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2008 (4) TMI 722

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..... g (to be constructed over it) for any purpose other than residence, with a stipulation that in case of breach of this condition, the lease shall become void. (ii) After constructing the building, the lessee inducted Shri Jai Narain Sharma and Dr. Ms. Tara Motihar, as tenants in two portions of the building, who started using the rented premises for running watch shop and clinic respectively. (iii) Smt. Satyawati Sharma (appellant herein), who is now represented by her LRs, purchased property i.e. house bearing No.3395-3397, Ward No.XVI, Block R, Gali No.1, Reghar Pura, New Delhi from legal heirs of the lessee. (iv) After purchasing the property, the appellant filed Petition Nos.184 of 1980 and 187 of 1980 for eviction of the tenants by claiming that she needed the house for her own bona fide need and also for the use and occupation of the family members dependant upon her. The appellant further pleaded that she wanted to demolish the building and reconstruct the same. She also alleged that tenants have been using the premises in violation of the conditions of lease and, therefore, they are liable to be evicted. (v) The tenants contested the eviction petitions by asserti .....

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..... ofar as it does not provide for eviction of the tenant from the premises let for non-residential purposes. Both the writ petitions were heard by the Full Bench of Delhi High Court along with other writ petitions involving challenge to the vires of Section 14(1)(e) and were dismissed by the order under challenge. The Full Bench referred to an earlier judgment of the Division Bench in H.C. Sharma vs. Life Insurance Corporation of India Anr. [ILR 1973 (1) Delhi 90] and large number of judgments of this Court including Amarjit Singh vs. Smt. Khatoon Quamarin [1986 (4) SCC 736] and held:- i) Tenants of non-residential premises are a class by themselves. The Parliament in its legislative wisdom did not think it fit to make any provision for eviction of a tenant from such premises on the ground of bona fide requirement of the landlord for residential purpose. Referenced to Section 29(2)(r) of the 1995 Act, in our opinion, cannot be said to have any relevance whatsoever for the purpose of determining. Admittedly, the 1995 Act is yet to come into force. If the said Act is yet to come into force, the question of taking recourse to the provisions of the said Act would not arise more so b .....

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..... es or tenancy cannot per se be said to be unreasonable. (v) In the instant case, so far as Sections 14(1)(e) and 14(1)(k) are concerned, the statute itself has indicated the persons to whom the provisions would apply. The provision is absolutely clear and unambiguous. In such a case the Court is only required to examine whether the classification is based upon reasonable differentia, distinguishing the person, group from those left out and whether such differential has reasonable nexus with the objects to be achieved. The impugned provision indisputably was intended to beneficially apply to landlords and of one class of tenancy viz. tenancy in respect of the residential premises and not non-residential premises. 5. The Full Bench also noticed the judgment in Harbilas Rai Bansal vs. State of Punjab Anr. [1996 (1) SCC 1] whereby Section 13(3)(a) of the East Punjab Urban Rent Restriction Act, 1949, as amended by Punjab Act No.29 of 1956, was struck down but distinguished the same by making the following observations :- The objects and reasons of the said Act, thus, were considered having regard to the provisions made at the time of commencement of the said Act. Such a cont .....

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..... at Act has not been enforced, the Court can take cognizance of the legislative changes and declare the implicit restriction contained in Section 14(1)(e) on the eviction of tenant from the premises let for non-residential purposes as unconstitutional. 7. Shri C.S. Rajan, learned senior counsel appearing for the Union of India emphasized that the purpose of the Act is to protect the tenants against arbitrary eviction by the landlord and argued that the classification of the premises with reference to the purpose of lease should be treated as based on rational grounds because the same is meant to further the object of the enactment. Shri Rajan referred to the judgment of Amarjit Singh vs. Smt. Khatoon Quamarin (supra) to show that challenge to the constitutionality of the Section 14(1)(e) on the ground of violation of Article 14 has already been negatived and argued that the vires of that provision cannot be re- examined merely because a similar provision contained in the 'Punjab Act' has been declared unconstitutional in Harbilas Rai Bansal vs. State of Punjab (supra). Learned senior counsel relied on the judgments of this Court In Re The Special Courts Bill, 1978 [1979 ( .....

