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CASE NO.: Appeal (civil)  5559 of 2001

PETITIONER: Jamshed Hormusji Wadia                              

RESPONDENT: Board of Trustees, Port of Mumbai & Anr.         

DATE OF JUDGMENT: 13/01/2004

BENCH: R.C. LAHOTI & BRIJESH KUMAR .

JUDGMENT: JUDGMENT  

With  

C.A. No.5562/2001,  C.A. No.5561/2001,  C.A. No.5‘‘563-5564/2001,  C.A. No.5565-5566/2001,  C.A. No.5567-5568/2001,  C.A. No. _______/2004  (Arising out of  SLP (C) 19877/2001),  C.A. No. _______/2004  (Arising out of SLP (C) 6064/2002), C.A. No. 3211/2002, C.A. No. _______/2004  (Arising out of SLP (C) 8657/2002)    R.C. Lahoti, J.

       Leave granted in SLP (C) Nos.19877/01, 6064/02 &  8657/02).

       The Bombay Port Trust (hereinafter ’BPT’, for short),  presently constituted and governed by the Major Port Trust Act,  1963, and now known as The Board of Trustees of the Port of  Mumbai, is an ’authority’ within the meaning of Article 12 of the  Constitution of India.  It has been the subject matter of several  legislations governing its constitution, administration, powers  and duties, some of which are The Bombay Port Trust Act, 1873,  The Bombay Port Trust Act, 1879 and the Major Port Trust Act,  1963.  Bombay, presently known as Mumbai, continues to be    the commercial capital of the country.  In spite of the  development of several other ports having taken place along the  coasts of India, some of them being of recent origin, the Bombay  port continues to be the Gateway of India for  international trade  and commerce.  Space is scarce in Mumbai as it is an island, and  demands on its land are heavy in view of the ever-growing  industrial, commercial and economic activities. Due to the  availability or continuously growing modern infrastructure at  Mumbai large sections of the population from throughout the  country continue to migrate to Mumbai, which, with its  characteristically liberal metropolitan culture, open-heartedly  accommodates anyone who seeks shelter in its arms.   

       The Bombay Port Trust Estate, admeasuring around 720  hectares (1800 acres approx.) of land is a huge stretch from  Colaba to Raoli junction, including Pir Pau, Butcher island, land  at Titwala and other islands.  The population is highly urbanized  and dense.  Out of the total area of 720 hectares the area under

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the jurisdiction of Estate department of the BPT is around 336  hectares.  Out of these, 306 hectares of area is occupied by the  lessees of BPT holding leases of various tenures.  Around 720  hectares of land was under intensive use for the Board’s own   activities around the year 1980.  There were about 600 lessees.   The lessees could broadly be divided into three categories:  monthly or annual lessees, 15 years’ term lessees, and 99 years’  or long term lessees, with or without clauses for renewal. In case  of monthly or annual leases, the municipal taxes are borne by  the BPT, while in cases of 15 years term and long term leases,  the liability to pay municipal taxes is with the lessees.  The BPT  Estate cannot be sold; it is all held out on leases excepting for  the land in the use of the Port and for Port activities i.e. for the  self requirement of the BPT.  Leases were created long back,  some of which being around a century old.  The lease rents were  revised and increased from time to time not as a matter of some  uniform policy decisions but only by way of adhoc arrangements.   In the year 1962, the World Bank advised BPT that its rate of  return on its real estate was hopelessly inadequate and needed  to be reviewed.  The Comptroller and Auditor General of India  too, in his report of the year 1979-80, shared the opinion of the  World Bank and highlighted the obligation on the part of the  trustees to secure a fair and reasonable revenue for its estate so  as to   attend better to its manifold public duties.  The trustees  felt convinced that the Port Trust had to perform several  functions under the Law governing it which were in the nature of  public duties to fulfill public objects; that the expenditure on  maintenance was gradually increasing and there was disparity  between realised rent and the billed rent; and that a minus rate  on return was actually being secured taking into account the  expenditure incurred by the Board on maintenance.  All these  factors persuaded the Board to undertake a massive exercise for  the revision of rent as also for the revision of the terms and  conditions of leases, whereunder the different categories of  lessees were holding land and estates from the Board.  The  Board by inserting advertisements in all-India newspapers  invited proposals from  consultancy firms and   practicing valuers  for ascertaining the market value of the land of the Bombay Port  Trust, including lands in docks and bunders.  Out of the several  offers received, the choice of BPT fell on Kirloskar Consultants  Ltd., Pune, who were entrusted with the task on the following  terms of reference:-

"i)     To give an estimate of market values of  the Bombay Port Trust land (including  the lands in the Docks and Bunders)  dividing them into convenient zones or  blocks to be delineated on the Port Trust  estates and  having regard to the various  factors relevant to the valuation for the  Port Trust estates ranging from Raoli  Junction to Colaba, Pir Pau and Butcher  Island.  In all, the lands admeasure  about 1800 acres and are inclusive of  land at Titwala and Butcher and other  islands.

ii)     The estimate of market value should  indicate values of lands both in vacant  and occupied conditions and for different  users.

iii)    The market values should be given  separately for each zone or block on two  relevant dates, viz. as on 1st January

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1975 and 1st January 1978 (these dates  have since been modified at the time of  signing the agreement as 1st January  1975 and 1st January 1980).

iv)     To lay down a general formula for the  guiding principles to enable the Port  Trust to arrive at land values rationally at  a future date and realize a fair share of  the future increase in land values  periodically."

At the point of time when Kirloskar Consultants embarked upon  their task, there were 764 law suits filed by BPT in several courts  and another 265 were in the pipeline - proposed to be filed.   Nearly 1/3rd of the land of BPT was rented out, and lessees were  holding the same on rates of rent which had remained stationary  for long number of years. The gigantic task entrusted to them  was well performed by Kirloskar Consultants Ltd. - the experts in  association with M/s. M.N. Dange & Associates, the government  approved valuers.  The BPT(including its trustees, officers and  staff) and the several government departments - all rendered  their assistance.  A draft report was submitted on  October 18,  1980, and after discussions with the Estate department and the  Chairman of the BPT, the final report was submitted on  December 25, 1980.  The report runs into   volumes.  The  experts in their report explained their approach and  methodology, took into account the factors influencing land  prices in Bombay, the legal aspects relevant to the land of BPT,  constraints of BPT estate, blockwise fair market rates during half  a decade preceding the report, future values and the factors of  leasing of land viz. a viz. its need.  The experts also carried out  international port studies.  In the meeting of BPT held on August  23, 1982, the report of the consultants was accepted, preceded  by serious deliberations.  Notices were issued to several lessees  terminating the tenancies but with an option that the lessees  would continue as lessees subject to their agreeing to pay the  revised rent fixed in pursuance of the report submitted by the  experts.

       Some of the lessees filed writ petitions under Article 226 of  the Constitution of India complaining that the BPT being an  instrumentality of the State within the meaning of Article 12 of  the Constitution, it was bound to be reasonable and fair in its  dealing with the lessees.  The increase in rent proposed by the  BPT was exorbitant, for example, the rate of rent which was  Rs.66.44 in the year 1948 and which gradually increased to  Rs.317.11 in the year 1981, was proposed to be revised at  Rs.4515.86.  The petitions were disposed of by a learned single  Judge (S.M. Daud, J.) vide  his judgment dated 1/4.10.1990.   The learned single Judge dealt with two points around which the  controversy had centred.  On the first point, the learned single  Judge  held that the proposed revision of rent and the  consequent demand of rent did not breach the provisions of the  Major Port Trust Act, 1963. On the second issue, the learned  single Judge formed an opinion that the revision of rent by the  BPT was arbitrary and capricious and therefore violative of the  constitutional restraint on the Port Trust as an instrumentality of  the State.  In the opinion of the learned single Judge, the BPT  was entitled to protect itself against erosion in the rentals as a  result of inflationary trends, but excepting this no other factor  could be taken into consideration and in any case the BPT could  not afford to behave like a private landlord indulging into rack- renting by co-relating the rates of rent with market rates.  The  notices terminating the tenancies with the option for continuance

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subject to revision of rent based on Kirloskar Consultants report  were struck down. Thus the decision of the learned single Judge  had the effect of nullifying the entire exercise undertaken by the  BPT through Kirloskar Consultants.

