Mohd. Ataur Rehman Khan (Died) By L.Rs v. Mohd. Kamaluddin Ahmed & Another

(1) These revision petitions arise under rent control act. C. R. P. No. 180 of 1983 is at the instance of the landlord and c. R. P. No. 1953/85 is at the instance of the tenant. The landlord filed a petition for fixation of fair rent at rs. 350 per month under sec. 4 of a. P. Buildings (lease, rent and eviction control act, 1960 at rs. 350/ - p. M. The rent payable at the time was rs. 90/ -. The enhancement was sought for on the ground that there is continous increase in labour charges, maintance charges, municipal taxes and the rents prevailing in the locality. This is resisted by the tenant on the ground that the house is an old one and it requires major repairs in addition to the white - washing of the house and the tenant is only a state government employee of l. D. C. Cardre and hence the claim for enhancement is not sustainable. In the counter - affidavit filed on behalf of the deputy secretary to government, accomodation department, it was stated that the enhancement of rent is not justified as the increase in labour charges and maintenance charges are not relevant for the purpose of enhancement and in any event the fair rent claimed is excessive. The rent controller having regard to the provisions of section 4 of the act and taking into consideration the general increase in cost of living and cost of maintenance and also in view of the fact the rent was fixed 16 years ago fixed the rent of 150/ - p. M. Aggrieved by this order the land - lord filed an appeal. The appellate authority taking into consideration the guide - lines in g. O. Ms. No. 1302 dated 18 - 5 - 1966 arrived at the conclusion that the rent of rs. 275/ - p. M. Is fair and equitable. Aggrieved by this decision both the landlord as well as the tenant filed revision petition.

(2) The learned counsel for the land - lord contended that the premises is big one with six big halls and varandah with all the provisions and amenities having plinth area of 990 sq. Ft and spacious ope n place and considering the spun in prices and the demand the premises would easily fetch an amount of not less than rs. 1,000/ - to rs. 1,500/ - p. M. The learned counsel for the tenant contended that the provisions of sec. 4 of the rent control act were not taken into consideration by the appellate authority and no cogent reasons have been assigned for enhancing the rent from rs. 150/ - to 275/ - p. M.

(3) Apart from the contentions on merits sri b. Prakash rao, learned counsel for the landlord raised a far - reaching contention namely that s. 4 (2) of the rent control act providing fixation of fair rent on the basis of rents prevailing in the locality for similar accomodation during the twelve months prior to 5th april, 1944 is outmoded and far removed from the current increase in prices and arbitrary and violative of article 14 of the constitution. Sri omprakash misra, learned counsel for the tenant contended that the tenant is the government employee and the date for fixing the fair rent provided in sec. 4 is in consonance with the objects of the act to avoid exploitation of the tenants and arbitrary increase in rents at the instance of the land - lords and the provision designed to safeguard the interests of the tenants cannot be considered as arbitrary and hence section 4 is not violative of article 14 of the constitution.

(4) Sri misra raised a preliminary objection as to the consideration of constitutional validity of the provision on the grounds that the government is not made a party and this court while considering the revision/under sec. 22 of the act cannot consider the constitutional validity of the provision. The government pleader is put on notice and sri n. Subba reddy, the government pleader appeared. While considering the revision petition the high court has ample power under articles 226 and 227 of the constition to consider the constitutional validity of the provision.

(5) Section 4 of the a. P. Buildings (lease, rent and eviction) control act, 1960 (hereinafter called the act) is as follows :

