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  • Section 3(2) of the M. P. Accommodation Control Act, 1961 (hereinafter referred to as the Act)
  • provisions of the Madhya Pradesh Accommodation Control Act, 1961.
  • Madhya Pradesh Accommodation Control Act, 1961
  • provisions of Article 14 of the Constitution.
  • M. P. Accommodation Control Act, 1961
  • Rent Control) Act, 1960
  • WAKF ACT 1954
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
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Acts
  • Section 3(2) of the M. P. Accommodation Control Act, 1961 (hereinafter referred to as the Act)
  • provisions of the Madhya Pradesh Accommodation Control Act, 1961.
  • Madhya Pradesh Accommodation Control Act, 1961
  • provisions of Article 14 of the Constitution.
  • M. P. Accommodation Control Act, 1961
  • Rent Control) Act, 1960
  • WAKF ACT 1954
Smart Summary

Structured Summary of the Court Opinion

Factual and Procedural Background

The petitioners are tenants occupying shops that form part of the Jama Masjid building at Chowk, Bhopal, which is owned by respondent No. 2, a Wakf registered under the Wakf Act, 1954. The petitioners claimed to be long-standing tenants who had been protected by the Madhya Pradesh Accommodation Control Act, 1961 (the Act). They alleged that respondent No. 2 demanded substantially increased rents (ranging in many instances from 100% to 300%, and in some cases many times more) and served notices threatening eviction if the increased rents were not paid. The petitioners challenged a Notification dated 7-9-1989, published in the Madhya Pradesh Rajpatra and issued by respondent No. 1 under Section 3(2) of the Act, on the ground that it illegally deprived them of the Act’s protections and was violative of Article 14 of the Constitution.

Procedurally, the writ petition under Article 226 was admitted on 1-8-1991. Respondents were served but did not file a substantive return; the case was represented at times by the Additional Advocate General who ultimately did not file a return or appear at the final hearing dates, and the court proceeded to hear and decide the matter after observing the petitioners on the listed hearing dates.

Legal Issues Presented

  1. Whether Section 3(2) of the Madhya Pradesh Accommodation Control Act, 1961 is constitutionally valid (as raised in the petition and discussed with reference to precedent).
  2. Whether the Notification dated 7-9-1989 (Annexure B) issued under Section 3(2) was issued in accordance with law and is constitutionally valid, particularly with reference to Article 14 of the Constitution.

Arguments of the Parties

Petitioners' Arguments

  • The petitioners asserted that they were old tenants entitled to the protection of the Madhya Pradesh Accommodation Control Act, 1961 against unjustified eviction and exorbitant rent increases.
  • They submitted that respondent No. 2 had demanded rent increases ranging typically from 100% to 300%, and in some instances far greater (details in Annexure A), with notices threatening eviction (Annexure A-1).
  • They contended that the Notification dated 7-9-1989 (Annexure B) illegally deprived them of the Act’s protection and subjected them to arbitrary and discriminatory treatment by respondent No. 2, thereby violating Article 14 of the Constitution.
  • They also argued that the withdrawal of statutory protection where they were already enjoying it should not have occurred without affording them an opportunity of hearing (a contention that the court noted but found unnecessary to decide further in view of its primary reasoning).

Respondent No. 2's Position (as recorded)

