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PETITIONER: DWARKADAS MARFATIA & SONS

       Vs.

RESPONDENT: BOARD OF TRUSTEES OF THE PORT OF BOMBAY

DATE OF JUDGMENT27/04/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) KANIA, M.H. RANGNATHAN, S.

CITATION:  1989 AIR 1642            1989 SCR  (2) 751  1989 SCC  (3) 293        JT 1989  Supl.    146  1989 SCALE  (1)1157  CITATOR INFO :  R          1990 SC1031  (12)  F          1991 SC 537  (48)  F          1991 SC 855  (69)

ACT:     Constitution  of India,  1950: Articles 12, 14,  32  and 226--’Bombay  Port  Trust’--Whether  ’State’--Evicting   its tenant  and  granting  the  land  in  question  to   another tenant--Frontiers of judicial review of such action.

HEADNOTE:     The  respondent Board of Trustees of the Port of  Bombay is a statutory authority, and as such has been exempted from the  operation  of the Bombay Rents, Hotel &  Lodging  House Rates (Control) Act, 1947. The appellant has been the lessee of the respondent since about 1932 in respect of part of the original  plot No. 4 (now plot 5B) which adjoins plot No.  6 tenanted  by M/s Bombay Bharat & Swadeshi Rice Mills. In  or about 1933-34, M/s Bombay Bharat & Swadeshi Rice Mills  took over  the appellant, and a rice mill was started  on  appel- lant’s part of plot No. 4 and plot No. 6.     In  December  1957, the Town Planning Scheme  No.  1  in Bombay City came into force, and the original plot No. 4 was reconstituted  into final plot No. 5. In or about  1963  the respondent  sub-divided  plot No. 5 into final plot  5A  and final  plot  5B,  and as a result of  the  sub-division  M/s Dhanji  Mavji became the tenant/occupant of a major  portion of  plot  5B, In 1970-71 the respondent agreed  to  let  the entire plot 5B, including the portion which had been let  to and was in possession of the appellant since 1933, to Dhanji Mavji.  The appellant objected to the offer made  to  Dhanji Mavji  but the respondent asserted that as Dhanji Mavji  had been  in possession of the major portion of plot No. 5B,  it agreed  to let the entire plot to them. In the premise,  the respondent purported to terminate the tenancy of the  appel- lant in respect of its . portion of plot 5B, and later filed suit for eviction. The Trial Court dismissed the suit  hold- ing  that it would be legitimate to infer that  the  letting was  for  a manufacturing purpose and hence  the  notice  of termination  was  bad.  The appellate  court  reversed  that

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decision.  Aggrieved  thereby, the appellant  filed  a  writ petition  under  Article 227 of the Constitution.  The  High Court  accepted the finding of the appellate court that  the notice of ejectment was valid notice and there was no waiver of notice. 752     Before  this  Court, it was contended on behalf  of  the appellant  that (1) the exemption from the operation of  the Rent  Act was given to the Port Trust Authority on  the  as- sumption that it would act in public interest and would  not behave  like ordinary landlords; (2) the action of  the  re- spondent in terminating the appellant’s contractual  tenancy had a public law character attached to it and was according- ly  subject  to  judicial review; (3) every  action  of  the respondent  which was ’State’ within Article 12 of the  Con- stitution,  whether  it be in the field of contract  or  any other  field, was subject to Article 14 of the  Constitution and must be reasonable and taken only upon lawful and  rele- vant grounds of public interest; (4) the respondent’s estab- lished rational/policy was to offer/allot a  final/reconsti- tuted plot for development to the existing occupants thereof as joint tenants; and (5) the eviction of the appellant  was not necessary in the public interest for the proper develop- ment of the plot as required by the Town Planning Scheme.     On  behalf of the respondent it was contended  that  (1) the onus was entirely on the appellant to establish that the Bombay  Port Trust had terminated the tenancy or  taken  the proceedings  in  eviction not in public interest but  for  a collateral  purpose or mala fide or that it had acted  in  a manner  contrary to the provisions of Article 14; (2)  since there  was no obligation or duty cast upon the  Bombay  Port Trust  to provide accommodation, there could be no  question of  acting in governmental character, and such a body  stood on  the  same  footing as any other citizen  and  would,  in respect  of  such activity, not be subjected to  public  law duty;  (3) the respondent’s dealing with tenants was a  con- tractual  dealing  and it was not a matter  for  public  law domain  and was not subject to judicial review; and  (4)  it was  the  policy of the respondent to allot the  entire  re- constituted  plot to one person who was occupying the  major portion of such plot, for its proper development. Dismissing the appeal, it was, HELD: Per Sabyasachi Mukharji, J., (Kania, J. agreeing)     (1)  Bombay  Port  Trust being a public  body,  even  in respect  of  its dealing with its tenants, it  must  act  in public interest, and an infraction of that duty is  amenable to examination either in civil suit or in writ jurisdiction. [761G]     Rampratap Jaidayal v. Dominion of India, [1952] 54  Bom. L.R.  927; and Baburao Shantaram More v. The Bombay  Housing Board, [1954] V SCR 572, referred to. 753     (2)  Where any special right or privilege is granted  to any public or statutory body on the presumption that it must act  in  a certain manner. such bodies must make  good  such presumption while acting by virtue of such privilege.  Judi- cial  review  to  oversee if such bodies are  so  acting  is permissible. ]762D-E]     Radhakrishna  Agarwal & Ors. v. State of Bihar  &  Ors., [1977] 3 SCR 249 and Life Insurance Corporation of India  v. Escorts Ltd. & Ors., [1985] 3 Supp SCR 909, referred to.     (3)  The  field of letting and eviction  of  tenants  is normally governed by the Rent Act. The Port Trust is  statu- torily  exempted from the operation of the Rent Act  on  the basis   of   its   public/Governmental   character.    Every