       The BPT preferred an intra-Court appeal which was dealt  with by a Division Bench.  On 28.6.1991, the matter came up for  consideration before a Division Bench (consisting of Chief Justice  P.D. Desai, and Justice Sukumaran).  The Division Bench formed  an opinion and expressed it to the parties that the matter should  be put to an end  and suggested that they would fix a cut-off  date and the number of years upto the expiry of which they  would direct the lessees to pay the increase in rent at a certain  percentage to be decided by them, so that at fixed intervals of  years BPT would get permanently   an automatic increase in rent  at the percentage fixed by them.  The Division Bench called upon  the BPT to suggest some formula to enable them to arrive at a  percentage of rent to be fixed by them.  It was also suggested  that such formula could be made applicable to other lessees of  the BPT who were not parties in the appeal before the High  Court by giving a public notice under Order 1 Rule 8 of CPC.

       The Board reconsidered the matter and a fresh exercise  was undertaken by the Board so as to respond to the suggestion  of the Court.  The Board arrived at a formula which has been  termed as "compromise proposals", approved in the meeting of  the Board held on August 13, 1991, and submitted to the Court.   It is not necessary to deal with the exchange of views amongst  the trustees which received consideration in the meeting of the  Board.  The summary of the "compromise proposals",   which is  based on a detailed note submitted by the office of the BPT for  being placed before the Board, is as under:- "(i)    Nature of occupations may continue as at  present on revised rents.  Development  may be in accordance with the  Development Plan and the Development  Control Regulations and BPT Master Plan  including restructuring from time to time  to cater for port’s and city’s needs.

(ii)    Occupations may be classified for the  purpose of levy of rents either as ’Non- Home Occupation’ or as ’Home  Occupation’ as defined in the   Development Control Regulations on the  basis of actual use.

(iii)   Letting rates for ’Non-Home Occupation’  per sq. metre of floor space per month of  built up area (as derived from valuation  by Kirloskar Consultants) shall be as  under for the period 1.10.1982 to  30.9.1992.

       (a)     Sassoon Dock Estate :   Rs.22.03

       (b)     Wellington & Apollo                 Reclamation Estates:    Rs.26.91

       (c)     Ballard and Mody Bay                 Estates             :   Rs.24.00

       (d)     Elphinstone Estates                 (TPS)                       :   Rs.14.44

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       (e)     Bunders South       :   Rs.21.38

       (f)     All other Estates     : Rs.12.66

Letting rate for ’Home Occupation’ may  be at 20 per cent of the above rates.

Letting rates for future years from  1.10.1992 to 30.9.2012 for ’Non-Home  Occupation’ and ’Home Occupation’ shall  be as given in the Annexures".

Notwithstanding the fixation of letting  rates for 20 years for good and sufficient  reasons, Board may review and revise  the letting rates.

(iv)    Minimum rent may be for built up area  upto 0.5 FSI irrespective of whether the  area is built up or not.  Minimum rent  from 1.10.1982 to 30.9.1992 for non- hazardous trade/use will be Rs.6.33 per  sq. metre per month and for POL and  hazardous trade/use will be Rs.8 per sq.  metre per month or for 0.5. FSI of built  up area, whichever is more.  The rent  will increase proportionately to the built  up area but maximum rent may not  exceed the rent that would have been  payable on the basis of Fair Market Rents  recommended by Kirloskar Consultants  Ltd.

(v)     In case of letting of BPT structures, the  revised rate of rent per sq. metre of floor  space may be at 2.5 times the letting  rates.  The repairs and maintenance of  the structure shall be done by the  tenant/lessee.  For this purpose the  lessee/tenant shall retain 0.5 times the  rent and pay to BPT a net rent at twice  the letting rates.

(vi)    Rent in respect of occupations having  mixed use may be in proportion of the  floor space under use for ’Home  Occupation’ and ’Non-Home Occupation’.   In case of change of use from ’Home  Occupation’ to ’Non-Home Occupation’  rents will be regulated at the letting rate  for ’Non-Home Occupation’ for the floor  space so changed with effect from date  of change of use.

(vii)   Rents shall be increased by 4 per cent  every year over the rent in the previous  year from 1.10.1992.

(viii)  Arrears for the period from 1.10.1982  upto 30.9.1991 in the case of monthly  tenancies and 15 monthly lease would be  recovered respective of the built up area  at a flat rate of Rs.6.33 per sq. metre per  month in case of non-hazardous  trade/use or at a rate of Rs.8 per sq.

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metre per month in case of POL and  hazardous trade/use with simple interest  at 8 per cent per annum.

(ix)    Arrears in respect of structures would be  recovered at the applicable rate from  1.10.1987 upto 30.9.1991 with simple  interest at 8 per cent per annum.

(x)     In case of monthly tenancies/15-monthly  leases where the pre-revised rent is  more than the rent under above terms or  where allotments have been made  through auction/tender at rates higher  than the rate applicable under the above  terms, the rents will continue at the  earlier rates till the applicable letting rate  for a year exceeds that rate of rent  where after the rent will increase to the  applicable letting rate and will further  increase at 4 per cent annum.

(xi)    In case of expired lease, fresh lease on  new terms shall be at the sole discretion  of the Board.  Grant of fresh lease may  be considered taking into account  restructuring requirements for the City’s  Development Plan, BPT’s Master Plan and  the Development Control Regulations.   Where a fresh lease is granted, arrears  may be recovered in the form of  premium at the applicable letting rate for  respective use with simple interest at 15  per cent per annum from the date of  expiry of lease till grant of fresh lease.   In case of expired leases without a  renewal clause, additional premium may  be recovered at 12 months’ rent at the  applicable letting rate.

(xii)   In the case of monthly tenancies the  applicable rates used to be more than  the above rates to cover general  property taxes.  However, in view of the  restrictive tenure, the tax liability is to be  borne by BPT.

(xiii)  In the case of subsisting leases,  assignments and consequent grant of  lease on new terms would be at the  prevailing letting rate at the relevant  time and in relation to use.  However, in  case of amalgamation revised rent would  be at the letting rate prevailing at the  time of amalgamation subject to a ceiling  that the revised rent will not be more  than 12 times the earlier rent.  Where  lessee is already paying rent at the  prevailing letting rate, assignment would  be permitted on levy of revised rent at  25 per cent over the applicable letting  rate or on levy of premium at 12 months  rent at the applicable letting rate as may  be desired by the lessee/tenant.

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(xiv)   Subletting, change of user, transfer,  occupation through an irrevocable power  of attorney and any other breaches may  be regularized by levy of revised rent at  the applicable letting rate at the time of  such breach from the date of breach.  Where lessee/tenant is already paying  rent at the prevailing letting rate, such  regularization be permitted on levy of  revised rent at 25 per cent over the  applicable letting rate or a levy of  premium at 12 months’ rent at the  applicable letting rate as may be desired  by the lessee/tenant.

(xv)    In case of hardship where effect of the  terms is harsh, such cases may be  brought up before the Board for  consideration on merits.

(xvi)   The above proposals are applied to  properties failing outside the port limits  which is within the Board’s power to  sanction.  For properties failing within  the port limits, proposals on the above  lines may be made to  Government for  approval.

These proposals are made with deference to  the suggestions by the Division Bench  consisting of Hon’ble Chief Justice and Hon’ble  Justice Sukumaran for acceptance of the  respondents in the pending appeals.  As  regards the proposals which do not affect the  pending appeals, the Board may, after the  result of these appeals, consider extending the  benefit of these proposals to the other affected  tenants.  If the present proposals are not  accepted, the Board reserves the right to  withdraw them. The proposals are without  prejudice to the appeals.  The proposals do not  ipso facto create any right in the tenants to the  fresh tenancy/lease but confine to only rents to  be charged in the event of grant of fresh  tenancy/lease."

