13 to exempt premises must be exercised in furtherance of the policy and object of the Act (so as not to offend Article 14). It also identified the main objects of the Act: control of rent and regulation of letting to prevent unreasonable eviction. | The High Court (Balakrishna Ayyar, J.) relied on this decision to validate the Government's exemption in the lower court. The appellate court adopted and applied the same principles from Globe Theatres to analyze whether the Government's exemption in the present case was in furtherance of the Act's policy and therefore lawful; it concluded that the exemption here was arbitrary when measured against the Globe Theatres standard and therefore quashed the order. |
Court's Reasoning and Analysis
The appellate court proceeded by examining the specific reasons relied upon by the High Court in upholding the Government's exemption and by testing those reasons against the statutory scheme and the principle laid down in Globe Theatres.
- The court recalled that Globe Theatres had held that Section 13 power to exempt must be exercised in furtherance of the Act's policy and object — mainly rent control and preventing unreasonable eviction — and that arbitrary exercises of the power can be struck down.
-
The court reviewed the two reasons given by Balakrishna Ayyar, J. in support of upholding the Government order:
- That the tenants were obtaining an unconscionable advantage (by subletting) at the landlord's expense; and
- That the landlord required the premises to restart his commission mandi business because his present premises were unsuitable.
- On the first reason (subletting/unconscionable advantage), the appellate court held this to be irrelevant for justifying exemption under Section 13 because the Act itself provides remedies for such conduct (e.g., applications to the Rent Controller to fix fair rent or address subletting). The court observed that the existence of statutory remedies meant that taking this matter as a justification for exempting the premises from the Act was improper.
- On the second reason (landlord's business need), the court analysed the statutory eviction grounds in Section 7 (sub-sections (2) and (3)) and concluded that the Act expressly circumscribes the grounds upon which a landlord may obtain possession (including certain business-related grounds for non-residential buildings). The court emphasised that the policy of the Act is to deny a landlord the right to evict unless the statutory conditions are met — for instance, the landlord not occupying any other non-residential building in the city.
- The appellate court rejected the second respondent's argument that an inadequacy of the landlord's other non-residential premises was a ground outside the Act's scheme which Section 13 could lawfully remedy. The court reasoned that allowing the Government to use Section 13 to create additional grounds for eviction (such as the landlord's inconvenience or fairness of his proposal) would be inconsistent with the Act's expressed policy and purpose.
- The court clarified the concept of arbitrariness in the exercise of Section 13: arbitrariness includes both taking into account irrelevant considerations and basing the decision on reasons that the legislature has specifically excluded as grounds for eviction. The court found the Government's reasoning in this case to be arbitrary because it relied on circumstances that the Act does not countenance as justifying eviction or exemption.
- Having applied these legal principles to the facts (including the Government's own statement of reasons in the G.O.), the appellate court concluded that the Government's grant of exemption in this instance was an arbitrary exercise of the discretion conferred by Section 13 and therefore unlawful.
Holding and Implications
Holding: The appellate court allowed the appeal and quashed the Government order exempting the premises. In the court's words, the order was the result of an arbitrary exercise of discretion under Section 13 and therefore liable to be set aside.
DISPOSITION: The appeal is allowed; rule nisi is made absolute. Costs of the appeal are payable by the second respondent, and an advocate's fee of Rs. 150 is directed.
Implications: The direct effect is that the Government's exemption of the specified premises from the Madras Buildings (Lease and Rent Control) Act, 1949, was quashed and the appellants' statutory protections under the Act remain in force for those premises. The opinion emphasises that Section 13 must be exercised only in furtherance of the Act's policy and object and that the Government cannot use Section 13 to add new grounds for eviction beyond those the legislature specified. The opinion does not purport to create a novel doctrine beyond applying and reaffirming the Globe Theatres principle; it limits its practical effect to setting aside the exemption in this case.
All information in this summary is drawn exclusively from the provided opinion text and does not add facts or conclusions beyond that source.