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..... distinction between residential and non-residential premises. Section 10(1) of that Act provided that no order for recovery of possession of any premises shall be made so long as the tenant pays or is ready and willing to pay rent to the full extent allowable by this Act and perform other conditions of the tenancy. However, in terms of proviso to Section 19(1), the Court could make an order for recovery of possession if the landlord satisfied that the prescribed notice had been served on the tenant. Sub-section 2 of Section 10 provided that where any order mentioned in sub-section 1 has been made on or after the First day of January, 1939 but not executed before the commencement of the Act, the Court by which the order was made may if it is of opinion that the order would not have been made if the Act had been in operation on the date the order was made, rescind or vary the order. The proviso to Section 10(2) enumerated the other grounds for eviction of the tenants. One of the grounds was that the premises are reasonably and bona fide required by the landlord for his own occupation. (iii) In 1944, the Delhi Rent Control Ordinance (XXV), 1944 was promulgated. In this Ordinance .....

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..... s a legislation for the control of rents and evictions and of rates of hotels and lodging houses, and for the lease of vacant premises to Government, in certain areas in the Union Territory of Delhi. Section 2(i) of that Act defines the premises to mean any building or part of a building which is intended to be or is let for use as a residence or for commercial use or for any other purpose. The definition of the term standard rent contained in Section 2(k) refers to the premises irrespective of its use. Section 3 which exempts certain premises from the operation of the Act also does not make any distinction between residential and non- residential premises. Clause (c) of that section which provides for exemption in the context of monthly rent speaks of residential as well as non-residential premises. Section 6 relates to standard rent. It deals with residential as well as non-residential premises. Para A of Section 6(1) specifies the standard rent for residential premises and para B specifies such rent for premises other than residential premises. Sub-section (2) of Section 6 which provides for fixation of standard rent refers to premises irrespective of their user. The limitatio .....

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..... the landlord or such person has no other reasonably suitable residential accommodation. Explanation. For the purposes of this clause, premises let for residential purposes include any premises which having been let for use as a residence are, without the consent of the landlord, used incidentally for commercial or other purposes. (vii) The 1958 Act was amended five times between 1960 to 1988, but demands continued to be made by the landlords and the tenants for its further amendment to suit their respective causes. In 1992 National Housing Policy was notified. One of the important features of that Policy was to remove legal impediments to the growth of housing in general and rental housing in particular. Both the Houses of Parliament adopted the Policy. Thereafter, the 1995 Act was enacted. Though the new Act has not been enforced so far and in Common Cause vs. Union of India and Others [2003 (8) SCC 250], this Court declined to issue a writ of mandamus to Central Government to notify the same, it will be useful to take cognizance of the statement of objects and reasons and Section 22(r) of the 1995 Act to which reference was made by the learned counsel during the course .....

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..... nstead of making changes in the Delhi Rent Control Act, 1958, it is proposed to repeal and replace the said Act by enacting a fresh legislation. 4. To achieve the above purposes, the present Bill, inter alia, seeks to provide for the following, namely:- (a) exemption of certain categories of premises and tenancies from the purview of the proposed legislation; (b) creation of tenancy compulsorily to be written agreement; (c) compulsory registration of all written agreements of tenancies except in certain circumstances; (d) limit the inheritability of tenancies; (e) redefine the concept of rent payable and provide for its determination, enhancement and revision; (f) ensure adequate maintenance and repairs of tenanted premises and facilitate further improvement and additions and alterations of such premises; (g) balance the interests of landlords and tenants in the matter of eviction in specified circumstances; (h) provide for limited period tenancy and automatic eviction of tenants upon expiry of such tenancy; (i) provide for the fixing and revision of fair rate and recovery of possession in respect of hotels and lodging houses; (j) provide for a simp .....

