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PETITIONER: MALPE VISHWANATH ACHARYA & ORS.

       Vs.

RESPONDENT: STATE OF MAHARASHTRA & ANR.

DATE OF JUDGMENT:       19/12/1997

BENCH: B.N. KIRPAL, M. SRINAVASAN

ACT:

HEADNOTE:

JUDGMENT:                             WITH         (WRIT PETITION (C) NOS. 17 AND 824 OF 1996)                THE 19TH DAY OF DECEMBER, 1997 Present:                  Hon’ble the Chief Justice                  Hon’ble Mr. Justice B.N. Kirpal                  Hon’ble Mr. Justice M. Srinivasan F.S. Nariman, Sr. Adv., Mulraj Shah, P.H. Parekh, Jagdish Karia,  Subhash Sharma, Ms. Dhun Chapgar, Ms. Sunita Sharma, Nikhil  Sakhardande, Sameer  Parekh, Advs.  with him for the appellants. M.S. Nargolkar, Sr. Adv., D.M. Nargolkar, S.M. Jadhav, Advs. with him for the Respondents. M.N. Shroff, Adv. for K.V. Sreekumar, Adv. for Intervenor.                       J U D G M E N T      The following Judgment of the Court was delivered:                             With           WRIT Petition @ Nos. 17 and 824 of 1996 Kirpal, J.      Lex injusta non est lex’, unjust laws are not  laws, is what is  being contended by the landlords in their challenge in these  appeals, and  the connected writ petitions, to the validity of  the relevant  provisions of  the Bombay  Rents, Hotel and Lodging House Rates Control Act, 1947 (hereinafter referred to  as ’the  Bombay Rent  Act’) in  so  far  as  it provides that  landlords cannot charge rent in excess of the standard rent.      The appellants  are landlords  or their representatives of different  premises in  Bombay which  have been  given on rent to various tenants. They had filed in the High Court of Bombay  writ   petitions  challenging   the   constitutional validity of  Section 5(10)  (B), Section  11 (1) and Section 12(3) of the Bombay Rent Act, inter alia, on the ground that the said  provisions pertaining  to standard rent were ultra vires Articles  14,  19  and  21  of  the  Constitution  anc consequently void. The main challenge to the said provisions was on  the ground  that the restriction on the right of the Landlords to  increase rents, which ha been frozen as on 1st September, 1940  or at the time of the first letting, was no long a  reasonable restriction  and the said provisions had,

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with the  passage of time, become arbitrary, discriminatory, unreasonable and  consequently ultra vires Article 14 of the Constitution.  By  the  impugned  judgment  the  High  Court dismissed the  writ petitions,  inter alia, holding that the object of  the Bombay  Rent Act  was not  to provide  to the landlord an adequate return on its investment and it was not open to  him to claim an increase in the rent by taking into account the increase in the land privies etc. The Court also observed that the writ petitions lacked particulars in order to satisfy  the Court  that the  relevant provisions  of the Bombay Rent Act were unreasonable or arbitrary.      The Bombay  Rent Act  came into force on 13th February, 1938 This  Act was  meant to  be a  temporary  measure.  The original act was enacted only for two years, with a power to the Government  to extend  the same  by notification in this behalf. this Act has been extended from time to time a least on twenty  occasions and  the present  extension remains  in force upto  31st March,  1998. Sections  5(10), 7,  9(b) and 11(1)(a) which  are being impugned in the present cases read as follows:      "5(10) "Standard  rent" in relation      to any premises means-      (a)  Where  the  standard  rent  is      fixed  by   the   Court   and   the      Controller respectively  under  the      Bombay Rent  Restriction Act, 1939,      or the  Bombay Rents,  Hotel  Rates      and Lodging  House Rates  (control)      Act, 1944, such standard rent; or      (b) when  the standard  rent is not      so fixed,-      subject  to   the   provisions   of      section 11,-      (i) the  rent at which the premises      were  let   on  the  first  day  of      September 1940,      (ii) where they were not let on the      first day  of September  1940,  the      rent at  which they  were last  let      before that day, or      (iii) where  they  were  first  let      after the  first day  of  September      1940, the  rent at  which they were      first let or      (iii-a)  notwithstanding   anything      contained in  paragraph (iii),  the      rent of the premises referred to in      sub-section  (1A)   of  section   4      shall, on  expiry of  the period of      five years  mentioned in  that sub-      section,  not   exceed  the  amount      equivalent to  the  amount  of  net      return of  fifteen per cent, on the      investment in the land and building      and all  the outgoing in respect of      such premises: or]      (iv) on  any of the cases specified      in section  11, the  rent fixed  by      the Court;      7. [(1)]  Except where  the rent is      liable to  periodical increment  by      virtue of an agreement entered into      before the  first day  of September      1940, it  shall not  be  lawful  to      claim or receive on account of rent