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action/activity  of the Bombay Port Trust which  constituted "State" within Article 12 of the Constitution in respect  of any  right conferred or privilege granted by any statute  is subject to Article 14 and must be reasonable and taken  only upon lawful and relevant grounds of public interest.  [762E- F; 763A-B]     S.P.  Rekhi v.  Union of India,  [1981]  2 SCR  111  and M.C.  Mehta  & Anr. v. Union of India & Ors., [1987]  1  SCC 395, referred to.     (4) Where there is arbitrariness in State action,  Arti- cle  14 springs and judicial review strikes such  an  action down.  Every action of the Executive authority must be  sub- ject  to  rule of law and must be informed  by  reason.  So, whatever be the activity of the public authority, it  should meet the test of Article 14. [763C]       All exercise of discretion or power by public authori- ties  as the respondent, in respect of dealing with  tenants in  respect of which they have been treated  separately  and distinctly from other landlords on the assumption that  they would  not act as private landlords must be judged  by  that standard. [763H; 764A]        If a governmental policy or action even in contractu- al  matters fails to satisfy the test of reasonableness,  it would be unconstitutional. [764A-B]      E.P. Royappa v. State of Tamil Nadu, [1974] 2 SCR  348; Maneka  Gandhi  v. Union of India, [1978] 2  SCR  621;  R.D. Shetty  v.  The International Airport Authority of  India  & Ors., [1979] 3 SCR 1014; Kasturi Lal Lakshmi Reddy v.  State of J & K, [1980] 3 SCR 1338 and 754 Ajay  Hasia  v. Khalid Mujib Sehravardi, [1981]  2  SCR  79, referred to.     (7)  Governmental Policy would be invalid as lacking  in public  interest, unreasonable or contrary to the  professed standards  and this is different from the fact that  it  was not done bona fide. [764B-C]     (8)  There is always a presumption that  a  governmental action  is reasonable and in public interest. It is for  the party  challenging its validity to show that the  action  is unreasonable,  arbitrary or contrary to the professed  norms or  not  informed by public interest, and the  burden  is  a heavy one. [764C-D]     (9) Judicial review is not concerned with the  decision, but  with the decision making process. Unless this  restric- tion on ’the power of the court is observed, the court under the guise of preventing the abuse of power, would be  itself guilty  of  usurping  power which does  not  belong  to  it. [765E-F]     (10)  The  Court  cannot really  substitute  a  decision reached  by a fair procedure keeping the policy of  the  re- spondent in mind by a different decision only on the  ground that  the  decision which appeals to the court is  a  better one. [765G]     Council  of  Civil Service Unions v.  Minister  for  the Civil  Service,  [1984] 2 AER 935; Chief  Constable  of  the North Wales Police v. Evans, [1982] 1 WLR 1195; In re  Pres- ton v. I.R.C., [1985] 2 WLR 336 and Regina v. Chief  Consta- ble of the Merseyside Police, [1986] 2 WLR 144, referred to.     (11)  The Bombay Port Trust, perhaps, was  justified  in coming  to  the  conclusion that the only  possible  way  to develop  the properties of the Bombay Port Trust in  compli- ance with the Town Planning Scheme was by allotting plots to holders of major portions thereon. Such a decision cannot be faulted. [766E-F]     (12)  Upon the facts of the instant case, there  was  an

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implied   obligation  in  respect  of  dealings   with   the tenants/occupants  of  the Port Trust Authority  to  act  in public interest/purpose. That requirement is fulfilled if it is  demonstrated that the Port Trust authorities have  acted in  pursuance of a policy which is referable to public  pur- pose.  Once that norm is established whether that policy  is the  best policy or whether another policy was possible,  is not relevant for consideration. [767E-F] 755     (13)  Under the constitutional scheme of  this  country, the Port Trust Authorities were required by relevant law  to act in pursuance of public purpose. This Court is  satisfied that they have proceeded to so act. [767G] Per S. Ranganathan, J. (Concurring)     On the facts of the instant case, the action of the Port Trust  was not improper and there are no grounds for  inter- ference. [768F]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2036  of 1987.     From  the  Judgment and Order dated  19.11.1986  of  the Bombay High Court in W.P. No. 710of 1984.     Aspi  Chinai, R.F. Nariman, Miss Darshna Bhogilal,  K.K. Lahiri, R. Karanjawala, Ejaz Maqbool and Mrs. Manik Karanja- wala for the Appellant.     K.K. Singhvi, Brij Bhushan and Anil Kumar Gupta for  the Respondent in C.M.P. No. 19447 of 1988.     G. Ramaswamy, Additional Solicitor General, U.J.  Mukhi- ja, B.S. Basania, Mrs. A.K. Verma, Arun Banga and D.N. Misra for the Respondent. The Judgment of the Court was delivered by      SABYASACHI  MUKHARJI, J. This is an appeal  by  special leave from the judgment and order dated 19th November,  1986 of  the  learned Single Judge of the Bombay High  Court.  In this  appeal this Court has been asked to examine the  fron- tiers  of judicial review of the action of a  statutory  au- thority,  i.e. the Board of Trustees of the Port of  Bombay, in evicting its tenant and granting the land in question  to another tenant. However, in order to appreciate the  contro- versy  it  is necessary to have a conspectus  of  the  facts involved. 756     The  respondent Board of Trustees of the Port of  Bombay is  a statutory authority. Vast areas of South Bombay  which are completely tenanted, are owned by the respondent.  Being a statutory authority, the respondent has been exempted from the operation of the relevant Rent Act. The respondent is  a statutory corporation constituted under the Major Port Trust Act,  1963  as amended by the Major Port  Trust  (Amendment) Act, 1974.     Between  about 1906 and 1932, one Jhunjhunwala  was  the lessee  of  plot No. 6 (which adjoins plot 5B which  is  the suit  plot) and a building was existing on plot No. 6  which was tenanted to M/s Bombay Bharat & Swadeshi Rice Mills, and the  said  Mills were desirous of operating a rice  mill  on plot No. 6 but could not get the licence from the Municipal- ity for the operation of the said rice mill unless satisfac- tory  arrangement  was made for the removal and  storage  of rice husk in a separate chamber/structure.     Since  about 1932, the appellant had been the lessee  of the respondent in respect of part of the original plot No. 4 (now  plot  5B) which adjoins plot No. 6 of  the  suit  plot