1. This appeal is directed against the judgment of Balakrishna Ayyar, J., in Writ Petition No. 275 of 1957. The Writ Petition was filed by the appellants before us, Abdul Subhan Sahib & Sons, for the issue of an appropriate writ to quash the order of the State of Madras, exempting premises No. 6, Varasiddhi Vinayakar Koil Street, Periamet, Madras, from the operation of the Madras Buildings (Lease and Rent Control) Act, 1949.
2. The appellants are lessees of the property, and it is stated in their affidavit that they have been in occupation of the property for nearly 40 years. The previous owner of the property was one C. Haji Abdul Karim Sahib. In 1952 he filed a petition before the Rent Controller to evict the present appellants from the premises. This proceeding ended in a compromise, as a result of which the appellants were allowed to continue in possession of the premises on payment of rent at the rate of Rs. 170 per mensem. In November, 1954, Abdul Wahid, the second respondent to the writ petition and the second respondent before us in this appeal, purchased this property. Thereafter, he is said to have effected repairs to the property and then made a demand for payment of higher rent. The parties did not agree. Thereafter, on the 14th February, 1956, the second respondent presented a petition to the Minister in charge of accommodation, Government of Madras, requesting the Government to exempt the premises (No. 6, Varasiddhi Vinayakar Koil Street, Periamet Madras) from the operation of the provisions of the Madras Buildings (Lease and Rent Cortrol) Act of 1949. The reasons he gave in that petition for this request will be dealt with presently. The Government, after hearing the objections of the appellants, the tenants, passed an order in G.O. Ms. No. 380, Home, dated 12th February, 1957, exempting the premises from the operation of the Act. The order runs thus:
Premises No. 6, Varasiddhi Vinayakar Koil Street, Periamet, Madras, belongs to Sri M.R. Abdul Wahid, a merchant doing business in hides and skins at premises No. 26 in the same street, which is also owned by him. The entire downstairs portion and upstairs portion newly constructed of premises No. 6, V. V. Koil Street is under the occupation of Nagal Abdul Subhan & Sons on a monthly rent of Rs. 170. They have sublet one-third of the premises to two sub-tenants and are realising a rent of Rs. 150 per mensem from the sub-tenants. Hence for the two thirds of the portion occupied by Sri N. Abdul Subhan Sahib & Sons they are paying only a rent of Rs. 20 per mensem. The landlord has applied to the Government for grant of exemption of the premises from the provisions of the Madras Buildings (Lease and Rent Control) Act, 1949, on the ground that he purchased the premises for a sum of Rs. 25,000 for the specific purpose of re-starting his commission mandi business and that the present premises he is living in is unsuitable for this business and that, therefore, he needs the premises for his own occupation and use. The Government have carefully examined the request made by the landlord and they have decided to exempt premises No. 6, V.V. Koil Street, Periamet, Madras, from all provisions of the Act.
It is common ground that on 15th December, 1956, a few months before the order of the Government, the concerned Minister inspected the premises.
3. The attack against the validity of this order of the Government is based on the contention that the Government had exercised the discretion vested in them under Section 13 of the Act in disregard of the standards or contrary to the declared policy and object of the legislation or arbitrarily or mala fide. The learned Judge, Balakrishna Ayyar, J., did not sustain this objection, because in his view there was no mala fide exercise of the power vested in the Government in granting exemption in this case. In coming to this conclusion, the learned Judge relied upon a Bench decision of this Court in Globe Theatres v. State of Madras (1954) 2 M.L.J. 110 : I.L.R. (1954) Mad. 616. The constitutional validity of the provisions in Section 13 of the Act was attacked before that Bench. In upholding the validity of the provisions, one of us a member of that Bench observed:
In my opinion, 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 in specific cases not inconsistent with and in furtherance of such policy and object.