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..... es if the same are bona fide required by him/her. 10. Section 13(3)(a) of the Punjab Act (unamended and amended), which came up for consideration in Harbilas Rai Bansal vs. State of Punjab (supra) reads as under:- Unamended Section 13(3)(a) of the Punjab Act. 13(3)(a). A landlord may apply to the Controller for an order directing tenant to put the landlord in possession (i) in the case of a residential or a scheduled building if (a) he requires it for his own occupation; (b) he is not occupying another residential or a scheduled building, as the case may be, in the urban area concerned; and (c) he has not vacated such a building without sufficient cause after the commencement of this Act, in the said urban area; (ii) in the case of a non-residential building or rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such building or rented land, as the case may be and (c) he has not vacated such a building or rented land without sufficient cause after the commencement of this Act, in the urban area concerned; (iii) in the case of any building, if he requi .....

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..... sed before or after the commencement of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section, or in pursuance of an order made under Section 13 of the Punjab Urban Rent Restriction Act, 1949, as subsequently amended. (2) * * * (3)(a) A landlord may apply to the Controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building, if (omitted as not relevant) (ii) in the case of rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such rented land, and (c) he has not vacated such rented land without sufficient cause after the commencement of this Act, in the urban area concerned. 11. Before proceeding further we consider it necessary to observe that there has been a definite shift in the Court's approach while interpreting the rent control legislations. An analysis of the judgments of 1950s' to early 1990s' would indicate that in majority of cases the courts heavily leaned in favour of an interpretation which would benef .....

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..... increases made even in 1987 are not adequate, fair or just and the provisions continue to be arbitrary in today's context. When enacting socially progressive legislation the need is greater to approach the problem from a holistic perspective and not to have narrow or short sighted parochial approach. Giving a greater than due emphasis to a vocal section of society results not merely in the miscarriage of justice but in the abdication of responsibility of the legislative authority. Social Legislation is treated with deference by the Courts not merely because the Legislature represents the people but also because in representing them the entire spectrum of views is expected to be taken into account. The Legislature is not shackled by the same constraints as the courts of law. But its power is coupled with a responsibility. It is also the responsibility of the courts to look at legislation from the altar of Article 14 of the Constitution. This Article is intended, as is obvious from its words, to check this tendency; giving undue preference to some over others. 12. In Joginder Pal vs. Naval Kishore Behal [2002 (5) SCC 397], the Court after noticing several judicial precedent .....

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..... of equality clause is still continuing. In last 58 years, the courts have been repeatedly called upon to adjudicate on the constitutionality of various legislative instruments including those meant for giving effect to the Directive Principals of State Policy on the ground that same violate the equality clause. It has been the constant refrain of the courts that Article 14 does not prohibit the legislature from classifying apparently similarly situated persons, things or goods into different groups provided that there is rational basis for doing so. The theory of reasonable classification has been invoked in large number of cases for repelling challenge to the constitutionality of different legislations. 15. In Ram Krishna Dalmia and Ors. vs. Shri Justice S.R. Tendolkar and Ors., [AIR 1958 SC 538], this Court considered the inter-play of the doctrines of equality and classification and held:- It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely (i) that the classificat .....

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..... ere must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. 16. In Mohd. Shujat Ali vs. Union of India [1975 (3) SCC 76], the Court observed that Article 14 ensures to every person equality before law and equal protection of the laws. However, the constitutional code of equality and equal opportunity does not mean that the same laws must be applicable to all persons. It does not compel the State to run all its laws in the channels of general legislation . It recognises that having regard to differences and disparities which exist among men and things, they cannot all be treated alike by the application of the same laws. To recognise marked differences that exist in fact is living law; to disregard practical differences and concentrate on some abstract identities is lifeless logic. The Legislature must necessarily, if it is to be effective at all in solving the manifold problems which continually come before it, enact special legislation directed towards specific ends limited in its application to special classes of persons or things. Indeed, the greater part of all legislation is special, eith .....