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measuring  113.4 sq. rots. In or about 1933-34, with a  view to  acquire  the suit plot and using the same for  the  rice mill/dust room, M/s Bombay Bharat & Swadeshi Rice Mills took over the appellant. The dust room structure was  constructed on  the suit plot. The rice mill on plot No. 6 and the  dust room  on  the suit plot had a common wall  and  were  inter- connected by ducts.     It  was  stated  that the  respondent’s  inspectors  had regularly  visited  the premises in question but  had  never objected  to the user of the rice mill/dust room. In  Decem- ber’57,  the Town Planning Scheme No. 1 in Bombay City  came into  force. The original plot No. 4 was reconstituted  into final plot No. 5 but continued to belong to the  respondent. The Scheme also stipulated that all rights of lessee/tenants in the original plots stood transferred to the final  plots. It  may  be noted that in December’57 original  plot  No.  4 comprised  of 113.4 sq. mts. let to the appellant,  390  sq. mts. let to M/s Dhanji Mavji, 453 sq. mts. let to two  asso- ciate  firms  (M/s Gordhandas Ranchoddas  and  M/s  Chunilal Gupta) and 195 sq. mts. let to M/s Vassanji Hirji. Hence, of the final plot No. 5, the appellant and their associates, it was  asserted,  held 569 sq. mts., Dhanji  Mavji  held  390, Vassanji  Hirji held 195 sq. rots. and the balance  155  sq. mts.  was  with the respondent/others. Total area  of  final plot 5 was 1309 sq. mts. From 1957-72, the respondent, it is asserted,  continued the tenancies of the appellant and  its associate  firms. In or about 1963, however, the  respondent applied for and got final plot No. 5 sub-divided into  final plot 5A (659 sq. mts.) 757 and  final  plot 5B (650 sq. mts.). The suit  plot  and  M/s Dhanji Mavji’s plot fell entirely in final plot 5B and as  a result   of  the  sub-division,  Dhanji  Mavji  became   the tenant/occupant of a major portion of plot 5B. It is assert- ed  that appellant’s associate firm and Chunilal Gupta  fell in  plot No. 5A and became the tenants/occupants of a  major portion  of plot No. 5A. In 197 1 the  Municipality  renewed the mill licence covering both the structures.     It  is  the case of the appellant that in  1970-71,  the respondent  arbitrarily  agreed to let the  entire  plot  5B including  the  portion  which had been let to  and  in  the possession of the appellant since 1933 to M/s. Dhanji Mavji, and  thereby agreed to give him 650.6 sq. mrs.  against  his existing 390 sq. mts. Also the appellant offered to  develop final  plot  5B jointly with Dhanji Mavji  in  1972-76.  The appellant, however, asserted that it had offered to pay  the revised  rent  that might be fixed by  the  respondent.  The appellant objected to the offer made to Dhanji Mavji  exclu- sively and pointed out that the established practice of  the respondent  was to continue the existing tenants/  occupants on  the final plots. The respondent, however, asserted  that as Dhanji Mavji had been in possession of the major  portion of plot No. 5B (390 sq. mts. vis-a-vis 113.4 sq. mts.), they agreed  to let the entire plot to Dhanji Mavji  and,  there- fore,  could not entertain the appellant’s request.  In  the premises,  by  notices issued in 197  1-73,  the  respondent purported  to  terminate the tenancy of  the  appellant.  In 1973-74,  the  Municipal Corporation  auctioned  the  right, title  and  interest of Jhunjhunwala and the  respondent  in plot  No. 6 for nonpayment of property taxes.  An  associate firm  of the appellant M/s. Natwar Parekh &  Sons  purchased plot  No.  6 and became the owner thereof. The case  of  the appellant  was  that the respondent got the  Corporation  to wrongfully  exclude the respondent’s interest from the  con- veyance. The said Natwar Parekh challenged such exclusion by