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    for any premises any increase above      the  Standard   rent,  unless   the      landlord  was,  before  the  coming      Standard rent,  unless the landlord      was,   before   the   coming   into      operation of  this Act, entitled to      recover  such  increase  under  the      provisions  of   the  Bombay   Rent      Restriction  Act,   1939,  or   the      Bombay  Rents,   Hotel  Rates   and      Lodging House  Rates (Control) Act,      1944 or is entitled to recover such      increase under  the  provisions  of      this Act  [either before  or  after      the  commencement   of  the  Bombay      Rents,  Hotel   and  Lodging  House      Rates  Control   (Amendment)   Act,      1986].      (2) (a)  No person  shall claim  or      receive on  account of  any license      fee or  charge for  any premises or      any  part   thereof,  anything   in      excess of  the  standard  rent  and      permitted increase(or,  as the case      may  be,   a   proportionate   part      thereto), for such premises if they      had been  let, and  such additional      sum as  is reasonable consideration      for any amenities or other services      supplied with the premises.      (b) All  the provisions of this Act      in respect of the Standard rent and      permitted increases  in relation to      any premises  let, or  if let, to a      tenant,  shall   mutatis   mutandis      apply in respect of any license fee      or charge  and permitted  increases      and the  additional  sum  mentioned      above ].      9.(b) Before  making  any  increase      under  clause   (a),  the  landlord      shall obtain a certificate from the      local   authority   that   he   was      required  by   it  to  make  or  to      provide  such   additions,  he  was      required  by   it  to  make  or  to      provide       such       additions,      alterations,    improvements     or      amenities and has completed them in      conformity with its requirements.      11.(1) [  Subject to the provisions      of  section   11A  in  any  of  the      following cases the Court may, upon      an application  made to it for that      purpose,  or   in   any   suit   or      proceedings, fix  the standard rent      at such amount as, having regard to      the  provisions  of  this  Act  and      circumstances  of   the  case,  the      Court deems just-      Where any  premises are  first  let      after the  first day  of  September      1940 and the rent at which they are      so let  is in  the opinion  of  the      Court excessive; or

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    Where the  Court is  satisfied that      there is  no sufficient evidence to      ascertain the  rent  at  which  the      premises were let in any one of the      cases mentioned  in [paragraphs (1)      to  (iii)  of  sub-clause  (10)  of      Section 5; or      Where by  reason  of  the  premises      having been  ; let at one item as a      whole or  imparts  and  at  another      time in parts or as a whole, or for      any other  reason,  any  difficulty      arises in  giving  effect  to  this      Part; or      Where any premises have been or are      let rent-free  or at a nominal rent      or  for   some   consideration   in      addition to rent; or      Without prejudice to the provisions      of sub-section  (1A) of  section  4      and paragraph (iii-a) of sub-clause      (b) of  clause (10)  of Section  5,      where the  Court is  satisfied that      the rent in respect of the premises      referred  to  therein  exceeds  the      limit of standard rent laid down in      the said paragraph (iii-a); or      Where there  I any  dispute between      the   landlord   and   the   tenant      regarding the  amount  of  standard      rent,      Section 10 provides for an increase in rent where after the commencement  of the  Bombay Rents,  Hotel  and  Lodging House Rates  Control (Amendment)  Act, 1986  a  landlord  is required to  pay any  fresh rate,  cases, charges,  tax land assessment, ground  rent of  land or any other levy on lands and buildings.  Section 10 A enables the landlord to make an increase in  the  rent  of  the  premises  by  a  percentage specified therein  in respect  of those  premises which were let on  or before  the first  day of September 1940. Section 12, inter  alia, provides  that ordinarily there shall be no ejectment of a tenant if he is ready to pay or is willing to pay the  standard rent with permitted increase in the manner provided therein.      From the  aforesaid provisions  it is  clear that in so far  as  the  question  of  fixation  of  standard  rent  is concerned when  the Act  was enacted  the premises fell into two categories;  (a) those  let on  1st September, 1940 and; (b) those  let for the first time after 1st September, 1940. According to Mr. Nariman these provisions provide as under:      A.  Premises  let  out  before  1st      September, 1940.      In respect of (a) i.e. premises let      out on  or  before  1.9.1940.  rent      paid on  that date  is the standard      rent.      i) and  thus the  ret is  pegged at      the  rent   paid  as  on  1.9.1940,      subject to  the increases mentioned      below.      ii) Those  increases are  of  three      types:      a) those permitted U/s 10A      In respect  of premised  let on  or      before  1.9.1940;   increases   are