  • Although the respondents did not file a comprehensive return, respondent No. 2 filed a reply to the application for ad interim relief asserting that the Notification was issued in exercise of powers under Section 3(2) of the Act and that the provision is constitutionally valid; on that basis respondent No. 2 submitted that the petitioners were not entitled to relief.
  • Respondent No. 2’s response indicated that the Wakf was registered prior to 1961, suggesting a historical basis for seeking exemption, but no detailed materials or evidence explaining the grounds for exemption were placed on record by the State or in the respondents’ filings before the Court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
State of Madhya Pradesh v. Kanhaiyalal, 1970 M.P.L.J. 973 Held that the provision (Section 3(2) of the Act) is constitutionally valid; relied upon the Supreme Court's earlier approach in similar matters. The court accepted that Kanhaiyalal establishes the constitutional validity of Section 3(2) but drew from it the further principle that exemption must not be granted by mere application of a "rule of thumb" and that the State must apply its mind and have germane grounds for exemption.
P.J. Irani v. State Of Madras & Another, AIR 1961 SC 1731 Earlier Supreme Court authority relied upon in Kanhaiyalal concerning similar issues of exemption and statutory interpretation. Used by the court (through Kanhaiyalal) as foundational authority establishing constitutional validity of the exemption power while simultaneously informing constraints on its exercise.
S. Kandaswamy Chettiar v. State of Tamil Nadu, AIR 1985 SC 257 Upheld constitutional validity of a similar provision in the Tamil Nadu Buildings (Lease and Rent Control) Act, relying on Kanhaiyalal. Cited to support the proposition that Section 3(2)-type provisions have been upheld but do not permit unguided discretion by the State.
Kailash Chandra v. National Textile Corporation, Indore, 1991 M.P.L.J. 290 One of a series of Madhya Pradesh decisions emphasizing that executive authority exercising statutory power must act justly, fairly and not arbitrarily; obligation to comply with Article 14. Relied upon to reinforce that the State must act reasonably and comply with Article 14 in granting exemptions under statutory power.
Parenteral Drugs (India) Pvt. Ltd. v. State of Madhya Pradesh, 1991 MPLJ 386 Illustrates the obligation of statutory authorities to be fair and not arbitrary; Article 14 compliance in administrative action. Used alongside other state decisions to support the requirement that exemptions be based on material and reasoned consideration consistent with Article 14.
Devendrapal Singh v. State of Madhya Pradesh, 1992 MPLJ 638 Similar emphasis on the duty of statutory authorities to act reasonably and to comply with Article 14 when exercising statutory powers. Reinforced the court's view that the State must apply its mind and act with fairness when issuing exemption notifications.
Ishwarlal and Anr. v. The Madarsa Taiyabia Committee, 1981 M.P. Rent Control Journal 138 Applied the test from Kanhaiyalal: mere ownership by a religious/charitable institution or utilization of income for the institution is not by itself sufficient; the institution must allege why exemption is necessary (e.g., need to evict to use accommodation, or income inadequacy). The court applied Ishwarlal to the facts and concluded that the impugned notification did not disclose any of the relevant grounds or material that would justify exemption; hence it was invalid in so far as it affected the petitioners.

Court's Reasoning and Analysis

The court proceeded in distinct analytical steps:

  1. Constitutional validity of the statutory provision: The court observed that Supreme Court authority (via P.J. Irani and Kanhaiyalal) and subsequent decisions (including S. Kandaswamy Chettiar) have upheld the constitutional validity of Section 3(2)-type exemptions. Therefore, the provision itself is not struck down on constitutional grounds.
  2. Limits on executive discretion: The court emphasized that upholding the provision did not authorize "uncontrolled or unguided discretion" in the State to grant exemptions. The exercise of the power must conform to Article 14 and involve an obligation to act reasonably, justly and not arbitrarily.
  3. Requirement of material and application of mind: Drawing on the passage from Kanhaiyalal reproduced in the opinion and the state decisions (Kailash Chandra, Parenteral Drugs, Devendrapal Singh) as well as the local authority Ishwarlal, the court explained that an institution seeking exemption must allege and present why exemption is necessary (examples include a need to evict for occupation by the institution, or that income from the premises is wholly inadequate for institutional expenses). The State must consider such grounds and apply its mind before issuing a notification.
  4. Absence of supporting material: The court found that there was no affidavit or material on record from the State explaining why exemption was granted in this case, and that returns filed did not disclose any germane grounds. The respondents failed to place before the court reasons or material justifying the exemption in favour of respondent No. 2.
  5. Conclusion from facts and law: Given the lack of material and absence of any considered application of mind by the State in issuing Annexure B, the court concluded that the notification was arbitrary and violative of Article 14 insofar as it affected the petitioners. The court therefore declared the notification invalid in relation to the petitioners.
  6. Ancillary observation: The court noted that because of this primary finding it was unnecessary to decide the separate contention that petitioners were entitled to a hearing before the State granted exemption.

Holding and Implications

Holding: The petition was allowed. The court declared that the notification dated 7-9-1989 (Annexure B) insofar as it exempts respondent No. 2 from the operation of the Madhya Pradesh Accommodation Control Act, 1961, is constitutionally illegal and void being violative of Article 14 of the Constitution.

Direct consequences and implications:

  • The petitioners will continue to be governed by the provisions of the Madhya Pradesh Accommodation Control Act, 1961.
  • Considering the facts and circumstances, the parties were directed to bear their own costs of the petition.
  • Any security amount (if any) will be refunded.

The opinion does not elaborate broader doctrinal changes beyond applying existing precedent: it upholds the provision's validity but enforces the requirement that the executive must record and act upon germane reasons in accordance with Article 14 when granting exemptions under Section 3(2).

    Chintamani Chandra Mohan Agarwal And Others v. State Of Madhya Pradesh And Another

    1. The petitioners are tenants of respondent No. 2, a Wakf registered under the Wakf Act, 1954 and feel aggrieved by the Notification dated 7-9-1989 published in Madhya Pradesh Rajpatra of the said date, issued by the respondent No. 1 under Section 3(2) of the M. P. Accommodation Control Act, 1961 (hereinafter referred to as the Act) ; and challenge the constitutional validity thereof by filing this petition under Article 226 of the Constitution.