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filing  writ  petition  No.  52/74 in  the  High  Court.  On 26.7.1976, the writ petition was allowed, and Natwar  Parekh are  now  the owners of plot No. 6. This, according  to  the appellant,  caused  resentment  to the  respondent,  and  it offered Plot No. 5A to the existing tenants, i.e. the  peti- tioner’s  associates  who  held 453 sq.  mts.  and  Vassanji Hirji, who held 195 sq. mts. The petitioner’s associates who held 70% of the plot 5A, pointed out that the said  Vassanji Hirji  was  not interested and that the entire  plot  should accordingly  be given to them. The respondents declined  and instead commenced eviction proceedings against all the three holders. In or about October 1977, the respondent issued one month’s notice to the appellant to terminate the tenancy.      In December, 1977 the respondent filed suits Nos. 447 & 603/77  against the appellant in the Court of Small  Causes, Bombay. The 758 appellant  filed its written statement and pleaded that  the proceedings had been instituted mala fide and just to  bene- fit  Dhanji Mavji and to harass the appellant’s  associates, who  had  acquired  the respondent’s title to  plot  no.  6. Secondly,  it  was asserted that the premises had  been  ac- quired  and used for rice mill for 40 years and  accordingly it  could not be terminated by one month notice.  The  lease was  for manufacturing purposes. Thirdly, it  was  asserted, that  the  notice  of termination, in any  event,  had  been waived by demanding and recovering rent/ enhanced rent.     It is asserted that at the hearing the witnesses of  the respondent  had  admitted that the plot would  be  given  to Dhanji Mavji if the appellant was evicted therefrom. It also agreed that the respondent was under no statutory obligation to give the entire plot to Dhanji Mavji.     On  or about 31st March, 1981 the Trial Court  dismissed the  suit, holding that the appellant was  admittedly  using the plot for a rice mill for over 50 years to the  knowledge of the respondent; and it would be legitimate to infer  that the  letting  was for a manufacturing  purpose.  Hence,  the notice of termination was bad. The Trial Court did not  deal with  the question of mala fide. On or about  13th  January, 1984  the  appellate court reversed that decision  and  also held  that the issue of mala fide or arbitrariness  was  not relevant  on the legality of the eviction  proceedings.  Ag- grieved  thereby,  the appellant filed a writ  petition  No. 710/84 under Article 227 of the Constitution. The High Court dismissed  the  said  writ petition by  the  judgment  under appeal  and  upheld the order of eviction.  The  High  Court accepted the finding of the appellate court that the  notice of  ejectment  was valid notice and there was no  waiver  of notice.  In  our opinion, the High Court was right  on  this aspect  and in any event under Article 227 of the  Constitu- tion the High Court could not have gone into this  question. We,  in  an  appeal under Article 136  of  the  Constitution cannot re-appraise that question.     The  question  that survived after the  finding  of  the appellate  court and which was urged mainly before the  High Court and also in this appeal, was whether the action of the respondent in evicting the appellant and granting the  prem- ises  in question to M/s Dhanji Mavji was proper and  right. It was contended on behalf of the appellant that the  action of the respondent in terminating the appellant’s contractual tenancy  had a public law character attached to it  and  was accordingly subject to judicial review. It was asserted that every  action  of the respondent which  was  ’State’  within Article  12 of the Constitution, whether it be in the  field of  contract, or any other field, was subject to Article  14

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of the Constitution and must be reasonable and taken only 759 upon lawful and relevant grounds of public interest. In that light,  it was urged that if the eviction of  the  appellant was not necessary in the public interest and if it had  been taken  pursuant to any norm or policy which does not  permit eviction of the appellant, then the action is arbitrary  and discriminatory  and not in accordance with any policy  which the respondent was enjoined to follow..     In  the aforesaid background it was contended  that  the eviction of the appellant was not necessary in public inter- est. It appears that the eviction of the appellant was  only in  pursuance  of a policy of the Port Trust to  let  out  a reconstituted  plot  to the person who  occupied  the  major portion  and who could use it for development. It was  urged that the decision of the Port Trust to allot the entire plot to  M/s  Dhanji  Mavji to the  exclusion  of  the  appellant (although  the appellant was thereof for the past 40  years) was  an  arbitrary  and discriminatory  departure  from  the established policy of the Port Trust, which was to offer the plot to the existing tenants (where two or more tenants were in occupation of one plot) as joint-tenants. It was contend- ed  that the impugned termination was ultra vires and  arbi- trary. It was contended that the exclusive allotment of  the entire plot 5B to M/s Dhanji Mavji and the consequent termi- nation  of  the  appellant’s tenancy was  not  necessary  to enable  proper  development of the plot as required  by  the Town  Planning  Scheme. There was no  policy  requiring  the entire  final/reconstituted plot to be allotted  exclusively to the person occupying the major portion thereof or requir- ing the other existing occupants to be evicted. Nor, it  was submitted, was the allotment of the entire plot, pursuant to any  such alleged policy. On the other hand,  the  appellant contended  that the respondent’s established policy  was  to offer/allot  a final/ reconstituted plot for development  to the  existing  occupants thereof as joint  tenants.  It  was contended that this rational policy which, according to  the appellant,  would  have  fulfilled the  public  interest  of development  in accordance with the regulations of the  Town Planning Scheme and at the same time would not have required or necessitated the eviction of the existing occupants.     Contrary to the established rational policy of  accommo- dating  tenants by offering/allotting a new plot jointly  to the existing occupants/tenants, the respondent  arbitrarily, it was contended, and discriminatingly did not offer the new plot 5B to M/s Dhanji Mavji and the appellant (both of  whom were  existing tenants/occupants of the plot) as joint  ten- ants, but instead wrongfully decided to give the entire plot to M/s Dhanji Mavji to the exclusion of the appellant.      "Our  attention  was drawn to Section 4 of  the  Bombay Rents,  Hotel  & Lodging House Rates  (Control)  Act,  1947, which enjoins that 760 the  Act  would not apply to the premises belonging  to  the Govt. or to the local authorities. By the provisions of  the said Section 4, the Port Authorities were exempted from  the operation  of the Rent Act. This privilege was given to  the Port Trust Authorities, it was submitted, on the  assumption that  it would act in public interest, and would not  behave like ordinary landlords. The special privileges, powers  and benefits were statutorily conferred on the Bombay Port Trust by Section (4) of the aforesaid Act. It had those rights due to its statutory or public character, as a local authority.      Our attention was also drawn to the decision in Rampra- tap Jaidayal v. Dominion of India, [1952] 54 Bom. LR 927  at