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    permitted to  the extent  of 5%  to      7.5% over  the  standard  rent  for      residential premises:      And 7.5% - 12.5% in respect of non-      residential premises-      This  is   a  one   time  permitted      increase.      b) Increase  on  account  of  heavy      repairs, additional  amenities  and      repairs required  to be carried out      under   requisition    from   local      authorities;  increase  in  monthly      rent is  permitted to the extend of      15% per  year on  the  actual  cost      incurred without  interest (Section      9)      c)  Increase  in  ground  rent,  in      respect of  leasehold premises paid      to the  government, local authority      and statutory  authority is allowed      to be  passed on to the tenant by a      proportionate increase  in  monthly      rent (Section 10)      d) increase  in amount  of property      taxes after  13.2.1948   is allowed      to be  passed on to the tenant by a      proportionate increase  in  monthly      rent (Section 10)      The cost  which have to be absorbed      and borne  by the landlord (without      entitlement to  pass on to tenants)      therefore:      Entire cost of "tenantable" repairs      U/s 23,  which if the landlord does      not  carry   out,  and  the  tenant      carries out the same, the tenant is      permitted to deduct and recover the      same from the landlord from year to      year to the extent of 3 months rent      in a year together with interest at      the rate of 15% p.a.; under Section      23   as    amended   in   1987   by      Maharashtra Act No. 18 of 1987.      Landlord has had to bear the repair      cases from  1.1.1970: first  levied      under the  Bombay  Building  Repair      and Reconstruction  Board Act, 1969      replaced by Maharashtra Housing and      Area Development Act, 1976 ( MHADA)      - to  the  extent  of  10%  of  the      "ratable" value  ( 8.5%  of  actual      rent in  a year),  which in  effect      works out  to one month’s rent in a      year.      50% of the total tax levied in lieu      of  the   abolition  of  the  Inami      tenures (  w.e.f.  1.4.1971)  under      Bombay  city   (Inami   &   Special      tenures) Abolition  and Maharashtra      Land Revenue Code (Amendment ) Act,      1969; Sections 7,8,10.      In  case  of  leasehold  land,  the      increase in ground rent paid by the      landlord to  private parties,  i.e.      parties  other   then   Government,

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    total     authority,      statutory      authority, etc. the entire increase      is to  Be borne by the landlord and      no part  of it  can be passed on to      tenant. (  This is  the  effect  of      Section   10    as    amended    by      Maharashtra Act No. 18 of 1987.)      B. Premises  let out  for the first      time after  1.9.1940-such  premises      fall into 2 categories;      a) Where  the landlord  is  himself      the owner  of the building in which      flats are  let to different tenants      mostly from 1940-1950.      b) Where  the landlord is himself a      member of  a  co-operative  housing      society and holds the flat as owner      member; but has let out the flat to      a tenant  -  the  rent  will  stand      frozen at  the amount  paid on  the      date  of   the  first  letting;  by      reason     of  the   definition  of      "standard  rent"  under  Section  5      (10) (b)(iii)  of the  Act  ("where      they were first let after the first      day of  September, 1940 the rent at      which they  were first let"). These      are    "ownership     flats"     in      "cooperative   society   buildings"      constructed  in   the  post   -1950      period.  Almost  all  constructions      after 1950 are on this pattern.      c) In  the decades  of the fifties,      sixties and seventies, the landlord      member is  invariably out of pocket      as the  ever increasing  amounts of      the outgoing  and maintenance  paid      to the  Society are invariably more      than  the  actual  amount  of  rent      received ( which had been frozen at      first letting)/      In the  decade of  the eighties and      the nineties however, the amount of      the     first     letting     being      considerably higher, this incidence      does not  occur. Since  increase in      maintenance charges  is absorbed in      the amount of rent fixed.      In both  classes of  cases i.e. the      premises  let   on  or  before  1st      September, 1940 and premises let on      or after  1.9.1940,  there  are  no      statutory provisions  which entitle      the landlord  to move the Count for      an increase  in standard  rent. The      Scheme of  the  Act  negatives  any      such right (see Section 5 (10) read      with Sec. 11(1)(a)).      Mr. F.S.  Nariman, learned  senior counsel on behalf of the appellants  submitted that  a  legislation  which,  when enacted, was  justified on  considerations of  necessity and expediency may,  with the  passage of time, become arbitrary and unreasonable  in changing  circumstances. In view of the constant  escalation   in  privies   due  to  inflation  and corresponding fall  in the  value of  the rupee,  ceiling on