    2. We must at the very outset regret the non-availability of any help in deciding this writ petition by the respondents. The petition was admitted as long back as on 1-8-1991 and thereafter the respondents were served notices. They were represented by Addl. Advocate General. The respondents have neither filed any return nor have appeared on the last date of hearing when the matter was fixed for final hearing. This Court was informed that since the Advocates of the High Court are boycotting this Court, the office of the Advocate General is also not able to attend the hearing. This court knows no reason why the office of the Advocate General should boycott the Court. The Office of the Advocate General has a status of its own and is under an obligation to discharge its own responsibilities also and since this court finds no valid reason for the absence and since the petitioners were present in this Court, not only on 6-9-1993 but also on 13-9-1993, the Court has proceeded to hear them and decide the matter in accordance with law.

    3. The petitioners are in occupation of shops forming a part of Jama Masjid building situate at Chowk, Bhopal and owned by the respondent No. 2, a Wakf. They claimed to be old tenants and submit that earlier they were governed by the provisions of the Act and had the protection of the said law. They specifically submit that the protection of the Act extended to unjustified eviction from the tenanted shops and also exorbitant increase in the rent. The petitioners further submit that they have always been ready to pay the rent at the increased rate but the increased rent demanded from them is generally from 100% to 300%. In some case, the increase has been 20-30 times of the present rent. The details of the increase are contained in Annexure A, filed with the petition. The petitioners further submit that they have been served notices like Annexure A-l demanding increased rent and failing which are threatened with eviction. They submit that the Notification dated 7-9-1989 (Annexure B) not only illegally deprives them of the protection of the act but also subjects them to discriminatory and arbitrary treatment in the hands of respondent No. 2. The notification is, therefore, claimed to be illegal and violative of Article 14 of the Constitution.

    4. Though no return has been filed by the respondents, the respondent No. 2 has filed reply to the application for ad interim writ and has submitted that the notification having been issued in exercise of powers under Section 3(2) of the Act which is constitutionally valid, the petitioners are not entitled to any relief from this Court. Under the circumstances, the constitutional question requiring decision of this Court is whether Section 3(2) of the Act is a constitutionally valid provision and whether the notification Annexure B has been issued in accordance with law.

    5. As regards the constitutional validity of Section 3(2) of the Act, the decision is of the Supreme Court in State of Madhya Pradesh v. Kanhaiyalal, 1970 M.P.L.J. 973. In the said case, relying on its earlier decision in P.J. P.J Irani v. State Of Madras & Another, AIR 1961 SC 1731, the Supreme Court held that the provision was constitutionally valid. To the same effect is the decision in S. Kandaswamy Chettiar v. State of Tamil Nadu, AIR 1985 SC 257, where the constitutional validity of a similar provision in Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 was challenged and the challenge was repelled relying on the decision in Kanhaiyalal's case. Under the circumstances, there should be no difficulty in upholding the constitutional validity of Section 3(2) of the Act.

    6. The aforesaid however, does not mean that uncontrolled or unguided discretion has been vested in the State Government to grant exemption. The State Government while exercising this power has to act according to the provisions of Article 14 of the Constitution. Indeed the obligation to act reasonably is always implicit in such cases. Though it is not necessary to quote any law in this regard, some of the latest decisions of this Court pointing out to the obligation of the statutory authority to be just and fair and not arbitrary and fanciful, may be helpful. Reference may, therefore, be made to Kailash Chandra v. National Textile Corporation, Indore, 1991 M.P.L.J. 290; Parenteral Drugs (India) Pvt. Ltd. v. State of Madhya Pradesh, 1991 MPLJ 386 and Devendrapal Singh v. State of Madhya Pradesh, 1992 MPLJ 638. These decisions which are based on several Supreme Court decisions establish without doubt that the executive authority exercising statutory power is required to comply with the provisions of Article 14 which must be deemed to be implicit in the exercise of that power. Under the circumstances, the question requiring consideration is whether the notification Annexure-B is void being violative of Article 14 of the Constitution.