"4. Determination of fair rent : (1) the controller, shall, on application by the tenant or landlord of a building fix the fair rent for such building such enquiry as the controller thinks fit. (2) in fixing the fair rent under this section the controller shall have due regard. (a) to the prevailing rates of rent in the locality for the same or similar accomodation in similar circumstances during the twelve months prior to the 5th april, 1944 ; (b) to the rental value as entered in the property tax assessment book of the concerned local authority relating to the period mentioned in clause (a) ; (c) to the circumstances of the case, including any amount paid by the tenant by way of premium or any other sum in addition to rent after the 5th april, 1944 ; (3) in fixing the fair rent of residential building the controller may allow. (i) if the rate of rent or rental value referred to in sub - section (2) does not exceed twenty - five rupees per mensum, an increase not exceeding 12 1/2 percent on such rate or rental value ; (ii) if the rate of rent or rental value exceeds twenty - five rupees per mensem, but does not exceed fifty rupees per mensum an increase not exceeding 18 3/4 per cent on such rate or rental value (iii) if the rate of rent or rental value exdeeds fifty rupees per mensem, an increase not exceeding 37 1/2 per cent on such rate or rental value. Provided that in the case of a residential building which has been constructed after the 5th april, 1944, the percentage of increase shall not exceed 37 1/2, 56 1/4 and 75 respectively. (4) in fixing the fair rent of non - residential building, the controller may allow : (i) if the rate of rent or rental value referred to in sub - section (2) does not exceed fifty rupees per mensum an increase not exceeding 56 1 /4 per cent on such rate or rental value. (ii) if the rate or rent or rental value exceeds fifty rupees permensum, an increase not exceeding 75 per cent on such rate or rental value. Provided that in the case of non - residential building which has been constructed after the 5th april. - 1944, the per centage of increase shall not exceed 75 and 150 respectively. (5) in the case of a building for which the fair rent has been fixed before the commencement of this act, the controller shall, on the application of the landlord, allow such increase in the fair rent as in the opinion of the controller, the landlord is entitled to under this section"

(6) At the outset it is necessary to consider the pedigree and the objects of the rent control legislation. The war in 1941 brought in its train the increased demand for accommodation and consequent exploitation of the situation by the house - owners by recourse to demand of excessive rent and unreasonable eviction of tenants. With a view to case the situation, the madras house rent coatrol order, 1941 was passed pursuant to the powers delegated under the defence of india rules regulating the tenancies and the order was made applicable initially to the hill - stations only, but subsequently extended to the entire madras province. The order which was confined to the residential houses only ;n the beginning was extended to the buildings for storage accommodation by the madras godown rent control act, 1942 and later to all non - residential buildings. Subsequently, the madras house rent control order, 1945 and the madras non - residential buildings rent control order, 1945 were passed. After the expiry of the defence of india rules, the madras buildings (lease and rent) control act 1946 was introduced and it came into force with effect from 1st october, 1946. The rent control legislations followed the pattern evolved in rent restriction acts, england which were primarily aimed at protection to small tenants regarding continued tenancy and - against threat of enhancing the rent. The rent control legislations through out the country conceived as a transitory measure to rescue the enants frorn sudden spurt of threatend evictions and enhancement of rent as a result of war have become a permanent feature due to acute shortage of housing accommodation in urban areas. The rent control legislations through out the country are aimed at curbing unreasonable evictions and regulating the tenancies. The eviction of tenant is circumscribed by the conditions enumerated in the act striking a departure from the unfettered right of the landlord to seek eviction at his whim under the transfer of property act. Under the provisions of rent control act the eviction can be sougot for in the event of wilful default in payment of rent, subletting without express consent or committing acts of waste or nuisance and denying the title of the landlord. Without reference to the lapses by the tenant, the landlord is enabled to see for eviction ana resumption of the possession of the building on proof of bona fide requirement for self occupation. Apart irom regulating the tenancy and safeguarding the righ ts of the tenants against unreasonable or oppressive altempts at evictions and also taking care of the legitimate rights and needs of the landlord. The provision is made for fixation of fair rent for the premises under occupation of the tenant. The act is a self - contained enactment providing reliefs and remedies before the heirarchy of authorities constituted under the act. The object of the act is to interdict unreasonable eviction of tenants and though the slant towards tenants is clearly discernible from the provisions of the act the corresponding obligations of tenants with reference to punctual payment of rent, embargo on subletting without express consent of landlord and keeping the demised premises in a fit condition arid attempting to defy the title of the landlord are provided. Equally the provision enabling the fixation of fa. R rent at the instance of either landlord or tenant is made to ensure just and equitable rent.

(7) Section 4 of the act is designed to fix fair rent for the building at the instance of either the tenant or the landlord. The ingredients for fixing the rent embodied in sub - section 2 are the prevailing rates of rent in the locality in similar circumstances during 12 months - prior to 5 - 4 - 1944 and the lental value entered in the property tax assessment book for the said period and the circumstances of payment of premium or any other sum in addition to the rent subsequent to 5 - 4 - 1944. The marginal increases on the rate of rent prevailing during 12 months period prior to 5 - 4 - 1944 depending upon the contingencies are provided in sub - section 3. The increase of 12 1/2 per cent is provided in the event of rent fixed under sub - section 2 not exceeding rs. 25/ - p. M. , 18 3/4 per cent if the rent is in between rs. 25/ - and rs. 50/ - and 37 1/2 per cent if the rent exceeds rs. 50 -. The main basis for fixing the rent is the rate of rent prevailing in the 12 months period prior to 5 - 4 - 1944.