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rentals, such  as the  one imposed  by Section 5 (10)(a) and (b) read  with Section  7 and  11 of the Bombay RENT Act, is totally  arbitrary   and  unrealistic   and   ,   therefore, unreasonable.      In reply  it  was  submitted  by  Mr.  N.S.  Nargolkar, learned senior  counsel for  the respondents  that the  writ petitions which  were filed  by the  appellants did not give sufficient details  as regards  the rents  which  they  were receiving from  the tenanted  premises. It  was,  therefore, contended that  the claims  made were  hypothetical as there was no  sufficient material  to  decide  the  truth  of  the assertions  made  by  the  appellants  as  regards  negative returns  from   their  rented  properties.  It  was  further submitted by the learned counsel that the respondent - State has become  aware of  the rising  prices at least since 1986 and this  had resulted  in Maharashtra  Act 18 of 1987 being passed whereby  the Bombay  Rent Act  was  amended.  It  was contended that an important concession which was made by the Amending Act  was the introduction of Section 4 (1) A, which provided that  the provisions  relating to standard rent and permitted increases  was not  to apply  for a period of five years to  any premises the construction or reconstruction of which was  completed on or after the appointed date, namely, 1.10.1987. This  Amending  Act  also  introduced  Section  9 which; allowed  to landlord  to increase  the  rent  for  an improvement  or   structural  alteration  of  the  premises, excepting repairs  under, Section 23 of the Bombay Rent Act. Furthermore, it  was submitted  that the  amended Section  6 also entitled  to landlord  to increase the rent by addition of an  amount not  exceeding 15  per cent  of  the  expenses incurred  on   account  of   special  addition   or  special alterations  or   additional  amenities,   improvements   or structural alterations. The landlord was further entitled to temporarily increase the rent at a rate not exceeding 18 per cent of  the standard  rent for  special or  heavy  repairs. Reference was  also made to Section 10 and 10A introduced by the Amending Act of 1986 whereby landlord could increase the rent in  case he  was required  to pay  fresh rates, charges etc. to  the Government  or if  he was required to cover the increase in  water  and  electricity  charges.  The  learned counsel reiterated  that the  State was  aware and conscious about the problem of the landlords and was proceeding in the right direction  to  obviate  their  difficulties.  In  this connection the  attention of  the Court  was invited  to the constitution of a committee headed by Mr. V.K. Tembe in 1979 for the  purpose of preparing a Unified Rent Control Act for the entire  State. The State Law Commission had examined the recommendations of  the Tembe  Committee and  submitted  its report. The  Cabinet  Sub-  Committee  had  considered  this report as  well as the Model Rent Control Bill, forwarded to it by the Central Government, and this had resulted in a new Rent Control Bill being introduced in the upper house of the State Legislature in July, 1993. This bill has been referred to the Select Committee and it was accepted that the reading of  the   bill  clause   will  be  commenced  in  the  State Legislature.      There is  considerable judicial authority in support of the submission  of learned  counsel for  the appellants that with the  passage of  time a legislation which was justified when enacted  may become arbitrary and unreasonable with the change in  circumstances in  the State of Madhya Pradesh Vs. Bhopal Sugar Industries [ (1964) 6 S.C.R. 846 ] dealing with a  question   whether  geographical  classification  due  to historical reasons  would be  valid this  Court at  page 853 observed as follows:

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    "Differential treatment arising out      of the  application of  the laws so      continued in  different regions  of      the same reorganised State, did not      therefore immediately  attract  the      clause    of    the    Constitution      prohibiting discrimination.  But by      the passage of time, considerations      of necessity  and expediency  would      be  obliterated,  and  the  grounds      which justified  classification  of      geographical regions for historical      reason may  cease to  be  valid.  A      purely  temporary  provision  which      because   of    compelling   forces      justified  differential   treatment      when  the  Reorganisation  Act  was      enacted   cannot    obviously    be      permitted to  assume permanency, so      as  to  perpetuate  that  treatment      without a rational basis to support      is after the initial expediency and      necessity have disappeared."      In Narottam  Kishore Dev  Varma and  Ors. Vs.  Union of India and Anr. [(1964) 7 S.C.R. 55] the challenge was to the validity of  Section 87  B of  the Code  of Civil  Procedure which granted  exemption to the rulers of former India State from being  sued except  with the  consent of  the  Central. Government, Dealing  with this  question it  was observed at page 60 as follows:      " If  under  the  Constitution  all      citizens  are   equal,   it   maybe      desirable to  confine the operation      of s.87B  to past  transactions and      not to  perpetuate the  anomaly  of      the distinction between the rest of      the citizens  and Rulers  of former      Indian States.  With the passage of      time, the  validity  of  historical      considerations on  which s.  87B is      founded will  wear Civil  Procedure      may  later   be  open   to  serious      challenge."      In H.H.  Shri Swamiji  of Shri Admar Mutt etc. Vs.  The Commissioner,  Hindu   Religious  &   Charitable  Endowments Department and  Ors. [  (1980) 1  S.C.R. 368] this Court was called upon  to  consider  the  validity  of  the  continued application of  the provisions of the Madras Hindu Religious Endowment Act, 1951 in the area which had formerly been part of State  of Madras  and which had latter become part of the new State  Of Mysore  ( now  Karnataka )  as a result of the State Re- Organisation Act, 1956. In this connection at page 387-388 it was observed by this Court as follows:      An   indefinite    extension    and      application of unequal laws for all      time to  come will militate against      their true  character as  temporary      measures taken  in order to serve a      temporary  purpose.   Thereby,  the      very    foundation     of     their      constitutionality shall  have  been      destroyed the foundation being that      section   119    of    the    State      Reorganisation   Act   serves   the      significant   Purpose   of   giving

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    reasonable time to the new units to      consider the  special circumstances      obtaining  in  respect  of  diverse      units. The decision to withdraw the      application  of   unequal  laws  to      equals    cannot     be     delayed      unreasonably   because    of    the      relevance  of   historical  reasons      which justify  the  application  of      unequal laws  is bound  to wear out      with  the   passage  of   time.  In      Broom’s   Legal;   Maxim   (   1939      Edition, page  97) can  be found  a      useful principle  "Cessante Ratione      legis Cessat  Ipsa Lex", that is to      say, "Reason  is the  sour  of  the      law, and  when the  reason  of  any      particular law  ceases, so does the      law itself".      This Court  in Motor General Traders and Anr. Etc. etc. Vs. State  of Andhra  Pradesh and  Ors. Etc. etc.  ()1984) 1 S.C.R. 594]  had to  consider the validity of Section 32B of the Andhra  Pradesh  Building  (Lease,  Rent  and  Eviction) Control Act,  1960. This section provided that the Act would not apply  to buildings constructed after 26th August, 1957. This exemption  had continued  for nearly  a  quarter  of  a century and  it was  argued  that  because  of  shortage  of housing accommodation  since the section had been valid from the commencement  of the  Act, therefore,  it could  not  be struck down  at any  time after  it came  into force.  While referring to earlier decisions in Bhaiyalal Shukla Vs. State of Madhya  Pradesh [(1962)  Suppl. 2  S.C.R. 257] and Bhopal Sugar Industries Ltd. (supra) it was observed at page 606 as follows "what  may be  unobjectionable as  a transitional or temporary measure  at an  initial  stage  can  still  become discriminatory and  hence violative  of Article  14  of  the Constitution of  it is  persisted  in  over  a  long  period without any justification." Dealing with the contention that the impugned  provisions had  been in  existence for over 23 years and  had once  been held to be valid by the High Court and therefore  this Court  should  not  pronounce  upon  its validity at  this late  stage, it  was observed  at page 614 that "what  was justifiable during a short period has turned out to  be a  case of  hostile discrimination  by  lapse  of nearly  a  quarter  of  century...  We  are  constrained  to pronounce upon  the validity  of the  impugned provision  at this late  stage because  of grab of constitutionality which it may  have possessed  earlier has  become worn out and its unconstitutionality  is   now  brought   to   a   successful challenge".      In Rattan  Arya and  Ors. Vs.  State of  Tamil Nadu and Anr. [(1986)  3 SCC  385 ]  this Court  had to  consider the validity of  Section 30  (ii) of  the Tamil  Nadu  Buildings (Lease and  Rent )  Control Act,  1960 which  provided  that tenants of residential building being monthly rent exceeding Rs. 400 were exempted from the protection of the Act whereas no such  restriction was  imposed in  respect of  tenants of non- residential  buildings under the said Act. Holding that the tenants  of the  residential buildings  required greater protection and  that there  was no  justification in picking out the  class of  tenants of residential buildings paying a rent of  more than  Rs. 400/- per month and to deny them the right conferred  generally  on  all  tenants  of  buildings, residential or  non-residential, and for this reason holding Section 30  (ii) of  the Said  Act  as  being  violative  of