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..... on an intelligible differentia which distinguishes certain persons or things that are grouped together from others and that differentia must have a rational relation to the object sought to be achieved by the legislation. We have to be constantly on our guard to see that this test which has been evolved as a matter of practical necessity with a view to reconciling the demand for equality with the need for special legislation directed towards specific ends necessitated by the complex and varied problems which require solution at the hands of the Legislature, does not degenerate into rigid formula to be blindly and mechanically applied whenever the validity of any legislation is called in question. The fundamental guarantee is of equal protection of the laws and the doctrine of classification is only a subsidiary rule evolved by courts to give a practical content to that guarantee by accommodating it with the practical needs of the society and it should not be allowed to submerge and drown the precious guarantee of equality. The doctrine of classification should not be carried to a point where instead of being a useful servant, it becomes a dangerous master, for otherwise, as p .....

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..... t rural and urban areas engaged in unorganized or self- employed sectors to have life insurance offending Article 14 of the Constitution and socio-economic justice. 18. In Gian Devi Anand vs. Jeevan Kumar Ors. [1985 (2) SCC 683] the Supreme Court considered the question whether the statutory tenancy in respect of commercial premises is heritable. The facts of that case were that one Wasti Ram was tenant in respect of Shop No. 20, New Market, West Patel Nagar of the respondents at a monthly rental of ₹ 110/-. The tenancy commenced from September 1, 1959. In April, 1970, the respondent landlord determined the tenancy by serving a notice to quit. In September, 1970 he filed a petition under Section 14 of the Act for eviction of Wasti Ram on the grounds of non-payment of rent, bona fide requirement, change of user from residential to commercial, substantial damage to the property and sub-letting. He also impleaded one Ashok Kumar Sethi, as defendant No. 2 by alleging that he had been unlawfully inducting a sub-tenant. The Rent Controller negatived all the grounds of challenge except the non- payment of rent. He held that the premises had been let out for commercial purpose .....

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..... ct matter of tenancy, and heritability is an incident of the tenancy. It cannot be assumed, however, that with the determination of the tenancy the estate must necessarily disappear and the statute can only preserve his status of irremovability and not the estate he had in the premises in his occupation. It is not possible to claim that the sanctity of contract cannot be touched by legislation. It is therefore necessary to examine the provisions of the Madhya Pradesh Accommodation Control Act, 1961 to find out whether the respondent's predecessors-in-interest retained a heritable interest in the disputed premises even after the termination of their tenancy. In paragraph 34 of the judgment, the Court highlighted difference between the residential and commercial tenancies and concluded that the legislature could never have intended that the landlord would be entitled to recover possession of the premises or the building let for commercial purposes on the death of the tenant of the commercial tenancies, even if no ground for eviction as prescribed in the rent Act is made out. In the concluding part of the judgment, the Court took cognizance of the absence of provision for ev .....

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..... requirement of the landlord a ground of eviction in respect of commercial premises as well. [Emphasis added] 19. What is significant to be noted is that in para 34 of the aforementioned judgment, the distinction between residential and non-residential tenancies was made in the context of the rights of the heirs of the tenant to continue to enjoy the protection envisaged under Section 14(1). The Court was of the view that the heirs of the tenants of the commercial premises cannot be deprived of the protection else the family of the tenant may be brought on road or deprived of the only source of livelihood. The Court also opinioned that if the heirs of the individual tenants of commercial tenancies are deprived of the protection, extremely anomalous consequences will ensue because the companies, corporations and juridical entities carrying on business or commercial activities in rented premises will continue to enjoy the protection even after the change of management, but the heirs of individual tenants will be denuded of similar protection. At the same time, the Court noted that the landlord of a premises let for residential purpose may bona fide require the same for his own .....

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..... njab Act and observed: The Scheme of the Act, unmistakably aims at regulating the conditions of tenancy, controlling the rents and preventing unreasonable and mala fide eviction of tenants of the residential and non-residential buildings. For the advancement of these objects, tenants are invested with certain rights and landlords are subjected to certain obligations. These rights and obligations are attached to the tenants and the landlords of all buildings, residential or non- residential. None of the main provisions of the Act, to which we have referred, make any serious distinction between residential and non- residential buildings. The provisions of the Act, prior to the amendment, were uniformly applicable to the residential and non-residential buildings. The amendment, in the year 1956, created the impugned classification. The objects and reasons of the Act indicate that it was enacted with a view to restrict the increase of rents and to safeguard against the mala fide eviction of tenants. The Act, therefore, initially provided conforming to its objects and reasons bona fide requirement of the premises by the landlord, whether residential or non-residential, as a gro .....