Proceedings under Order 1 Rule 8 of the CPC were initiated  putting all the lessees of the Board on notice through publication  in newspapers.  Several lessees filed applications for intervention  and were permitted to make submissions in respect of the  compromise proposals.  It appears that in spite of the indulgence  shown by the Court, the writ petitioners and the interveners  were not agreeable to accept the proposals.       The Division  Bench (M.L. Pendse & A.A. Cazi, JJ) heard the Board, the writ  petitioners and the interveners at length.  The Division Bench  rightly formed an opinion that the decision by the learned single  Judge did not bring to an end the entire controversy inasmuch as  merely striking down the action of the Board based on Kirloskar  Consultants’ report was not a solution to the problem.  The  Division Bench, on a review of the case law, formed an opinion  that if the action of the Board satisfied the  test of being fair and  reasonable, it was to be accepted.  Leaving aside the grievances  made by the lessees in respect of individual prpoperties as in the

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opinion of the Division Bench it was not permissible to expand  the ambit of enquiry in the proceedings pending before it and to  determine whether a particular lessee was entitled to some other  advantage or not, the Division Bench concentrated on the issue  as to the right of the Port Trust to increase the rent and the  modalities adopted by it in determining the rates at which the  rent would be increased.  On behalf of the Board a chart was  tendered before the Division Bench indicating the rents which  were paid by the lessees (who had filed petitions before the    Court) prior to October 1, 1991, and the revised rent as  suggested by Kirloskar Consultants and the modified rent fixed  by the Port Trust in pursuance of the directions of the Division  Bench with a view to demonstrate the fairness and  reasonableness writ in the proposals.  The chart was taken on  record and annexed as exhibit ’B’ to the judgment dated  11.3.1993 of the Court.  The Port Trust made it clear to the  Division Bench that it was not insistent on levying and  recovering rents as was initially suggested by Kirloskar  Consultants and was satisfied with the revised formula placed  before the Court.  Taking an overall view of several relevant  factors brought to the notice of the Court on behalf of the Port  Trust as also on behalf of the lessees, the Division Bench formed  an opinion that in their judgment "the revised proposals  submitted by the Port Trust are extremely reasonable and fair".    The document entitled "revision of rents of monthly tenancies/15  monthly leases - compromise proposals" was marked as exhibit  ’A’ and annexed with the judgment.  The Division Bench put its  seal of approval on the compromise proposals.   

       BPT felt satisfied with the judgment of the Division Bench.   However, the grievances of some of the lessees persisted and  resulted in filing of a few SLPs in this Court.  The principal  appellant before us namely Jamshed Hormusji Wadia too was  one of the appellants.  Mainly three grievances were raised  before this Court:

(i)     That the High Court was in error in not permitting the  individual lessees to make their submissions about their  complaint in the matter of increase in rent in relation to  their particular leases;

(ii)    That no proper justification has been offered by the Port  Trust in support of the ’compromise proposals’; and

(iii)   That the Division Bench of the High Court has not  considered the matter of revision of rents on the basis of  the report of the Kirloskar Consultants on merits and there  is no consideration of the reasons that were given by the  learned single Judge for setting aside the enhancement of  the rates by the Port Trust on the basis of the Kirloskar  Consultants’ report. A Bench of two learned Judges of this Court granted leave in all  the Special Leave Petitions and disposed of the Civil Appeals by  an order of remand dated 31.10.1995.  The judgment of the  Division Bench was set aside and the case was remanded for  decision afresh in the light of the following direction made by this  Court:-         "Having regard to the aforesaid  submissions urged on behalf of the appellants,  we are of the view that it is necessary that the  ’Compromise proposals’ submitted by the Port  Trust are considered by the Division Bench of  the High Court in the light of the reasons given  by the learned single Judge and submissions  that are made by the lessees in support of the

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said judgment to show that the said  ’Compromise Proposals’ fo renhancement of  rent suffer from the vice of arbitrariness.   Since this question has not been gone into by  the Division Bench of the High Court, we  consider it appropriate to set aside the  impugned judgment of the Division Bench of  the High Court for reconsideration of the  appeals in the light of the submissions that are  made by the appellant lessees as well as  intervenors with regard to the ’Compromise  proposals’ that are submitted by the Port Trust  and consider the same on merits.  It will be  open to the respondents in the Letters Patent  Appeals before the High Court as welll as the  intervenors to agitate the points which were  agitated before the learned single judge and  which have been decided against them by the  learned single judge.  If any of the appellants  in these appeals had not intervened before the  High Court in Letters Patent Appeals still will be  open to him to move the High Court for  intervention."

(emphasis supplied)

       The matter reached back and has been disposed of afresh  vide the impugned judgment dated 1.8.2000 by a Division Bench  (N.J. Pandya & Dr. D.Y. Chandrachud, JJ).  This time the Division  Bench has formed an opinion that so far as the exercise of the  Port Trust to call consultants for determining the fair market rate  of that property is concerned, nothing wrong can be found with  that.  The subsequent compromise proposals were only by way  of a softening blow to relieve the lessees of the hardship caused  by revision of rent.  So far as the question of interest on arrears  is concerned, the Division Bench thought that the rate of interest  deserved to be confined to 6% per annum only.  The Division  Bench also held that the Kirloskars’ report and the action based  thereon was already set aside by the learned single Judge and in  their opinion even the so-called ’compromise proposals’ did not  meet with the test of fairness and reasonableness.  Then the  Division Bench held:-

"1.     For granting upwards revision, we will divide the entire  period starting from 1981 to 2000 into two parts.  .............  the first period will commence from the year 1981 and end  with 31.3.1994. The second period will start on and after  1.4.1994.

2.      In view of the stand of the Port Trust itself before the  Supreme Court in S.L.P. upto 31.3.1994 it should be  permitted to apply its original norms of proper revision as  it was doing right upto the year 1981, periodically.  It may   accordingly revise the same upto 31.3.1994.

3.      As to the second period, i.e. on and after 1.4.1994, the  revision will have to be on the basis of 6% of the market  rate instead of 15% for non-residential use and for  residential purpose the return shall be worked out at the  rate of 4% on the market value.  At this rate the  Kirloskars’ report has to be worked out on and from 1994  till 31.3.2000.

4.      On and after 1.4.2000, the new Maharashtra Rent Control  Act 1999 has come into force.  The Bombay Port Trust has

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been omitted from the definition of "local authority".  The  1999 Act has received Presidential assent and the  provisions of Article 254 of the Constitution of India will,  therefore, come into play.  The appellant-Trust will stand  governed by the provisions of the Maharashtra Rent  Control Act, 1999.  To the extent permissible therein, the  appellant-Trust can certainly increase the rent periodically  and the occupants of the plots, on whatever terms and  conditions at present, will also have to abide by the same.  The appellant-Trust cannot claim any exemption from the  provisions of the 1999 Act."

5.      As to the individual submissions or as to the cases of  individual hardships, the court made certain observations  and formed an opinion that by and large the same were  already taken care of.

       At the end the Division Bench allowed the Port Trust liberty  to go ahead with the fixation of rent consistently with the  observations made by the Court.

       Feeling aggrieved by the decision of the Division Bench,  Jamshed Hormusji Wadia has once again come up in the present  appeal by special leave.  There are other appeals by a few other  lessees and a host of intervention applications by other lessees.

       The BPT has also filed a memo of cross-objections seeking  relief beyond the one allowed by the Division Bench of the High  Court.  In substance, the BPT seeks its initial action based on  Kirloskar Consultants’ report being restored and sustained. On  behalf of the appellants, not only the maintainability of cross- objections in an appeal under Article 136 of the Constitution has  been objected to, but it has also been submitted that the cross- objections are devoid of any merit.

       We have heard the learned counsel for the parties, i.e.  several appellants, the BPT as also the interveners.  The matters  have been argued from very many angles.  On 12.11.2002,  when we were almost reaching the end of the hearing, an offer  for settlement was mooted on behalf of the appellants.  The  terms of the offer were reduced into writing and tendered  "without prejudice" to the learned Addl. Solicitor General  appearing for the BPT.  The hearing was adjourned to enable the  learned ASG to obtain instructions from the BPT who could  report if it was inclined to accept the offer or  offer its comments  or make counter-offers.  On 3.12.2002, the learned ASG filed  the response of the BPT to the terms of settlement proposed on  behalf of the appellants.  Any mutual settlement was not  possible, it was reported. Further hearing was resumed and   then concluded.