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Article 14 at page 389 and 390 it was observed as follows:      "It certainly  cannot be  pretended  the  provision  is intended to  benefit the weaker sections of the people only. We must  also observe here that whatever justification there may have  been in  1973 when  Section 30 (ii) was amended by imposing a  ceiling of Rs. 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the  Act, the  passage of  time   has  made  the  ceiling utterly unreal.  We are  entitled to take judicial notice of the enormous  multifold increase  of  rents  throughout  the country. Particularly in urban areas. it is common knowledge today that  the accommodation  which one could have possible got for  Rs. 400  per month in 1973 will today cost at least five times  more. In  these days  of universal,  day to  day escalation of  rentals any  ceiling such  as that imposed by Section 30  (ii)   in 1973  can only  be  considered  to  be totally artificial  and irrelevant  today. As  held by  this court in  Motor General Traders v. State of A.P. a provision which was  perfectly valid  at the  commencement of  the Act could   be    challenged   later    on   the    ground    of unconstitutionality and  struck down on that basis. What was once a perfectly valid legislation, may in course of time, i become discriminatory  and liable to challenge on the ground of its being violative of Article 14".      Lastly reference  need be made to be made to Synthetics and Chemicals  Ltd. and  Ors. Vs.  State Of  U.P.  and  Ors. [(1990) 1  SCC 109]  where at  pages 156-157 it was observed that "restriction  valid under  one circumstance  may become invalid in  changed circumstances".  Reliance in  support of this view was not only placed on some American decisions but also on  the decision of this Court in Motor General Traders case (supra).      Mr. Nargolkar referred to the decision of this Court in Sant Lal  Bharti Vs.  State of  Punjab [(1988) 2 S.C.R. 107] and contended that the ratio of the said decision is clearly applicable to  the present  case. In  Sant Lal’s  case a two Judge Bench  of this  Court was  called upon to consider the validity  of  Section  4  of  the  East  Punjab  Urban  Rent Restriction Act,  1949, which  inter alia,  provided that in determining the  fair rent the rent controller shall fix the basic rent by taking into consideration the prevailing rates of  rent   in  the   locality  for   the  same   or  similar accommodation  in  similar  circumstances  during  a  twelve months prior  to 1st January, 1939. It was held in that case that the  act in  question had  been passed  in 1949  and it pegged the  rent prevalent for similar houses in 1938 and as such it  was not  unreasonable per se. Even though there was an increase  in the rents after the second world war and the partition of  the country,  it was  held that  fixing of the rents  at   the  1938   level  could   not  be  regarded  as unreasonable when  one of  the objects  of the  act  was  to restrict the increase by providing for certain provisions as to fixation  of a  fair rent. In that case the main emphasis of the  appellants was  to assail Section 4 by comparing the said law with the legislation of different states. There was no argument  raised or  considered, as  is being done in the present case, while relying on the decision of a Three Judge Bench in the cases of Rattan Arya, Motor General Traders and Synthetics and  Chemicals (supra)  that with  the passage of time and  with the  consequent change  of circumstances  the continued operation  of an  act which was valid when enacted may become arbitrary and unreasonable.      The aforesaid decisions clearly recognise and establish that a  statute which  when enacted  was justified may, with the passage  of time,  become arbitrary and unreasonable. It