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934 where the Chief Justice Chagla observed as follows:               "It is not too much to assume, as the Legisla-               ture  did in this case assume, that  the  very               Government  whose  object was to  protect  the               tenants  and prevent rent being increased  and               prevent people being ejected, would not itself               when it was the landlord do those very  things               which  it sought to prohibit its  people  from               doing, and therefore the underlying assumption               of this exemption is that Government would not               increase  rents  and would not  eject  tenants               unless  it was absolutely necessary in  public               interest and unless a particular building  was               required for a public purpose."      This  Court  in Baburao Shantaram More  v.  The  Bombay Housing  Board  &  Anr., [1954] V SCR 572  had  to  consider Section  4 of the Bombay Rents, Hotel & Lodging House  Rates Control  Act, 1947, and so far as material for  our  present purposes explained the basis of exemption under Section 4 as that the Govt. or local authority or the Board would not  be actuated by any profit making motive so as to unduly enhance the rents or eject the tenants from their respective proper- ties as private landlords are or are likely to be. In  other words, this Court recognised that the basis of  differentia- tion  in favour of the public authorities like the  respond- ent, was on the ground that they would not act for their own purpose  as  private landlords do, but must act  for  public purpose.    ’Our  attention  was  also drawn by  Mr  Chinai,  learned counsel for the appellant, to the observations on  ’Adminis- trative  Law  by Wade, 5th Edn. at page 355. It  was  stated therein as follows:                "Statutory  power conferred for  public  pur-               poses is conferred as it were upon trust,  not               absolutely-that  is  to say,  it           can               validly  be used only in the right and  proper               way which          Parliament when  conferring               it is presumed to have          intended." 761     It, therefore, follows that the public authorities which enjoy  this benefit without being hidebound by the  require- ments of the Rent Act must act for public benefit. Hence, to that  extent, this is liable to be gone into and can be  the subject-matter of adjudication.     Learned  Addl. Solicitor General Mr Ramaswami  contended that  the onus was entirely on the appellant and the  burden lay on the defendant to establish that the Bombay Port Trust had  terminated  the  tenancy or taken  the  proceedings  in eviction not in public interest but for a collateral purpose or  mala fide or that it had acted in a manner  contrary  to the  provisions of Art. 14 of the Constitution. He is  right so contending.     It  was  further urged by Mr Ramaswamy that  public  law duties  are owed to society at large and the nature  of  the body performing the functions is not determinative of public law  or private law character of the action taken.  He  con- tended that since the provisions of the Bombay-Rent Act  did not  apply to the premises of the Bombay Port Trust  in  the notice  of  termination no reason was required to  be  given either  in the notice itself terminating the tenancy  or  in the plaint for evicting the appellant. He further  contended that  originally the Bombay Port Trust was constituted as  a body corporate under the provisions of the Bombay Port Trust Act, 1889 and is now constituted under the provisions of the Major  Port  Trusts Acts, 1988. In both these  Statutes  the

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object  for  constituting the Bombay Port Trust was  not  to provide accommodation to persons and, therefore, the  object was  totally different from the object for which the  Bombay Rent  Act and similar enactments have been enacted. It  was, therefore, urged that since there was no obligation or  duty cast  upon the Bombay Port Trust to  provide  accommodation, there  could be no question of acting in Government  charac- ter.     It  was  urged  that the respondent did  not  enjoy  any special privileges/powers of benefits vis-a-vis such activi- ties  by  virtue  of its being a local  Body  or  Government character.  In  the premises, it was contended that  such  a body  stands  on the same footing as any other  citizen  and will,  in  respect  of such activity, not  be  subjected  to public law duty.      We  are  unable  to accept the  submissions..  Being  a public body even in respect of its dealing with its  tenant, it  must act in public interest, and an infraction  of  that duty  is amenable to examination either in civil suit or  in writ jurisdiction.      Our  attention  was drawn to the observations  of  this Court  in  Radhakrishna Agarwal & Ors. v. State of  Bihar  & Ors.,  [1977]  3 SCR 249. Reliance was also  placed  on  the observations of this Court in Life 762 Insurance  Corpn. of India v. Escorts Ltd. & Ors., [1985]  3 Suppl SCR 909, in support of the contention that the  public corporations’ dealing with tenants is a contractual  dealing and  it  is not a matter for public law domain  and  is  not subject  to judicial review. However, it is not the  correct position. The Escorts’ decision reiterated that every action of  the State ’or an instrumentality of the State,  must  be informed by reason. Indubitably, the respondent is an  organ of the State under Art. 12 of the Constitution. In appropri- ate  cases, as was observed in the last mentioned  decision, actions uninformed by reason may be questioned as  arbitrary in  proceedings under Art. 226 or Art. 32 of  the  Constitu- tion.  But  it has to be remembered that Art. 14  cannot  be construed as a charter for judicial review of State  action, to  call  upon the State to account for its actions  in  its manifold activities by stating reasons for such actions.     The  contractual  privileges are made  immune  from  the protection of the Rent Act for the respondent because of the public position occupied by the respondent authority. Hence, its  actions  are amenable to judicial review  only  to  the extent  that  the State must act validly for  a  discernible reason  not whimsically for any ulterior purpose. Where  any special  right  or  privilege is granted to  any  public  or statutory  body on the presumption that it must act in  cer- tain  manner,  such bodies must make good  such  presumption while  acting by virtue of such privileges. Judicial  review to oversee if such bodies are so acting is permissible.     The field of letting and eviction of tenants is normally governed  by  the Rent Act. The Port  Trust  is  statutorily exempted from the operation of Rent Act on the basis of  its public/Government  character. The legislative assumption  or expectation  as noted in the observations of Chagla C.J.  in Rampratap Jaidayal’s case (supra) cannot make such conduct a matter of contract pure and simple. These corporations  must act in accordance with certain constitutional conscience and whether  they  have so acted, must be discernible  from  the conduct of such corporations. In this connection,  reference may be made on the observations of this Court in S.P.  Rekhi v.  Union  of India, [1981] 2 SCR 111,  reiterated  in  M.C. Mehta  &  Anr. v. Union of India & Ors., [1987] 1  SCC  395,