       The questions arising for decision in these appeals and  several intervention applications can suitably be formulated as  under:- (i)     What is the status of the BPT as a landlord?  Is it free to  charge any rent from its lessees as it pleases in view of its  having been exempted from the operation of the Rent  Control Law or is it only to act in a fair and reasonable  manner in the matter of dealing with its lessees and  charging rent from them?

(ii)    Whether the cross-objections preferred by the BPT are  maintainable and, if so, to what effect?

(iii)   Can the grievances raised by individual lessees be said to

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have been satisfactorily disposed of by the Division Bench  of the High Court?

(iv)    The relief to which the parties are entitled.

       The Bombay Port Trust is an instrumentality of State and  hence an ’authority’ within the meaning of Article 12 of the  Constitution. (See - M/s Dwarkadas Marfatia And Sons Vs.  Board of Trustees of the Port of Bombay (1989) 3 SCC 293).   It is amenable to writ jurisdiction of the Court.  This position of  law has not been disputed by either party.  The consequence  which follows is that in all its actions, it must be governed by  Article 14 of the Constitution.  It cannot afford to act with  arbitrariness or capriciousness.  It must act within the four  corners of the statute which has created and governs it.  All its  actions must be for the public good, achieving the objects for  which it exists, and accompanied by reason and not whim or  caprice.                    It was submitted by the learned Additional Solicitor  General that not only does  the Bombay Port Trust happen to be  an instrumentality of State, it is also an owner-cum-landlord.   When the private landlords are making money in the commercial  capital city of Bombay, there is no reason why the Bombay Port  Trust should be kept pegged down to  abysmally low rates of  rent which were settled decades before and at a point of time  when in Bombay the land was available for occupation more or  less like just a  bounty of nature and people were being  persuaded and encouraged by holding out incentives to come to  Bombay and settle there.  He submitted that the Bombay Port  Trust has to manage and administer a huge port, most vital to  the industrial and economic life of the nation, and it needs  money for funding its activities.  Every additional penny earned  by Bombay Port Trust has to be and is spent for public good and  the increase in rent would augment the resources of the Bombay  Port Trust and thereby strengthen its hands in rendering better  service to the nation.  The learned Addl. Solicitor General  pointed out from facts and figures that most of the tenants were  indulging in such activities as were not expected of them such as  sub-letting, encroachments, unauthorized constructions and so  on.  They were pocketing huge sums of money by inducting sub-  tenants and collecting premiums and exorbitant rents while they  were not prepared to bear even with a reasonable increase of  rent proposed by the Bombay Port Trust.  The Bombay Port Trust  was being dragged into endless litigation by the tenants.  It was  pointed out that as on 30.9.2002 there were 1900 cases pending  in different courts at different levels all based on landlord-tenant  relationship.  This litigation was consuming a good chunk of the  Bombay Port Trust’s earnings, time and energy, all going waste.   The learned Addl. Solicitor General made a very passionate  appeal submitting that the Bombay Port Trust did not intend to  indulge in rack-renting, but at the same time the Court ought  not to deny ordinary rights available to any reasonable landlord  under the ordinary law of the land.  The Bombay Port Trust  should not be placed in a  worse position than that of an  ordinary landlord merely because it happened to be an  instrumentality of  State.  Needless to say, such submission  made by the learned Addl. Solicitor General was only a defensive  response to the vehement attack laid on the Bombay Port Trust’s  proposals to enhance the rent paid by the appellants and  interveners.    

       The position of law is settled that the State and its  authorities including instrumentalities of States have to be just,  fair and reasonable in all their activities including those in the

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field of contracts.  Even while playing the role of  a landlord or    a tenant, the State and its authorities remain so and cannot be  heard or seen causing displeasure or discomfort to Article 14 of  the Constitution of India.

       It is common knowledge that several rent control  legislations exist spread around the country, the emergence  whereof was witnessed by the post world war scarcity of  accommodation.  Often these legislations exempt from their  applicability the properties owned by the Government, semi-  Government or public bodies, Government-owned corporations,  trusts and other instrumentalities of State.  What is the purpose?   Does the Legislatures intend to leave such entities absolutely  unbridled and uncontrolled as landlords  from the operation of  the rent control legislation or do they do so with some hope and  trust in such institutions?  In M/s. Dwarkadas Marfatia And  Sons (supra) a few decisions and authorities were cited before  this Court.  The observations of Chief Justice Chagla (as His  Lordship then was) in Rampratap Jaidayal Vs.  Dominion of  India - 1952 L.R. 54 Bom. 927 were quoted with approval  stating that while enacting rent control legislations, the  Government seeks to achieve the object of protecting the  tenants and preventing the rent from being increased and people  from being ejected unreasonably; then it cannot be assumed  that that the very Government would itself be indulging into  those very activities which it was proposing to prevent by  enacting such laws.  The underlying assumption behind granting  exemption from the operation of the rent control legislations was  that the Government would not increase rents and would not  eject tenants unless it was necessary to do so in public interest  and a particular building was required for the public purpose.  It  was also pointed out that the Government 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 properties as private landlords are or are likely to do.   This Court in Baburao Shantaram More  Vs.  Bombay  Housing Board - 1954 SCR 572 recognised that the basis of  differentiation in favour of  public authorities-like the Bombay  Port Trust - was on the ground that they would not act for their  own purpose as private landlords do but would act for public  purposes.  The Court held in Dwarkadas Marfatia (supra) that  the public authorities which enjoy the benefit without being  hidebound by the requirements of the Rent Act, must act for  public benefit and where they fail to do so they render  themselves amenable to adjudication under civil review  jurisdiction of the Court.  A Division Bench of the Bombay High  Court presided over by Mrs. Sujata Manohar, J (as Her Lordship  then was) held in Ratti Palonji Kapadia & Anr.  Vs.  State of  Maharashtra & Ors. - 1992 Bom. L.R. 1356 that the  exemption from the provisions of the rent control law casts an  obligation on the State and its instrumentalities and authorities  to comply with the public policy of ensuring a fair return of  investments without charging exorbitant rates based on the  prevailing market price of the land.  Thus, a balance has to be  struck between ensuring a fair return on investment and  charging exorbitant rates based on the prevalent market prices  of land, which would be of utmost relevance to any other  landlord.  The State Government in order to justify a steep  increase in rent, cannot plead exploitative increases in prices of  lands.  Reference in this connection may also be made to   Kumari Shrilekha Vidyarthi etc.etc.,  Vs.  State of U.P. &  Ors. - (1991) 1 SCC 212, wherein this Court held that while  acting in the field of contractual rights the personality of the  State does not undergo such a radical change as not to require  regulation of its conduct by Article 14.  It is not as if the

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requirements of Article 14 and contractual obligations are alien  concepts which cannot co-exist. Our Constitution does not  envisage or permit unfairness or unreasonableness in State  action in any sphere of activities contrary to the professed ideals  in the Preamble.  Exclusion of Article 14 in contractual matters is  not permissible in our constitutional scheme.  In P.J. Irani Vs.  State of Madras and Anr. - AIR 1961 SC 1731 the Constitution  Bench observed that a tenant in a building owned by the State  or its instrumentality is not liable to eviction solely because the  tenancy has terminated.  The existence of rent control  legislation, though not applicable to such building, is suggestive  of the State’s policy of protecting tenants because of the great  difficulty of their obtaining alternative accommodation.

       In our opinion, in the  field of contracts the State and its  instrumentalities ought to so design their activities as would  ensure fair competition and non-discrimination.  They can  augment their resources but the object should be to serve the  public cause and to do public good by resorting to fair and  reasonable methods.  The State and its instrumentalities, as the  landlords, have the liberty of revising the rates of rent so as to  compensate themselves against loss caused by inflationary  tendencies.  They can - and rather must - also save themselves  from negative balances caused by the cost of maintenance, and  payment of taxes and costs of administration.  The State, as  landlord, need not necessarily be a benevolent and good  charitable Samaritan.  The felt need for expanding or stimulating  its own activities or other activities in the public interest having  once  arisen, the State need not hold its hands from seeking  eviction of its lessees.  However, the State cannot be seen to be  indulging in rack-renting, profiteering and indulging in whimsical  or unreasonable evictions or bargains.   