(8) The great equalising principle in article 14 of the constitution is given a new dimension beginning from royappa's case. The essence of the principle is stated as follows in menaka gandhi vs. Union of india, air 1978 sc 597,

"equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrionaire limits. We must reiterate here what was pointed out by the majority in w. P. Royappa vs. State of tamil nadu (1974) 2 scr 348 : (air 1974 sc 555) namely, that ' from a positivetic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies ; one belongs to the rule of law in a republic, while the other to the whim and caprice of an absolute monarch. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of article 14". Article 14 strikes at arbitrariness in state action and ensures fairness and equality of treatment".

In ajay hasia vs. Khalid mujib, air 1981 sc 487 reiterating the same view it is held as follows:

"it is sufficient to state that the content and reach of article 14 must not be confused with the doctrne of classification. Unfortunately, in the early stages of the evolution of our constitutional law, article 14 came to be identified with the doctrine of classification because the view taken was that article forbids discrimination where the classification making the differentia fulfils two conditions, namely, (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouned together from others left out of the group and (ii) that differentia has a rational relation to the object sought to be achieved bv the impugned legislative or executive action. It was for the first time in e. P. Royappa vs. State of tamil nadu (1974) 2 scr 348: (air 1974 sc 555) that this court laid bare a new dimension of article 14 and pointed out that that article has highly activist magnitude and it embodies a guarantee against arbitrariness."

The traditional approach of testing the provision or action in terms of equality and considering the reach of article 14 from the perspective of dual considerations ot reasonable classification or grouping and the legitimate affinity of such classification to the object sought to be achieved is not considered to be necessary and it is sufficient if the act is arbitrary. The arbitrary provision or action incurs the displeasure of article 14 as arbitrariness is antithesis to equality.

(9) The learned counsel for the respondent stressed that section 4 at the commencement of the act cannot be considered as arbitrary as the rents prevailing in the vicinity have to be considered as guideline and the provision which was just and equitable cannot be characterised as arbitrary or discriminatory after considerable time. The provision which is valid at inception can become arbitrary or discriminatory by efflux of time due to changed circumstances. In madhva pradesh vs. Bhopal sugar industries ltd, air 1964 sc 1179, while considering the validity of the levy of agricultural income - tax in the former state of bhopal after merger in the state of madhya pradesh the supreme court held as follows:

"but by the passage of time, considerations of necessity and expediency would be obliterated, and the grounds which justified classification of geographical regions for historical reasons may cease to be valid. A purely temporary provision which because of compelling forces justified differential treatment when the reorganisation act was enacted cannot obviously be permitted to assume permanency, so as to perpetuate that treatment without a rational basis to support it after the initial expediency and necessity have disappeared. It would be impossible to laydown any definite time limit within which the state had to make necessary adjustments so as to effectuate the equality clause of the constitution"

In h h. Shri swamiji of shri ademar mutt vs. Commissioner, h. R and c. E, air1980 sc 1 while considering the validity of the continued application of the provisions of madras act after the state reorganisation it is held as follows:

"with the passage of time the validity of historical considerations on which section 87 - b is founded will wear out and the continuance of the said section in the code of civil procedure may later be open to serious challenge"

In motor general traders vs. State of andhra pradesh, air 1984 sc 121 while striking down section 32 (b) of a. P. Rent control act as violative of. Article 14 venkataramaiah, j held as follows:

"the long period that has elapsed after the passage of the act itself serves as a crucial ractor in deciding the question whether the impugned law has become discriminatory or not because the ground on which the classification of buildings into two categories is made is not a historical or geographical one but is an economic one. Exemption was granted by way of an incentive to encourage building activity and in the circumstances such. Exemption cannot be allowed to last for ever"

It is further held as follows:

"the second answer to the above contention is that mere lapse of time does not lend constitutionality to a provision which is otherwise bad. "time does not run in favour of legislation. If it is ultra vires, it cannot gain legal strength from long failure on the part of lawyers to perceive and set up its invalidity. Albeit, lateness fn an attack upon the constitutionality of a statute is but a reason for exercising special caution in examining the arguments by which the attack is supported we are constrained to pronounce upon the validity of the impugned provision at this late stage because the garb of constitutionality which it may have possessed earlier has become worn out and its unconstitutionality is now brought to a successful challenge".