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wherein at p. 148, this Court observed:               "It  is  dangerous to  exonerate  corporations               from  the  need to  have  constitutional  con-               science; and so, that interpretation, language               permitting, which makes governmental agencies,               whatever their mien amenable to constitutional               limitations  must be adopted by the  court  as               against the alternative of permitting them  to               flourish as an imperium in imperio." 763     Therefore, Mr Chinai was right in contending that  every action  activity of the Bombay Port Trust which  constituted "State" within Art. 12 of the Constitution in respect of any right  conferred  or  privilege granted by  any  Statute  is subject  to  Art. 14 and must be reasonable and  taken  only upon  lawful and relevant grounds of public interest.  Reli- ance may be placed on the observations of this Court in E.P. Royappa  v.  State of Tamil Nadu, [1974] 2 SCR  348;  Maneka Gandhi v. Union .of India, [1978] 2 SCR 621; R.D. Shetty  v. The International Airport Authority of India & Ors.,  [1979] 3  SCR 1014; Kasturi Lal Lakshmi Reddy v. State of J &  K  & Anr.,  [1980]  3  SCR 1338 and Ajay Hasia  v.  Khalid  Mujib Sehravardi  &  Ors. etc., [1981] 2 SCR 79.  Where  there  is arbitrariness in State action, Art. 14 springs in and  judi- cial review strikes such an action down. Every action of the Executive Authority must be subject to rule of law and  must be informed by reason. So,, whatever be the activity of  the public  authority, it should meet the test of Art.  14.  The observations in paras 101 & 102 of the Escorts’ case (supra) read properly do not detract from the aforesaid principles.     The  High Court had relied on the observations  of  this Court  in  Kasturi Lal Lakshrni Reddy v. State  of  Jammu  & Kashmir & Anr., (supra) that the State was not totally freed of the duty to act fairly and rationally, merely because  it could  do  so under a contract. The High Court  stated  that though  it  might be accepted that a public  body  like  the respondent  should not act unreasonably or unfairly  but  it did  not follow that every time they decided to take  action against the contractual tenants, they had to decide the said action  in  terms  of fairness, equity and  good  faith.  In support  of  this proposition, reliance was  placed  on  the observations of this Court in L.I.C v. Escorts, (supra).  In this  connection,  Mr  Chinai appearing  for  the  appellant reiterated  before us as he did before the High Court,  that the  basis  of the legitimate assumption or  expectation  of which the statutory exemption had been granted by the Legis- lature  to  the Bombay Port Trust provided  a  guideline  or touch-stone  by  which the conduct of the  public  authority which  had  been granted exemption, should be  judged.  And, according  to him, the necessity of eviction in the  instant case,  must have been only in public interest. Reliance  was placed on several decisions referred to hereinbefore.     We  are  inclined to accept the  submission  that  every activity of a public authority especially in the  background of  the assumption on which such authority  enjoys  immunity from the rigours of the Rent Act, must be informed by reason and  guided by the public interest. All exercise of  discre- tion  or power by public authorities as the  respondent,  in respect  of  dealing with tenants in respect of  which  they have  been  treated  separately and  distinctly  from  other landlords on the assump- 764 tion  that they would not act as private landlords  must  be judged by that standard. If a governmental policy or  action even  in  contractual matters fails to satisfy the  test  of