       A balance has to be struck between the two extremes.   Having been exempted from the operation of rent control  legislation the courts cannot hold them tied to the same shackles  from which the State and its instrumentalities  have been freed  by the legislature in their wisdom and thereby requiring them to  be ruled indirectly or by analogy by the same law from which  they are exempt.  Otherwise, it would tantamount to defeating  the exemption clause consciously enacted by the Legislature. At  the same time the liberty given to the State and its  instrumentalities by the statute enacted under the Constitution  does not exempt them from honouring the Constitution itself.   They continue to be ruled by Article 14.  The validity of their  actions in the field of landlord-tenant relationship is available to  be tested not under the rent control legislation but under the  Constitution.  The rent control legislations are temporary, if not  seasonal; the Constitution is permanent and all time law.

       In the backdrop of these principles let us test what the  Bombay Port Trust proposed to do.  The learned Addl. Solicitor  General has pointed out by filing a chart incorporating requisite  facts in requisite details that a good number of lessees were  running into huge arrears and were not willing to pay the rent  even where the rates were nominal.  Sub-letting,  encroachments, and unauthorized constructions were rampant.   The observations made and the wise counsel tendered by the  World Bank and the Comptroller and Auditor General of India  could not have been ignored as the Bombay Port Trust as also its  Trustees could otherwise be accused of inaction.  In the  aforesaid background the Port Trust and its Trustees acted very  reasonably.  They invited competitive quotations for providing  professional service to them by inviting financial experts and  valuers through an all-India public invitation.  The Kirloskar

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Consultants Ltd., whose expertise and   competency is not in  question, performed the gigantic task entrusted to them with the  assistance of Government approved valuers.  The report  submitted by Kirloskar Consultants reveals a very scientific and  methodical research carried out by them, followed by  recommendations  for such action as logically flew from the facts  found by them.  Relevant historical and geographical facts were  collected, analysed and given due weight and consideration for  drawing deductions therefrom.  There was nothing wrong in the  procedure adopted by the Bombay Port Trust and in the decision  taken on Kirloskars’ Report  but for the fact that the  consequence which followed from the action taken on  recommendations made by Kirloskar Consultants was a sudden  and exorbitant increase in rates of rent which turned out to be  manifold compared to the current rates at which the rent was  being paid by the lessees.  Two factors weighed heavily with the  1993 Division Bench decision of the High Court.  The learned  judges felt that the proposals, if accepted, would result in the  distinction between an ordinary private landlord and the Bombay  Port Trust - a landlord yet an instrumentality of State, being    lost.  Secondly, accepting the current market rates of real estate  and working out a return on such rates by reference to the  market trends, would tantamount to indulging into profiteering.   The Division Bench rightly held out the hope and trust that the  Bombay Port Trust would act reasonably as also that the lessees  would be willingly prepared for a reasonable increase.  Another  factor which weighed heavily with the Division Bench was that  the lessees whose rent was sought to be revised, were all  continuing on the premises holding the property as tenants for  quite some length of time, and it was not a case where the  property was proposed to be let out for the first time or by way  of fresh lease to aspirants bidding with each other.  The Division  Bench rightly put the ball in the court of Bombay Port Trust  calling upon it to take the lead and respond with a reasonable  proposal, and also indicated its desire to intervene and find out a  solution which would be acceptable to the Bombay Port Trust as  also to all the lessees and bring to an end the multiple litigation  already pending in courts and to avert the likelihood of further  litigation in waiting.   

       The proceedings of the Board reveal   the Trustees having  fallen on the horns of a dilemma.  Any step in retreat would have  a toning down effect on the  voluminous  exercise undertaken by  them through Kirloskar Consultants and at the same time, as is  writ large, the Court was pressing for a settlement and as an  instrumentality of State they could not afford to be indifferent to  the trust and faith reposed in them by the Division Bench of the  High Court.  The matter came up before the Board in several  meetings.  There were exchanges of views and dissents.  Yet the  Board succeeded in arriving at a resolution shaped as   ’Compromise Proposals’ and submitted the same for the  consideration of the Court.  But the lessees would not agree.   The Court found the ’Compromise Proposals’ reasonable and  meeting its approval.  The Compromise Proposals were taken on  record and made a part of the Division Bench judgment dated  11/12.3.1993.

       We have set out in the earlier part of this judgment, the  order of remand dated 31.10.1995 made by this Court.  A  careful reading of the judgment of the High Court and the order  of remand passed by this Court together significantly reveals  that none has cast any reflection __ much less any adverse one __  on the report of Kirloskar Consultants and the decision of the  Board based thereon.  The only consideration which prevailed  with the High Court and this Court was one of reasonability and

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the need for striking a balance before taking a long leap in the  direction of an upwards revision of rates.  The stand throughout  taken by the Board has to be appreciated.  It has been agreeable  to every reasonable suggestion made by the Court and has  never treated the issue as to revision of rent as a matter of its  prestige or with the ego of a landlord.  This Court made a  remand to the Division Bench of the High Court persuaded by  the consideration that there were a few aspects of paramount  significance which needed the attention of the Division Bench of  the High Court.  The fact remains that in the quest for an  amicable, and if not so, then at least a reasonable resolution of  the dispute, the Division Bench of the High Court as well as this  Court have proceeded on an assumption that for the future, the  settlement whether mutual or by dictum of the Court, shall  centre around the Compromise Proposals.  This Court wanted  the Court to be assured for itself and  the lessees to be satisfied  for themselves that the Compromise Proposals were not just an  arrow shot in the dark but were capable of being illuminated by  assigning reasons.  At the same time, though all the lessees  were to be treated alike so far as laying down of common  standards governing different classes of leases was concerned,  care had also to be taken to redeem the grievances of certain  individual lessees who could make out a case for further  legitimate reduction in rates on account of peculiarities attaching  with the land or lease held by them.  Later, while delivering the  2000 judgment, which is impugned herein, the Division Bench  certainly  assumed a wider field of jurisdiction than the one  which had been permitted by this Court and   entered into  examining the whole controversy afresh and as if all the  contentions of all the parties were open before it, which view of  the High Court, in our opinion, cannot be countenanced on a  reading as a whole of the order of remand passed by this Court  along with the judgment of the Division Bench which was  impugned then.

       In our opinion, the matter between the parties has to be  decided by treating the Compromise Proposals dated 13th August  1991 as the base.  Any going behind would unsettle the settled  issues __ expressly or by necessary implication.  We made this  clear to the learned counsel for the parties on 12.11.2002, when  we adjourned the hearing with the earnest hope that the parties  would show a fine gesture of "give a little and take a little" and  thereby relieve the Court from the need of pronouncing its  verdict in place of a mutual settlement by the parties which is  always welcome.  We may place on record that during the course  of the hearing we suggested to the learned counsel for the  parties that instead of perpetuating the life of the litigation they  may advise their respective clients suitably and persuade them  to arrive at a settlement using their good offices.  We place on  record our appreciation of the positive gesture shown by all the  learned senior counsel, their assisting counsel and the other  learned counsel appearing for the parties and the interveners.   By discussion and exchange of views across the Bar the scope of  controversy has very much narrowed down as stated  hereunder:- (1)     It was agreed at the Bar that in view of the  Maharashtra Rent Control Act 1999, having  been brought into force w.e.f. 31.3.2000, the  controversy among the parties can be treated  safely as confined to the period from  1.10.1982 to 31.3.2000. This period is divisible  into three parts i.e. (i) 1.10.1982 to  31.3.1994; (ii) 1.4.1994 to 31.3.2000; and (iii)  the period post 31.3.2000.  In the  ’Compromise Proposals’ the Bombay Port Trust