    7. The submission of the petitioners in this behalf is that the notification deprives them benefit of protection of the M. P. Accommodation Control Act, 1961 without specifying any reason or necessity for the same and is, therefore, arbitrary. It is also claimed to be arbitrary because it violates the principles of natural justice. The specific claim is that since the petitioners were enjoying the benefit of the protection of the Act, the said protection could not be withdrawn without giving them the opportunity of hearing. It is unfortunate that no return has been filed by the respondents and therefore, nothing whatsoever has been placed for consideration of this Court to ascertain reasons for issuing the notification. The reply to the ad interim application filed by the respondent No. 2 indicates that the respondent No. 2 Wakf was registered as such much before 1961. Apparently, therefore, there should be some reason for the respondent State to exempt such a Wakf from the operation of all provisions of the Act. In this connection, it must be observed that issuance of notification under this provision is not an empty formality. Such a power is to be exercised in rare cases and for very good reasons. Section 3(1) of the Act exempts the property of the Government and local bodies from the operation of the Act and takes care of public interest. Sub-section (2) is applied only in cases of educational, religious and charitable institutions or to nursing homes or maternity homes. This provision has been interpreted by the Supreme Court in Kanhaiyalal's case wherein it was clarified that the rule of thumb cannot be the basis for granting the exemption by the State. It was also clarified that any institution covered by Section 3(2) has to allege why it has become necessary to apply for exemption and thereafter the State Government was required to apply its mind to those facts and circumstances to ascertain whether the claim for exemption was germane to the policy of the Act. The following passage from the judgment being of importance is reproduced for ready reference :-

    "4. Before we can hold in favour of the State Government, we must be satisfied that the ground of exemption was germane to the policy of the Act. In this case there is no affidavit by any officer who had anything to do with the order granting exemption. The returns filed on behalf of the State Government do not throw any light on this question. It would appear that in granting the exemption the State applied merely a rule of thumb and issued the notification on the basis of the assertion by the Trust that the entire rental income from the property was being applied to meet the expenses of the Trust. Such a statement only allows an institution to apply for exemption under Section 3(2). By itself it is not enough. Any institution covered by Section 3(2) had to allege why it had become necessary for it to apply for exemption. It was not the case of the Trust that they wanted to evict the tenants because they wanted the whole of the accommodation itself nor was it their plea that the income according to them was very low compared to prevailing rates of rent and that it was wholly inadequate for meeting the expenses of the Trust. If grounds like these or other relevant grounds had been alleged it would have been open to the State Government to consider the same and pass an order thereon. In our view, the State Government did not apply its mind which it was required to do under the Act before issuing a notification and the return does not disclose any ground which was germane to the purposes of the Act to support the claim for exemption."

    This Court has, subsequently in Ishwarlal and Anr. v. The Madarsa Taiyabia Committee, 1981 M. P. Rent Control Journal 138, applied the aforesaid test and observed as under :-

    "the mere fact that the building is owned by an institution, religious or charitable, or by any nursing or maternity home and that the whole of the income derived from the building is utilised for that institution or nursing home or maternity home would not enable the State Government to issue a notification granting an exemption in respect of a building. As pointed out by the Supreme Court, there are mere conditions of eligibility which enable the institution concerned to apply for exemption but something more has to be proved or shown before the State Government for grant of exemption and any institution covered by Section 3(2) had to allege why it has become necessary for it to apply for exemption. The Supreme Court further points out the circumstances which will enable the institution to the grant of an exemption. These circumstances are that the institution wanted to evict the tenant because it wanted the accommodation itself or that the income from the accommodation was very low compared to prevailing rates of rent and it was wholly inadequate for meeting the expenses of the institution. Grounds like these can enable an institution for grant of exemption under Section 3(2)."

    Judging the petitioners' submissions on the basis of aforesaid principles, it must be held that the notification dated 7-9-1989 (Annexure B) is constitutionally invalid. There is nothing whatsoever on record to ascertain why and how the State Government decided to grant the exemption. There is also nothing on record to consider whether the basic conditions necessary for granting exemption are satisfied. Since the effect of the notification is to withdraw the protection from the petitioners and leave them to the mercy of the respondent No. 2, some strong reasons were required to justify exemption. It was also obligatory on the part of the respondent-State to place material on record for consideration of this Court. Under the circumstances, the impugned notification (Annexure B) in so far as it affects the petitioners and denies the benefit of protection of the Act, must be held to be violative of Article 14 of the Constitution.

    8. In view of the discussion aforesaid, it is not necessary to examine the further submission that the petitioners were entitled to be heard by the respondent - State Government before granting exemption under Section 3(2) of the Act in favour of the respondent No. 2.

    9. The petition succeeds and is allowed by declaring that the notification dated 7-9-1989 (Annexure B) in so far as it exempts the respondent No. 2 from the operation of the Madhya Pradesh Accommodation Control Act, 1961 is constitutionally illegal and void being violative of Article 14 thereof. As a necessary consequence, the petitioners would continue to be governed by the provisions of the Madhya Pradesh Accommodation Control Act, 1961. Considering all facts and circumstances of the case, the parties will bear their own costs of this petition. Security amount, if any, will be refunded.

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    Chintamani Chandra Mohan Agarwal And Others v. State Of Madhya Pradesh And Another
    (Sep 17, 1993)