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..... her class of premises, residential or commercial fully support the view we have taken that the classification created by the amendment has no reasonable nexus with the object sought to be achieved by the Act. We, therefore, hold that the provisions of the amendment, quoted in earlier part of the judgment, are violative of Article 14 of the Constitution of India and are liable to be struck down. 23. The ratio of Harbilas Rai Bansal vs. State of Punjab (supra) was noted and approved in Rakesh Vij vs. Dr. Ravinder Pal Singh Sethi (supra), in the backdrop of the argument that the amendment made to the Punjab Act 1956 was not applicable to the Union Territory of Chandigarh. While rejecting the argument, the three Judge Bench referred to Article 13(2) of the Constitution, some of the judgments in which that Article was considered and observed: We find sufficient force in the contention raised by the learned counsel for the respondent landlord. In Harbilas Rai Bansal this Court held in very clear terms that the classification created by the Amendment Act, 1956, by which the words a non-residential building or occurring in Section 13(3)(a)(ii) were deleted and certain other amen .....

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..... d for non-residential use. Subsequently, the National Insurance Company Limited became Life Insurance Corporation of India. The petitioner made efforts to convince the Corporation that the premises are required for his bona fide use and occupation but could not convince the concerned authorities. He, therefore, filed an application for recovery of possession. The same was dismissed by the High Court. He then filed Writ Petition questioning the constitutionality of Section 14(1)(e) on the ground that the classification of the premises into residential and non-residential is arbitrary and violative of Article 14 of the Constitution. The Division Bench of Delhi High Court traced the history of rent control legislation applicable to Delhi, the background in which protection was extended to the tenants generally and the limited right given to the landlord to seek eviction of the tenants only from the premises let for residential purposes and observed: In judging whether the restriction imposed by the impugned provisions is reasonable, the court can look into the circumstances under which the restriction came to be imposed. Judicial notice can be taken of the fact that in 1947 there .....

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..... axed in the Act of 1952 and a landlord could recover possession of residential premises if he required it bonafide for occupation as a residence for himself or his family and he had no other suitable accommodation. In comparison to this the Rent Control Order, 1939 was not applied to non-residential premises. The Delhi Rent Control Ordinance did not place any bar on the right of the landlord to recover possession of non-residential premises. The only restriction placed was that the landlord could recover possession of the premises for his residential use. The bar against the eviction of tenants from non-residential premises was introduced in the Rent Control Act, 1947 and it has continued since then. A landlord cannot recover possession of non- residential premises on the ground of his personal need. There is a clear object behind classification of the premises into residential and non-residential . We have earlier observed that in 1947, on partition of the country, there was a large influx of refugees into Delhi. The Government was faced with the problem of resettling the refugees. This necessitated the imposition of restrictions on the right to evict tenants from residential a .....

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..... n Bench in H.C. Sharma Vs. Life Insurance Corporation of India Anr. (supra) and of this Court in Amarjit Singh vs. Smt. Khatoon Quamarin (supra) and by observing that legislature has the right to classify persons, things, and goods into different groups and that the Court will not sit over the judgment of the legislature. It is significant to note that the Full Bench did not, at all, advert to the question whether the reason/cause which supplied rational to the classification continued to subsist even after lapse of 44 years and whether the tenants of premises let for non-residential purposes should continue to avail the benefit of implicit exemption from eviction in the case of bona fide requirement of the landlord despite sea saw change in the housing scenario in Delhi and substantial increase in the availability of buildings and premises which could be let for non-residential or commercial purposes. 28. In our opinion, the reasons which weighed with the High Court in H.C. Sharma vs. Life Insurance Corporation of India Anr. (supra) and the impugned judgment cannot in the changed scenario and in the light of the ratio of Harbilas Rai Bansal vs. State of Punjab (supra), whic .....