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has agreed that for the period 1.10.1982 to  31.3.1994 the original terms would continue to  apply and the lessees give up their contest, if  any, for this period. (2)     The period between 1.4.1994 and 31.3.2000 is  the bone of contention.  The Compromise  Proposals proposed 15% return for non- residential use and 12% return for residential  use as the fair market rent on the estate value.   The Division Bench of the High Court has  directed these rates to be reduced to 6% and  4% respectively.  Instead of our undertaking  an exercise afresh as to what would be a fair  and reasonable return to the Bombay Port  Trust, it is sufficient to record that all the  learned counsel for the parties excepting the  Bombay Port Trust, have agreed that the  lessees are prepared to accept the rates  revised as 10% and 8% respectively.   In our opinion, (1) the rates of 10% and  8% abovesaid are very fair and reasonable and  the Bombay Port Trust ought to accept the  same; (2) the above said rates are of general  application. Shri Fali S. Nariman, the learned  senior counsel appearing for J.H. Wadia, the  appellant, insisted that the piece of land held  by the appellant on lease suffers from several  adversities and, therefore, some exception  must be carved out in favour of this appellant.   Similar contentions were advanced by a few  other lessees.  We find some merit in the  submissions so made as we would illustrate a  little after.  However still, we feel that we  cannot enter into the factual enquiries  referable to individual lessees and record any  findings thereon.  A suitable mechanism  devised in this regard would take care of  such  individual grievances and would also bring the  dispute to an end.   (3)     So far as the period post 31.3.2000 is  concerned there is a controversy.  According to  the lessees the Maharashtra Rent Control Act,  1999, applies to Bombay Port Trust and its  premises including land and buildings and the  Act would take care of the rent as well.  Shri  R.N. Trivedi, the learned Addl. Solicitor  General, has vehemently opposed this  contention and submitted that 1999 Act does  not apply to the Board and its estates.  He  submitted that the question is not free from  difficulty and would need additional pleadings  and documents which are not available on  record and it would be safer if that plea is left  out from adjudication insofar as the present  appeals are concerned.

To appreciate the abovesaid three zones of controversy  now surviving, we need to take note of some additional facts and  events, part of which have occurred during the pendency of  these proceedings.  Excerpts from the proceedings of the  meeting of the Board of Trustees of the Port of Mumbai held on  14.11.2000 are available on record.  They give an indication of  the number of lessees with whom the terms could be settled and  were settled.  The status of cases with lessees as on 31.7.2000  as reflected in the minutes of the meeting dated 14.11.2000 is

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as under :- (i)  Total number of cases where  compromise can be  considered including cases  where suits have not been  filed.   2490

(ii) Number of cases where  applications are received for  compromise as on 31.7.2000.   1611

(iii) Less : Applications received  but cannot be compromised  due to reservations, etc.   37

(iv) Eligible applications received  for compromise.   1574

(v) Number of cases fully settled  as on 31.7.2000   408

(vi) Number of eligible cases  where parties have not  approached for compromise.   916

It was pointed out at the Bar by the learned Addl. Solicitor  General that by the time the Division Bench of the High Court  pronounced its judgment, 408 lessees had accepted the  Compromise Proposals mooted by the Board and also entered  into new leases.  Subsequent to the said judgment another 79  lessees have settled their disputes and accepted the  Compromise Proposals. Thus 487 lessees have already taken  advantage of the Compromise Proposals.  This figure is very  encouraging and shows that other lessees too should have joined  in and should not at least now abstain from joining in the stream  of settlements.  So far as the Bombay Port Trust is concerned its  stand is reflected in the following record made by the High  Court, vide para 7 of its  Judgment dated 11/12.3.1993 :

"It is no longer in dispute that the Port Trust

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does not wish to levy and recover rents as  initially suggested by Kirloskar Consultants Ltd.  and the Port Trust desires to levy and recover  rent in accordance with the revised formula."

Vide para 15 of the Memo of cross objection (the  maintainability whereof shall be dealt with shortly hereinafter)   the Bombay Port Trust has stated :

"It is further submitted that if the impugned  judgment were accepted in toto, as a package, and  as it stands today, the Port Trust, would, without  prejudice to its submissions and contentions in law,  be willing to implement the impugned judgment and  order."    

The BPT is rightly happy with the Compromise Proposals,  in the prevailing circumstances and situation.

So far as the individual grievances are concerned we need  not make a detailed statement thereof by placing on record the  cases of several individual lessees.  By way of illustration it  would suffice to state the grievance of only one of them, namely,  J.H. Wadia, who has been vigilantly fighting his case craving for  justice accompanied by sympathy and consideration for the  circumstances in which the property held by him is situated.  It  is pointed out that a storm water drain flows underground across  the full length of the land leased out to him and thereon no  development can take place according to the Municipal Laws.  The only development which the appellant has been able to  make over the property, is the construction of sheds wherein  only timber business is being run. If Wadias can neither make  use of the entire property nor develop it fully in the same  manner as others can, they legitimately deserve some relaxation  over the others being allowed to them.  The status and nature of  the land held by the Wadias, as pointed out by them, finds  support from the documentary evidence available and was  noticed by Kirloskar Consultants also in their report.

We will take care of the individual grievances in the  operative part of the judgment by making suitable directions in  that regard.

We agree with the submission of the learned Addl. Solicitor  General that in the absence of adequate material being available  on record the question as to the applicability of the Maharashtra  Rent Control Act, 1999, to the Bombay Port Trust and its  premises should not be decided in the present case and should  rather be left open to be taken care of in appropriate  proceedings at an appropriate point of time.

Now we digress a little to deal with the issue as to the  maintainability of the cross objections.  For three reasons we  find the cross objection not entitled to consideration on merits :  firstly, in an appeal by special leave under Article 136 of the  Constitution, cross objections do not lie; secondly, the BPT  having given a proposal to the Court though on being prompted  by the Court to do so, the Bombay Port Trust  should not be  permitted to beat a retreat and withdraw from the compromise  proposals or lay challenge to it in the facts and circumstances of  the case.  The compromise proposals have been held to be fair,  just and reasonable, and challenge to it is devoid of any merit;  and thirdly,  the issue as to compromise proposals stands  implicitly circumscribed by the order of remand dated

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31.10.1995 and cannot be allowed to be reagitated at this stage.   The first of these three needs elaboration.

       BPT has filed cross-objections.  A question of significance  arises whether a cross-objection, as contemplated by Order 41  Rule 22 of the Code of Civil Procedure, 1908, is at all  maintainable in a civil appeal by special leave under Article 136  of the Constitution in this Court?   No decision by this Court  squarely  dealing with the point has been brought to our notice.   Alopi Nath & Ors. Vs. Collector, varanasi, 1986 (Supp) SCC  693, too is not directly on the point but comes very near to it. A  question as to the admissibility of cross-objections under a local  law of Uttar Pradesh arose for the consideration of this Court.   The U.P. Municipal Corporations Adhiniyam, 1959, has  constituted a tribunal with power and functions of the Court to  deal with reference arising out of acquisition of land for U.P.  Municipal Corporation under the Land Acquisition Act 1849.  The  Indian Evidence Act 1872 and the Code of Civil Procedure, 1908,  apply to all proceedings before the Tribunal.  Its decisions are  final subject to appeal under sub-Section (1) of Section 381  which reads as under:- "381.   Appeals__ (1) An appeal to the High  Court shall lie from a decision of the Tribunal,  if__

       (a)     the Tribunal grants a certificate  that the case is a fit one for appeal, or

       (b)     the High Court grants special leave  to appeal, provided that the High Court  shall not grant such special leave unless  the Tribunal has refused to grant a  certificate under clause (a).

xxx                     xxxx                    xxx   

(3)     Notwithstanding anything contained in  the foregoing provisions, no appeal shall lie  under this section unless the appellant has  deposited the money which he is liable to pay  under the order from which the appeal is filed.

(4)     Subject to the provisions of sub-section  (1), the provisions of the Code of Civil  Procedure, 1908, with respect to appeals from  original decrees, shall, so far as may be, apply  to appeals under this Act.

(5)     (i) An application for the grant of a  certificate under clause (a) of sub- section (1) may be made within thirty  days from the date of decision of the  Tribunal.

       (ii)    An appeal against the decision of  the Tribunal may be preferred within  sixty days from the date of the grant of  the said certificate.

       (iii)   An application to the High Court for  special leave to appeal under clause (b)  of sub-section (1) may be made within  sixty days from the date of the order of  refusal of the said certificate.

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xxx                     xxxx                    xxx   

A question arose whether cross-objections are maintainable  before the High Court in an appeal under Section 381.  This  Court held that the provision of Order 41 Rule 22 of the CPC is  inconsistent with the provisions of the said Act inasmuch as an  appeal is admissible only by a certificate or special leave under  Section 381.  "It is difficult to contend that a cross-objection is  anything other than an appeal as generally understood in law."   The cross-objection was held to be not maintainable.  