In rattan arya vs. State of tamil nadu, air 1986 s. C 144 while considering the constitutional validity of sec. 30 (ii) 01 tamil nadu buildings (lease and rent control) act as violative of article 14 of the constitution, chinnappa reddy, j held as follows :

"in these days of universal day to day escalation of rentals any ceiling such as that imposed by s. 30 (ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this court in motor general traders vs. State of andhra pradesh (air 1984 s. C. 121 p. 130) a provision which was perfectly valid at the commencement of the act could be challenged later on the grand of unconstitc,tionality and struck down on that oasis. What was once a perfectly valid legislation may : in course of time, become discriminatory liable to challenge on the ground of its being violative of art 14"

(10) It is fairly settled that the validity of the provision or act at the inception may not continue for ever and the entire complexion may change by efflux of time and changed circumstances. Sec. 4 envisages the modulation of fair rent in consonance with the rents prevailing in the legality during the period of 12 months prior to 1 - 4 - 1944 with marginal increase. This provision evolved at the time when the act was enacted continued to be same without responding to the sea change in the price structure. It cannot be gainsaid that there is gallopping increase in prices and the value of rupee has been eroding fast and the rupee value has fallen down to l/8th of its original value. In view of the high inflationary tendencies and the rupee value degenerating the continued adherance to the rents prevailing in 1944 is far removed from real state of affairs. The value of the building is appreciating by leaps and bounds and the cost of living index has been on tremendous increase, thanks to inflation, and the amount fixed, with relation to rents in 1944 is depreciating in terms of money value. In the instant case the building comprises plinth area of 990 sq ft and considering that it is a old structure the minimum value that caii be estimated is at rs. 1 lakh including the site. The return for rs. 1 lakh can be reasonably estimated at the minimum of rs. 750/ - p. M. The niggardly approach of fixing the rent ranging from rs. 200/ - to rs. 300/ - having regard to the rents prevailing in 1944 rents is negation of fairness in ascertaining the rental value. Further considering the current standards the minimum rent that can be expected in the locality where the house is situated is rs. 1/ - per sq. Ft and on this basis the reasonable rent is, likely to be rs. 1,000/ - per mensum. In view of current economic standards and spiraling prices it is highly unrealistic to cling to old values and rentals in 1944. It looks odd that the rents prevailing in 1943 - 44 with consolation increase should be applied in 1985 - 86 and the provision is screaming manifest unreasonableness. In view of the rigidity and dullness and lack of response to changed conditions and pattern of life sec. 4 is. Stripped of realistic and rational approach. Sec. 4 by adherence to the rentals of 1944 is totally indifferent to the real state of affairs in the real estate matters. The mode of fixing the fair rent envisaged in sec. 4 of the act is any thing but fair. It is heartening to note that the andhra pradesh law commission in its report dated 27 - 12 - 1977 realised the need of realistic overhaul of this provision and the relevant passage may be excerpted :

"the outmoded provision contained in sec. 4 is in our opinion, responsible to a large extent for constraining several landlords, who would otherwise be law - abiding citizens, to devise ways and means of circumventing the act, it has also had the effect of destroying the title incentive which they might otherwise have had in undertaking fresh building activity. Fixation of fair rent on the basis of rent prevailing in or around the year 1944 would have the effect of giving undue concession to the tenant at the expense of the landlord when in fact, fair rent, which relates to building should be fair both to the landlord and tenant as has been pointed out in a series of cases including rewal and co. V. K. G. Ramachandras (air 1974 s. C. 818) in which it was observed among other things, that wnat is fixed is not the fair rent payable by the tenant to the landlord who applies for fixation of fair rent but fair rent for the building, something like an incident of the tenure regarding the building. It is, therefore, needless to add that sec. 4 requires to be radically changed. This is the reason why some states, including tamilnadu have already revised the method for fixation of fair rent in their statutes. If we do not follow suit the plight of the tenant becomes more unenviable in the ultimate analysis as no one would ordinarily embark upon construction of new buildings in these days of high cost of land, material and labour and the usage that 'fools build houses for wise men to live in' will soon become a truism"

(11) Section 4 of a. P. Buildings (lease, rent and eviction) control act 1960 is hereby declared as unconstitutional.

(12) As section 4 is unconstitutional the approach of the primary authority as well as the appellate authority fixing the fair rent in terms of sec. 4 is illegal. Hence the orders are set aside and the matter is remitted to the rent controller for fresh consideration without reference to section 4 of the act.

(13) C. R. P. No. 180 of 1985 is allowed. C. R. P. No. 1953/85 dismissed. No costs.