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..... (1)(e) on the ground of violation of Article 14 of the Constitution, and we cannot uphold such arbitrary classification ignoring the ratio of Harbilas Rai Bansal vs. State of Punjab (supra), which was reiterated in Joginder Pal vs. Naval Kishore Behal (supra) and approved by three- Judges Bench in Rakesh Vij vs. Dr. Raminder Pal Singh Sethi (supra). In our considered view, the discrimination which was latent in Section 14(1)(e) at the time of enactment of 1958 Act has, with the passage of time (almost 50 years) has become so pronounced that the impugned provision cannot be treated intra vires Article 14 of the Constitution by applying any rational criteria. 29. It is trite to say that legislation which may be quite reasonable and rationale at the time of its enactment may with the lapse of time and/or due to change of circumstances become arbitrary, unreasonable and violative of the doctrine of equity and even if the validity of such legislation may have been upheld at a given point of time, the Court may, in subsequent litigation, strike down the same if it is found that the rationale of classification has become non-existent. In State of Madhya Pradesh vs. Bhopal Sugar Industr .....

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..... d application of unequal laws for all time to come will militate against their true character as temporary measures taken in order to serve a temporary purpose. Thereby, the very foundation of their constitutionality shall have been destroyed the foundation being that Section 119 of the State Reorganisation Act serves the significant purpose of giving reasonable time to the new units to consider the special circumstances obtaining in respect of diverse units. The decision to withdraw the application of unequal laws to equals cannot be delayed unreasonably because of the relevance of historical reasons which justify the application of unequal laws is bound to wear out with the passage of time. In Broom's Legal; Maxim (1939 Edition, page 97) can be found a useful principle Cessante Ratione Legis Cessat Ipsa Lex , that is to say, Reason is the sour of the law, and when the reason of any particular law ceases, so does the law itself. 32. In Motor General Traders vs. State of Andhra Pradesh (supra), validity of Section 32(b) of the A.P. Buildings (Lease, Rent and Eviction) Control, Act, 1960 was considered. By that Section it was declared that the provisions of the main Act wi .....

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..... e of Tamil Nadu and Anr. (supra) the Court relied on the ratio of Motor General Traders vs. State of Andhra Pradesh (supra) and struck down Section 30(ii) of the Tamil Nadu Buildings (Lease and Rent) Control Act, 1960 by observing that there was no rational basis in picking out the class of tenants of residential buildings paying a rent of more than ₹ 400/- per month and to deny similar right to tenants of other buildings and residential or non-residential premises. 34. In Malpe Vishwanath Acharya and Others vs. State of Maharashtra Another (supra), the Court found that the criteria for determination and fixation of rent by freezing or by pegging down of rent as on 1.9.1940 or as on first date of letting, had, with the passage of time become irrational and arbitrary but did not strike down the same on the ground that extended period of Bombay Rent Act was coming to an end on 31.3.1998. 35. Before parting with this aspect of the case, we may refer to the judgment of Amarjit Singh vs. Smt. Khatoon Quamarin (supra), on which reliance has been placed by the Full Bench of the High Court for negating the appellant's challenge to Section 14(1)(e). In that case, the respo .....

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..... ional right and therefore in exercise of that right if a landlord or an owner of a house lets out a premises in question there was nothing wrong. Shri Kacker submitted that the second limb of Section 14(1)(e) of the Act should be read in such a way that it was in consonance with Article 14 and Article 21 of the Constitution. Otherwise it would be void as being unconstitutional. As a general proposition of law this is acceptable. The Court rejected the argument and observed: The Act in question has the authority of law. There is no denial of equality nor any arbitrariness in the second limb of Section 14(1)(e) of the Act, read in the manner contended for by the appellant. Article 21 is not violated so far as the landlord is concerned. The rent restricting Acts are beneficial legislations for the protection of the weaker party in the bargains of letting very often. These must be so read that these balance harmoniously the rights of the landlords and the obligations of the tenants. The Rent Restriction Acts deal with the problem of rack renting and shortage of accommodation. It is in consonance with the recognition of the right of both the landlord and the tenant that a harmon .....

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