       An overview of the nature of jurisdiction conferred on this  Court under Article 136 of the Constitution becomes necessary.   The framers of the Constitution visualized the Supreme Court as  a Court having a final and appellate jurisdiction on questions  relating to the constitutional validity of laws.  It was to have  appellate jurisdiction in all cases involving a substantial question  of law as to the interpretation of the Constitution except where  an appeal had come to this Court on a Certificate given by the  High Court.  In spite of the Certificate having been refused, this  Court could grant a special leave. (The Framing of India’s  Constitution, B. Shiva Rao, pp. 483 & 488). Article 136 as  framed, opens with a non-obstante clause giving it overriding  effect on all other provisions contained in Chapter IV of the  Constitution and confers a discretionary jurisdiction on this Court  to grant special leave to appeal from any judgment, decree,  determination, sentence or order in any cause or matter passed  or made by any Court or Tribunal in the territory of India.  It is  well-settled  that Article 136 of the Constitution does not confer  a right to appeal on any party; it confers a discretionary power  on the Supreme Court to interfere in suitable cases.  The very  conferment of the discretionary power defies any attempt at  exhaustive definition of such power. When no law confers a  statutory right to appeal on a party, Article 136 cannot be called  in aid to spell out such a right. (M/s Bengal Chemical &  Pharmaceutical Works Ltd. - 1959 Suppl.(2) SCR 136,  The  State of Bombay Vs. Rusy Mistry and Anr. - AIR 1960 SC  391 and Basudev Hazra - (1971) 1 SCC 433.   Article 136  cannot be read as conferring a right on anyone to prefer an  appeal to this Court; it only confers a right on a party to file an  application seeking leave to appeal and a discretion on the Court  to grant or not to grant such leave in its wisdom.     The  discretionary power of this Court is plenary in the sense that  there are no words in Article 136 itself qualifying that power.   The power is permitted to be invoked not in a routine fashion but  in very exceptional circumstances as when a question of law of  general public importance arises or a decision sought to be  impugned before this Court shocks its conscience.  (Arunachalam Vs. P.S.R. Sadanatham - (1979) 2 SCC 297).   This overriding and exceptional power has been vested in this  Court to be exercised sparingly and only in furtherance of the  cause of justice (Subedar Vs. The State of UP (1970) 2 SCC  445).  The Constitution Bench in Pritam Singh Vs. The State -   1950 SCR 453 cautioned that the wide discretionary power  vesting in this Court should be exercised sparingly and in  exceptional cases only when special circumstances are shown to  exist.  In another Constitution Bench (The Bharat Bank Ltd.,  Delhi - 1950 SCR 459) Mahajan, J. (as His Lordship then was)  reiterated the caution couching it in a different phraseology and  said that this Court would not under Article 136 constitute itself  into a Tribunal or Court just settling disputes and reduce itself  into a mere Court of error.  The power under Article 136 is an  extraordinary power to be exercised in rare and exceptional

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cases and on well-known principles.   

       All said and done, in spite of the repeated pronouncements  made by this Court declaring the law on Article 136 and  repeatedly stating that this Court was a Court meant for dealing  only with substantial questions of law, and in spite of the clear  constitutional overtones that the jurisdiction is intended to settle  the law so as to enable the High Courts and the courts  subordinate to follow the principles of law propounded and  settled by this Court and that this Court was not meant for  redeeming injustice in individual cases, the experience shows  that such self-imposed restrictions placed as fetters on its own  discretionary power under Article 136 have not hindered the  Court from leaping into resolution of individual controversies  once it has been brought to its notice that the case has failed to  deliver substantial justice or has perpetuated grave injustice to  parties or is one which shocks the conscience of the Court or  suffers on account of disregard to the form of legal process or  with violation of the principles of natural justice.  Often such are  the cases where the judgment or decision or cause or matter  brought to its notice has failed to receive the needed care,  attention and approach at the hands of the Tribunal or Court  below, or even the High Court at times, and the conscience of  this Court pricks or its heart bleeds for imparting justice or  undoing injustice.  The practise and experience apart, the  framers of the Constitution did design the jurisdiction of this  Court to remain an extraordinary jurisdiction whether at the  stage of granting leave or at the stage of deciding the appeal  itself after the grant of leave. This Court has never done and  would never do injustice nor allow injustice being perpetuated  just for the sake of upholding technicalities.

       A few decisions were brought to the notice of this Court by  the learned Additional Solicitor General wherein this Court has  made a reference to Order 41 Rule 22 of the CPC and permitted  the respondent to support the decree or decision under appeal  by laying challenge to a finding recorded or issue decided against  him though the order, judgment or decree was in the end in his  favour. Illustratively, see Ramanbhai Ashabhai Patel (1965) 1  SCR 712; Management of Northern Railway Co-operative  Society Ltd. (1967) 2 SCR 476; Bharat Kala Bhandar Ltd. -  (1965) 3 SCR 499.  The learned ASG is right.  But we would like  to clarify that this is done not because Order 41 Rule 22 CPC is  applicable to appeals preferred under Article 136 of the  Constitution; it is because of a basic   principle of justice    applicable to Courts of superior jurisdiction.  A person who has  entirely succeeded before a Court or Tribunal below cannot file  an appeal solely for the sake of clearing himself from the effect  of an adverse finding or an adverse decision on one of the issues  as he would not be a person falling within the meaning of the  words ’person aggrieved’.   In an appeal or revision, as a matter  of general principles, the party, who has an order in his favour,  is entitled to show that even if the order was liable to be set  aside on the grounds decided in his favour, yet the order could  be sustained by reversing the finding on some other ground  which was decided against him in the court below.  This position  of law is supportable on general principles without having  recourse to Order 41 Rule 22 of the Code of Civil Procedure.   Reference may be had to a recent decision of this Court in  Nalakath Sainuddin Vs. Koorikadan Sulaiman - (2002) 6  SCC 1 and also Banarsi & Ors. Vs. Ram Phal - JT 2003 (5) SC  224.  This Court being a Court of plenary jurisdiction, once the  matter has come to it in appeal, shall have power to pass any  decree and make any order which ought to have been passed or  made as the facts of the case and law applicable thereto  call for.  

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Such a power is exercised by this Court by virtue of its own  jurisdiction and not by having recourse to Order 41 Rule 33 of  the CPC though in some of the cases observations are available  to the effect that this Court can act on the principles deducible  from Order 41 Rule 33 of the CPC.  It may be added that this  Court has jurisdiction to pass such decree or make such order as  is necessary for doing complete justice in any cause or matter  pending before it.  Such jurisdiction is conferred on this Court    by Article  142 of the Constitution and this Court is not required  to have recourse to any provision of CPC or any principle  deducible therefrom.  However still, in spite of the wide  jurisdiction being available,  this Court would not ordinarily make   an order, direction or decree placing the party appealing to it in  a position more disadvantageous than in what it would have  been had it not appealed.

       The exercise of appellate jurisdiction under Article 136 of  the Constitution is not dependent on the provisions of Order 41  of the CPC.  The Court may frame rules governing its own  procedure and practice.  No such rule has been framed by the  Court which entitles or permits a respondent to file a cross- objection.