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reasonableness, it would be unconstitutional. See the obser- vations of this Court in Kasturi Lal Lakshrni Reddy, (supra) and  R.D. Shettv v. The International Airport  Authoritv  of India & Ors., [1979] 3 SCR 1014 at 1034.     Learned  Additional  Solicitor  General  reiterated   on behalf  of the respondent that no question of mala fide  had been  alleged or proved in these proceedings. Factually,  he is  right. But it has to be borne in mind that  governmental policy  would  be  invalid as lacking  in  public  interest, unreasonable or contrary to the professed standards and this is  different from the fact that it was not done bona  fide. It is true as learned Addl. Solicitor General contended that there is always a presumption that a governmental action  is reasonable  and  in  public interest. It is  for  the  party challenging  its validity to show that the action is  unrea- sonable, arbitrary or contrary to the professed norms or not informed by public interest, and the burden is a heavy one.     In  this background the contention of the appellant  has been that its eviction was not necessary in public interest, and  further that the eviction was only in pursuance  of  an alleged policy on the part of the Port Trust to let out  the reconstituted  plot  to the person who  occupied  the  major portion,  which,  according  to the appellant,  was  not  in consonance  with the obligation of the Trust to take  action only in public interest. It was contended that eviction  for development with least dislocation, should have been the aim and  that  would have served the public purpose  better.  On behalf  of  the appellant it was contended that  before  the Trial  Court it was established that both the appellant  and M/s  Dhanji Mavji had been tenants of the Port Trust on  the original  plot No. 4 since 1932, and in fact  the  appellant was older tenant. Our attention was drawn to para 16 of  the appellant’s  written statement, Vol. 2 Paper Book, page  35. In  this context, it was submitted that the decision of  the Port Trust was not based on public purpose/interest, and  as such was ultra vires of the powers of the Port Trust. It was contended  that  such a plea was justiciable  in  all  civil suits.     On  behalf of the Port Trust authorities,  however,  the submission was that there was no obligation under the Bombay Port Trust Act to provide accommodation. So, there cannot be any governmental character. This we have already dealt with.     Learned  Add|. Solicitor General submitted that in  evi- dence  it has been mentioned by Katara (P.W. 1 at  page  43, Vol.II)  that  the plot had been allotted  to  Dhanji  Mavji since it was the policy of the Bombay Port Trust to allot  a re-constituted plot to a person occupying 765 a major portion of such plot. There was no challenge to this evidence  .in cross-examination. On the other hand, he  con- tended  that there was no evidence on the alleged policy  of the  Port  Trust  of giving plots on joint  tenancy  to  all occupants. According to him, in the letters addressed by the Port Trust at pp. 82, 123, 128 of Vol. 1 and in the  letters by  and  on  behalf of the appellant  and/or  their  alleged associate concerns at pp. 14 1 to 147 they have specifically admitted that there was a policy of the Port Trust to  allot plots to the occupants of the major portions thereof and  in fact  a grievance has been made by them that  in  accordance with  the said policy of the Bombay Port Trust, Plot No.  5A was  not being allotted to the associates of the  appellant. In that view of the matter even under the scope of  judicial review, it was contended, whether it should have been  given on  joint-tenancies or not, is not a matter which  could  be gone into by the Court. Reliance was placed on the  observa-

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tions  of Lord Justice Diplock in Council of  Civil  Service Unions  v. Minister for the Civil Service, [1984] 2 AER  935 at 950, where the learned Lord Justice classified 8  grounds subject to control of judicial  review,  namely,   illegali- ty,   irrationality   and  procedural  impropriety.  Learned Addl. Solicitor General is right, in our opinion, in that we cannot really substitute a decision reached by a fair proce- dure  keeping  the  policy of the respondent in  mind  by  a different  decision  only on the ground  that  the  decision which  appeals to the court, is a better one.  Reliance  was placed on the observations of Lord Chancellor Lord  Hailsham in  Chief  Constable  of the North Wales  Police  v.  Evans, [1982] 1 WLR 1155. In our opinion, it is necessary to remem- ber that judicial review, in the words of Lord Brightman  in that case, is not concerned with the decision, but with  the decision making process. As observed by Prof. Dias in ’Juri- sprudence’ (5th Edn. at p. 91) unless the restriction on the power  of the court is observed, the court would  under  the guise of preventing the abuse of power, be itself guilty  of usurping power which does not belong to it. It is  therefore necessary  to bear in mind the ways and means by  which  the court  can control or supervise the judicial action  of  any authority  which  is subject to judicial  control.  In  this connection, it is necessary to refer to the observations  of Lord Justice Templeman in re Preston v. I.R.C., [1985] 2 WLR 836  and the observations of Lord Justice May in  Regina  v. Chief Constable of the Merseyside Police, [1986] 2 WLR  144. It  is  not within the purview of a court  to  substitute  a decision taken by a constituted authority simply because the decision  sought to be substituted is a better one.  Learned Addl. Solicitor General, in our opinion, is therefore  right in  contending that the appellant should not be  allowed  to contend that the decision of the Bombay Port Trust to  allot the  plot  to the major holder is not one  of  the  feasible means of achieving the objectives of development. It was not open to the appellant to contend 766 that the Bombay Port Trust could have framed a better policy in a way in which both the goals, development and  non-evic- tion of existing tenants, could have been achieved.     Furthermore,  we have to bear in mind that  joint-allot- ment  for the purpose of development  pre-supposes  coopera- tion.  In this connection, it is necessary to remember  that Mr  Singhvi,  appearing for the intervener,  in  C.M.P.  No. 19447/88 indicated that the joint development was not possi- ble  because  they were not willing to take it  jointly.  He also  pointed  out  that the appellant was  aware  that  the decision to allot this plot in his client’s favour had  been taken as early as 1973 and that it was within the  knowledge of the present appellant that they had also put up construc- tions thereon at substantial cost. He urged that, though  it is  true  that  the lease in favour of  the  petitioner  was terminated and the suit filed only in 1977, the fact is that the appellant took no step earlier to have the allotment  in favour of his clients cancelled. This, he has urged, is also a ground for non-interference at this stage. We are inclined to agree. Our  attention was drawn to the fact that Dhanji  Mavji  had held  80% of the re-constituted plot. The plot 5B  had  been developed  inasmuch  as a building of ground  plus  5  upper storeys  had been erected as was the maximum  possible  not- withstanding the fact that the appellant had not yet surren- dered  their portion. As against this, on plot 5A where  the Bombay  Port  Trust  offered a joint tenancy  to  the  three occupants,  since  there  was no occupant  holding  a  major