Balakrishna Ayyar, J., followed this statement of the law, and applying it, held that the Government had not contravened this principle in granting exemption to the premises in question. His reasons for this conclusion may be stated in his own words thus:
Undoubtedly the petitioners have sublet a substantial portion of the building for a rent of Rs. 150 with the result that for the portion they actually occupy they were paying only a rent of, Rs. ao. This averment in the order of the Government is not contradicted in the affidavit filed by the petitioners. The position therefore is that the petitioners are obtaining an unconscionable advantage at the expense of the owner of the property, The object and purpose of the Act is to protect tenants from being rackrented and improperly evicted, it is not intended to enable them to profiteer. The purchaser of the property wanted the building for the specific purpose of re-starting his commission mandi business and his case was that the premises he is living in is unsuitable for the purpose.
Of the two reasons given by the learned Judge, the first, namely, that the petitioners are obtaining an unconscionable advantage at the expense of the owner of the property, appears to us, with all respect to the learned Judge, irrelevant. The provisions in the Act enable both the tenant and the landlord to file application before the Rent Controller for fixing fair rent for premises let. It is true that the mode in which fair rent should be fixed is indicated in the relevant provisions of the Act, but we were not informed that by that mode of fixing the fair rent the landlord in this case would not be able to get an increase in the rent payable by the appellants. Mr. Venkatrama Iyer, the learned Counsel for the second respondent, made no attempt to support the order of the learned Judge on this ground.
4. The second ground mentioned by the learned Judge is that the purchaser of the property wanted the building for the specific purpose of re-starting his commission mandi business and the premises he was living in was unsuited for the purpose. Assuming this purpose to be a real one which animated the landlord to evict the tenants, we have to see whether this would fall within the scope of the power vested in the Government under Section 13 of the Act. In Globe Theatres' case (1954) 2 M.L.J. 110 : I.L.R. (1954) Mad. 616 the law was stated thus:
If the policy and object of the Act can be discovered within the four corners of that Act including the preamble, and discretion is vested in the Government to make a selection in furtherance of that policy and object for the application of the Act, then the provision conferring such power is not void as offending Article 14 of the Constitution. If such power is improperly exercised in any particular case, that is, not in furtherance of the policy and object of the Act, but arbitrarily, then the Court can strike down the exercise of such power on every such occasion.
(Italics ours.) This decision further lays down that the two main objects of the Madras Buildings (Lease and Rent Control) Act, 1949, are (1) the control of rent, and (ii) the regulation of letting with a view to prevent unreasonable eviction of tenants. The Act takes away the unrestricted power of the landlord to evict tenants. However, the landlord is not left without remedy in this matter because the act specifies in section 7 two sets of circumstances alone which would enable the landlord to obtain eviction of a tenant. These circumstances are set out in Sub-sections (2) and (3) of Section 7. Sub-section (2) sets out six causes enabling the landlord to evict a tenant. They fall under what we would call acts of omission and commission of the tenant like default in payment of rent, sub-letting the property without consent of the landlord, using the building for a purpose other than one for which it was let out, committing acts of waste likely to impair the value or utility of the building, committing acts which are a nuisance to the occupiers of the other portions of the same building, ceasing to occupy the building for a period of four months and denying the title of the landlord. We are not concerned in this case with this group. Sub-section (3) of Section 7 enables the landlord to evict a tenant for a different cause. In the case of a residential building this Sub-section provides that the landlord could evict a tenant if he himself is not occupying a residential building of his own in the city concerned. In the case of a non-residential building the landlord is similarly entitled to evict a tenant, if he is not occupying, for the purpose of business which he is carrying on any non-residential building in the City concerned. A separate provision is made in this Sub-section to cover the case of a landlord who is occupying only a part of a residential or non-residential building. In that case he is entitled to apply for an order to evict the tenant occupying the remaining part of the building only if he satisfies the Authority that he requires additional accommodation for residential purposes or for the purposes of business.