Right to file cross-objections is the exercise of substantive  right of appeal conferred by law.  Cross-objections partake of the  right of preferring an appeal.  The procedure is different and so  is the rule of limitation (See, Municipal Corporation of Delhi  & Ors. Vs. Intnl. Security & Intelligence Agency Ltd. - JT  2003 (2) SC 103 and Superintending Engineer & Ors. Vs. B.  Subha Reddy (1999) 4 SCC 423).  Against a decision by the  High Court or Tribunal which is partly in favour of one and partly  in favour of the other, both the parties are aggrieved and each  one of them has a right to move an application in this Court  seeking leave to appeal.  One who does not do so and allows the  prescribed period of limitation to lapse, cannot come up by way  of cross-objections on the other party coming up in appeal,  though we must qualify our statement of law by reference to Sri  Babu Ram Vs. Shrimati Prasanni & Ors. 1959 SCR 1403. In  that case, in an election petition the respondent before this  Court had sought to  support the final conclusion of the High  Court by challenging a finding recorded against her which was  objected to by the appellant.  This Court did not think it  necessary to decide the point and observed that assuming the  respondent should have preferred a petition for special leave to  appeal against the finding of the High Court on the issue in  question, yet the application made by the respondent for leave  to urge additional grounds could be converted into a petition for  special leave to appeal against the said finding, and the delay  made in filing the same could be condoned.  Suffice it to observe  that the observation so made by this Court takes care of an  unusual situation where the Court feels inclined to relax the bar  of limitation by taking a sympathetic view on condoning of the  delay and entertains a belated prayer ex debito justicia . We  cannot close the topic without referring to  Vashist Narain  Sharma Vs. Dev Chandra and Ors. - 1955 (1) SCR 509 (at  p.519).  It was an election appeal and the learned counsel for  the respondent attempted to argue that he could support the  decision of the Tribunal on other grounds which had been found  against him and referred to the analogy of the Code of Civil  Procedure which permits a respondent to take that course.  The  Court held - "that provision has no application under Article 136.   We have no appeal before us on behalf of the respondent and we  are unable to allow that question to be re-agitated".  Vashist  Narain Sharma’s case is a three-Judges Bench decision and  though available was not placed before the Court deciding Sri

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Balu Ram’s case, which again is a three-Judges Bench decision.   Be that as it may, we are clearly of the opinion that in an appeal  under Article 136 of the Constitution, the respondent cannot file  cross-objections. If the judgment of the High Court was partly  against the respondent, it was for it to have filed an application  seeking leave to appeal.  That right having been foregone by it  and the period of limitation having expired, the cross-objections  cannot be entertained. The filing of cross-objections by a  respondent in this Court is an attempt at exercising the right of  filing an application for special leave to appeal after the expiry of  limitation and in a manner not contemplated by Article 136 of  the Constitution.  The Judgment of the High Court was delivered  on 1.8.2000. Leave was granted to the appellant on 13.8.2001  in the presence of counsel for the respondent.  Formal notice of  lodgment of appeal was served on the respondent on 28.9.2001.   The application by way of cross-objections has been filed on   31.7.2002.  The only reason assigned in the application seeking  condonation of delay  is that though the respondent-Trust had  accepted the judgment of the High Court, it was advised and  persuaded to file cross-objections because of the appellants  having filed the application seeking leave to file an appeal and  leave having been granted to them.  We do not think such  explanation, in the facts and circumstances of the case, amounts  to sufficient cause for condoning the delay.                  Even on merits we do not find any reason to entertain the  plea sought to be urged in cross-objections.  As we have already  pointed out, the respondents have accepted the judgment of the  High Court and also acted thereon.  Merely because the other  party has preferred an appeal, that cannot be a ground for the  respondent also to disown that part of the  judgment which was  acceptable to it.  Further, the issue which is now sought to be  re-agitated stands concluded by the earlier order of remand  passed by this Court.  The respondent  cannot now, in the  second round of appeal to this Court, be permitted to urge such  pleas as it could have urged in the earlier round or which it  urged and was not accepted by this Court.

The cross-objections preferred by the respondent-Trust are  dismissed as not maintainable and as also being devoid of any  merit.

All the appeals are directed to be disposed of in terms of  the following directions : -

(i)     by this judgment and in these proceedings the  controversy as to the rates of rent applicable  to the lessees shall be deemed to have been  resolved for the period 1.4.1994 to 31.3.2000;  

(ii)    the ’Compromise Proposals’ as approved by  the Board of Trustees of the Port of Mumbai in  their meeting held on  13.8.1991 which are  very fair, just and reasonable, subject to the  modification that the revision in rent from  1.4.1994, shall be on the basis of rates of  return at 10% for non-residential uses and 8%  for residential uses, based on Kirloskar  Consultants’ report, instead of 15% and 12%  respectively as was suggested in the  ’Compromise Proposals’.  The ’Compromise  Proposals’ so modified shall bind the parties,  and all the lessees even if not parties to these  proceedings in view of the proceedings taken  by the High Court under Order 1 Rule 8 of the

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C.P.C.;

(iii)   the rates of rent for the period upto 31.3.1994  shall remain as suggested in the ’Compromise  Proposals’;

(iv)    the interest chargeable by the Board of  Trustees of the Port of Mumbai in respect of  arrears of rent for the period commencing  1.4.1994 upto the date of actual payment shall  be calculated at the rate of 6% per annum,

(v)     subject to the abovesaid modifications, all  other terms and conditions of ’Compromise  Proposals’, shall remained unchanged;

(vi)    within a period of eight weeks from today lease  deeds consistently with the ’Compromise  Proposals’, subject to the modifications as  above said, shall be executed by the lessees  and even if lease deeds are not executed the  terms of ’Compromise Proposals’ shall bind the  lessees;

(vii)   such of the tenants as may wish to  contend that there are certain real and  material distinguishing features to be  considered for the purpose of carving out  an exception and relaxing the general  terms and  entitling them to reduction in  the rates of rent applicable as above said,  may file representations each setting out  specific grounds and relevant facts  precisely in that regard in the office of the  Bombay Port Trust under a written  acknowledgement.  The Bombay Port Trust  shall maintain a register of all such  representations filed.  No representation  filed after the expiry of six weeks from  today shall be received or entertained.

(viii)  We request the High Court to appoint a  retired Judge, preferably (and not  necessarily) of the rank of District Judge,  as a Sole Adjudicator of the  objections/representations filed in terms of  the above decision.  The High Court shall  appoint a place of sitting and the amount  of remuneration to be paid per case (and  not on per day basis) to the Adjudicator.   The fee shall be paid by each lessee filing  the representation for decision.  The  requisite secretarial and clerical assistance  shall be provided by the Bombay Port  Trust or as directed by the High Court.   The learned Adjudicator shall commence  his proceedings on expiry of eight weeks  from today and on the record of  representations being made available to  him and shall conclude the same within a  period of 4 months thereafter.  The  Adjudicator shall not be bound to record  evidence and may determine and dispose  of the representations by summary  hearing, receiving such affidavits and

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documents as required by him, and/or  carrying out inspection of the leased  properties, if he deems fit to do so.  The  Adjudicator shall examine and decide to  what relief in the rate of rent and/or any  other term of lease such representing  lessee is entitled.  The decision by the  Adjudicator shall be final and binding on  the parties.  In case of any difficulty in  implementing this procedure directions  may be  sought  for from the High Court.

(ix)    The abovesaid procedure is not to be  utilised as justification for withholding the  payment of any arrears of rent to be  calculated in terms of these directions.   The payments have to be made and made  regularly.  Any amount becoming due for  refund in terms of any relief granted by  the Adjudicator shall be refunded or  adjusted thereafter.

(x)     We expect the lessees to cooperate in  finalisation of the disputes.  We also  expect the lessees to desist from  preferring immaterial or frivolous  objections or objections just for their sake.   If any one does so the learned Adjudicator  may impose costs on him which shall be  payable to and recoverable under law by  the BPT as arrears of rent.

(xi)    For the purpose of appointing an  Adjudicator and dealing with application, if  any, seeking resolution of difficulties, in  terms of the preceding direction, we  request the learned Chief Justice of the  High Court of Bombay at Mumbai to assign  this matter for being placed before any  learned judge of his Court.  We, on our  part, suggest in the interest of expeditious  disposal, that the matter may be assigned  to any one of the judges available in the  High Court out of those who had earlier  dealt with the matter (i.e., the learned  Single Judge who passed the order dated  1/4-10-1990, the two learned Judges who  passed the judgment dated 11/12-3-1993  and the two learned judges who passed  the order dated 1-8-2000).  His  acquaintance  with the facts of the case  would accelerate the hearing and disposal.   However, this is only a suggestion and is  not in any manner intended to fetter the  power of the learned Chief Justice to  assign the matters for hearing in the High  Court.

(xii)   The issue as to the applicability of the  Maharashtra Rent Control Act, 1999, to  the Port of Mumbai and the property held  by it is left open to be decided in  appropriate proceedings.

The appeals and all the pending applications shall stand

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disposed of.  There shall be no order as to costs in these  proceedings.