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portion  thereof, there had been no  development  whatsoever and in fact there has been litigation going on to remove all the 3 occupants. In that view of the matter the Bombay  Port Trust,  perhaps, was justified in coming to  the  conclusion that the only possible way to develop the properties of  the Bombay  Port  Trust  in compliance with  the  Town  Planning Scheme  by  allotting  plots to holders  of  major  portions thereon. Such a decision cannot be faulted.     The Town Planning Scheme came into force in 1957. Plot 5 was  divided into Plot 5A and 5B in 1963. The Town  Planning Act had been enacted to meet the requirements for  planning, development and use of land. Having regard to Sections 2(7), 2(13),  2(17), 2(18), 2(21), 2(22), 2(27), 13, 14,  22,  59, 65,  88, 89, & 159, it appears that one of the purposes  was the  extinguishment of the tenancies of the Port Trust,  and as  such tenants of plot 5A and 5B were liable to  eviction. The  Port Trust continued them as monthly tenants  for  many years  before formulating a policy to develop the  plots  by offering them to major holders. In pursuance to that Scheme, regulations  have been flamed under Section 169 of the  Town Planning  Act.  Our attention was placed on  some  of  these regulations. It is contended that it was viewed that 767 plot  of  land of less than 500 sq. yards out  of  the  Town Planning  Scheme  cannot be allotted. In that  view  of  the matter it is a possible view and we need not go beyond this.     In  that context even though we reiterate that the  Port Trust must act reasonably and in adherence to a policy which serves the public purpose on the assumption of which  exemp- tion was granted to it from the Rent Act, while dealing with the  tenants or occupants, it cannot be said that  the  Port Trust  has acted improperly. In that light the  decision  of the High Court must be affirmed though on a different empha- sis.     In the view that we have taken, it is not necessary  for us  to  go into the question whether under Art. 227  of  the Constitution,  it was open to the High Court to go into  the question  of constitutional validity for which reliance  was placed  on  the observations of this Court in  Venkatlal  G. Pittie  & Anr. v. Bright Bros (P) Ltd. [1987] 3 SCC  558  at 569 and Khalil Ahmed Bashir Ahmed v. Tufelhussein  Samasbhai Sarangpurwala, [1988] 1 SCC 155. Reliance was also placed by Mr  Chinai  on  the observations of the House  of  Lords  in England  in  Wandsworth London Borough  Council  v.  Winder, [1985]  AC 461 at 505-507. In that case the local  authority was  under the agreement itself, required to fix rent  under the  statutory  provision. It committed  a  breach  thereof. Hence,  it was held there that that was a breach of  a  con- tractual  obligation enforceable under the Private Law  and, therefore, justiciable.     As  we  look upon the facts of this case, there  was  an implied   obligation  in  respect  of  dealings   with   the tenants/occupants  of  the Port Trust authority  to  act  in public interest/purpose- That requirement is fulfilled if it is  demonstrated that the Port Trust Authorities have  acted in  pursuance of a policy which is referable to public  pur- pose.  Once that norm is established whether that policy  is the  best policy or whether another policy was possible,  is not relevant for consideration. It is, therefore, not neces- sary  for  our  present purposes to dwell  on  the  question whether the obligation of the Port Trust Authorities to  act in  pursuance of a public purpose was of public law  purpose or a private law purpose. Under the Constitutional scheme of this  country  the Port Trust Authorities were  required  by relevant  law to act in pursuance of public purpose. We  are

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satisfied that they have proceeded to so act.      We  must  record that learned Addl.  Solicitor  General made  a  statement that irrespective of the result  of  this appeal, the Port Trust Authorities of Bombay, will  consider reasonably granting of an alternative site to the appellant, if such an application is made to them.      In the view that we have taken this appeal must, there- fore,  fail  and is accordingly dismissed.  The  C.M.P.  No. 19447/88 is disposed of 768 by directing that the applicants are permitted to  intervene and their submissions have been considered. In the facts and the circumstances of the case, the parties will pay and bear their own costs. All interim orders are vacated.     RANGANATHAN, J. I respectfully agree with the conclusion of  my  learned brother Sabyasachi Mukharji, J.  However,  I would like to add a word of reservation.     2. The principal argument which Shri Chinai addressed to us  at  great  length on behalf of appellant  was  that  the relationship  between the appellant and the Port  Trust  was not  purely contractual and in the realm of private law.  He urged that the Port Trust, having been granted an  exemption from  the  provisions of the rent control  acts  on  certain public  grounds, is not at liberty to take action  to  evict the petitioner without being accountable therefore and  that its action is in the realm of public law and hence liable to judicial  review.  He submitted that the  decision  of  this Court  in  the Escorts case, 1985-3 Suppl. SCR 909,  is  not inconsistent with this contention.     3.  The learned Additional Solicitor  General  contested the  above proposition on principle and refuted the  sugges- tion  that the Port Trust was under any obligation  to  show that  its action was bona fide, and not arbitrary or  unrea- sonable  but could be justified on grounds of public  inter- est. He submitted that on the facts of the present case, the state  of  the pleadings at the various stages and  its  own findings on the facts, the High Court was not called upon to go into the larger issue at all and that its observations in this regard were purely casual. He submitted, however, that, without prejudice to these contentions, he would be  willing to  satisfy  us on the facts of the present  case  that  the action  of the Port Trust was bona fide and based on  policy and reason. He addressed us on this aspect and I agree, with respect,   with  the  conclusion  of  my   learned   brother Sabyasachi  Mukharji, J. that, on the facts of  the  present case, the action of the Port Trust was not improper and that there are no grounds to interfere with the same.     4. In view of the above conclusion on the merits and  in view of my opinion that we have not heard full arguments  on both sides on the general propositions contended for by Shri Chinai as to the parameters and scope of judicial review  in such matters which are issues of far-reaching importance,  I would like to refrain from expressing any final and conclud- ed  opinion on these aspects though, prima facie, I am  also inclined to think, as held by my learned brother that  there is considerable force in them. R.S.S.                            Appeal dismissed. 769