5. Obviously, the provision as to the occupation of a part of building by the landlord does not apply here. The only provision which applies is the right given to the landlord to requisition a non-residential building on the ground that he is not occupying any other non-residential building in the City for the purpose of his business. The policy of the Act, as could be seen from these provisions, is to deny the right of the landlord to evict a tenant from a non-residential building, unless the landlord himself does not occupy another non-residential building in the same city. If he does occupy such a non-residential building, the legislature has debarred him from getting possession of a non-residential building in the occupation of a tenant. Mr. Venkatarama Iyer, the learned Counsel for the second respondent, pointed out that in a case where the landlord was occupying a non-residential building of his own in the City but found such a building insufficient for his requirements, there was no provision in the Act to enable the landlord to evict the tenant, and that the only provision which gave power to the landlord to evict a tenant occupying a non-residential building was found in Clause (c) of Sub-section (3) of Section 7 which dealt with a case of part occupation of premises by the landlord along with a tenant. Clearly, he argued, there was no provision in the Act dealing with a case like the present one, and if the Government felt that serious injustice was caused to the landlord by being denied possession of the premises in the occupation of this tenant, they could exercise the power vested in them under Section 13 of the Act.
6. There is a fallacy underlying this argument. As already pointed out by us, the decision in Globe Theatres' case (1954) 2 M.L.J. 110 : I.L.R. (1954) Mad. 616 has laid down that the power given to the Government to exempt any premises from the operation of the Act could only be exercised in furtherance of the object of the Act and should also be in consonance with the policy of the Act. We have also already pointed out that the two main objects of the Act are the control of rents and the regulation of letting with a view to prevent unreasonable eviction of tenants. We fail to see how procuring the premises for the landlord for a purpose for which he is not entitled to evict a tenant under the provisions of the Act, would be in furtherance of the object of the Act. Of course, regulation of letting of a premises includes not only prevention of unreasonable eviction of tenants but also permitting reasonable eviction. The Act itself provides for such reasonable eviction. If a particular case does not fall within the provisions of the Act permitting such eviction, we are unable to hold that exercise of power of exemption by the Government under Section 13 for achieving such eviction would be a reasonable exercise of power.
7. What constitutes arbitrary exercise of the power vested in the Government under Section 13 could not be defined in an abstract manner. The more reasonable course would be to examine every instance of the exercise of such power to find ou t whether it was arbitrary or not. In this connection we would point out that arbitrariness consists not only taking into account an irrelevant consideration as justifying the exercise of the power but also taking into account a reason, which the legislature by reason of the specific provisions in the Act had decided was not a ground justifying eviction of a tenant by the landlord.
8. Going back to the two reasons given by the learned Judge in his order, we have already pointed out that the fact of the tenant making any unconscionable advantage over the transaction would not be any ground justifying exercise of the power vested under Section 13. A remedy is provided under the Act for such specific evil, and the landlord should be left to pursue that remedy. The second ground, namely, that the landlord requires the premises in question for the purpose of his business since the premises which he is already occupying is unsuitable, is one which is not permitted as a ground for eviction under the provisions of the Act but is also not in furtherance of the policy underlying the Act. We would point out that regulation of letting out of premises is one of the objects of the enactment, and the end sought to be achieved is to prevent unreasonable eviction of tenants. The Act does categorically lay down the only grounds permissible for eviction of tenants. Under the circumstances it would not be open to the Government to add to these grounds either on the score of inconvenience of the landlord or on the ground of fairness of the proposal put forward by the landlord for alternate accommodation to the evicted tenant. Counsel for the second respondent argued that his client, the landlord, was very fair in this case, because he offered alternate accommodation to the tenants, which the tenants unreasonably refused to accept. This ground is not specifically relied on by the Government in their order. The order, however, states that the landlord purchased the premises in question for a sum of Rs. 25,000 for the specific purpose of restarting his commission mandi business and that the present premises in which he is living is unsuitable for his business. We need hardly point out that this circumstance is entirely irrelevant. Differing from Balakrishna Ayyar, J., we are of opinion that the order of the Government is the result of arbitrary exercise of the discretion vested in them under Section 13 of the Act, and it should be quashed.
9. This appeal is allowed. Rule nisi is made absolute with costs of appeal payable by the the second respondent. Advocate's fee Rs. 150.
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