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is, therefore, to be seen whether the aforesaid principle is applicable in  the instant  case. Can  it be  said that even though the  provisions relating  to the fixation of standard rent were  valid when the Bombay Rent Act was passed in 1947 the said  provision, as  amended, can  still be  regarded as valid now?      Reports of  different committees and resolutions of the minsters have  been placed  on record  in an  effort to show that these  official agencies  have, since over the last two decades, themselves  felt that  increase in rents was called for. The  correctness or  the authenticity  of this material has not,  in any  way been  doubted an  therefore we  see no reason as  to why this cannot be taken into consideration in order to  determine whether  the submission  of Mr.  Nariman merits acceptance. Reference may now be made to some of this material:- 1.   A rent  act inquiry committee of 1977 commonly known as      Tembe Committee,  was constituted  by the Government of      Maharashtra which  in its  report submitted in the same      year recognised that the pegging down of the rents to a      date nearly  thirty  years  back  (at  that  time)  had      deprived the  property owners of a reasonable return on      their properties  commensurate with the increase in the      cost of  living and  the cost of building materials. It      recognised that   there  were  several  small  property      owners all  over the  State who  had invested  the life      time  savings   in  building   houses  partly  for  the      residence and  partly for  being let  out in  order  to      assure a  steady income in old age. As a result of rent      control act, the return they got is inadequate even for      subsistence because of the step increase in the cost of      living. In para 6 (10) it observed that " having regard      to the  general increase  in the  cost of  living,  the      Committee is  of the view that there is a case for some      general increase  although not to the extent claimed by      the property  owners as  the period of twenty years has      elapsed since the last increase was allowed. 2.   The Maharashtra  State Law  Commission which  submitted      its report in the year 1977 recommended the increase in      the rents in the following terms "the commission, feels      that there is immediate need for reasonable increase in      standard rent." 3.   In the  12th report of Maharashtra State Law Commission      1979 on  the rent  control legislation  para 91 dealing      with this aspect reads as follows:      " The  Commission does not want the      rents to  be static  for long.  The      inflationary trend reflected by the      rising consumer price index numbers      at all  centers in  the State makes      it imperative  to make an objective      assessment  of   the  situation  at      regular  intervals   so  that   the      remedial action  may be possible by      periodical   variation   in   rents      according    as    the    situation      demanded.  Suggestions   for   such      periodical survey  was also made to      the    Commission     by    various      representatives  in  evidence.  The      Commission        by        various      representatives  in  evidence.  The      Commission  feels   that   such   a      periodical  survey  would  be  much      helpful in  maintaining the balance

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    between  the   landlord   and   the      tenant.  The   possibility  of  the      inflationary the  landlord and  the      tenant.  The   possibility  of  the      inflationary  trend   receding   in      future - though such possibility is      not easy  to entertain  - cannot be      totally ruled  out, in  which  case      the rents  could be brought down to      as  reasonable  level.  if  on  the      other hand,  the inflationary trend      continues    unabated,    then    a      reasonable rent  increase may  have      to be resorted to . it is true that      the Govt.  can always take stock of      the situation  and come  up with an      appropriate  measure  to  meet  the      situation at  any given  time.  But      the Commission  does  not  want  to      leave the matter to an action being      thought of  by the  Government. The      Commission thinks  that it would be      proper to make a specific provision      in the unified Act which would cast      an obligation  on the Government to      hold periodical reviews and to take      effective    actions    for    rent      variations   according    as    the      circumstances may warrant."      The Commission further stated:      " In  big  cities  like  Bombay,  a      large number  of  slums  have  come      into existence.  if the rigorous of      the Rent  Act had  not been  there,      new   houses    would   have   been      constructed. At present 30 lakhs of      people in  the city  of Bombay stay      in slums and 11/2 lakh on pavement.      If   new    buildings   had    been      constructed,  people  who  stay  in      slums today  might have  been in  a      position   to   get   some   decent      accommodation. It was further stated      "The increase  in the standard rent      must be  considered from  the point      of  view   of  the  Consumer  Price      Index.      "  It   was  pointed   out  to  the      Commission that  46 percent  of the      lands belong  to low  income group,      27 percent  belong to middle income      group, and  only 25 per cent belong      to the  higher income  group. These      figures will  indicate that  75 per      cent of the so-called landlords are      really people  who depend  upon the      rent  of  the  property  for  their      livelihood. To  designate  them  as      ’landlords’ itself  is undesirable.      When one  considers  the  financial      position of  the tenants,  compared      to  the  positions  in  1940s,  one      clearly  sees   that  the   monthly      income of these tenants has gone up

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    from 100  to 400 at least. However,      there has  not been a proportionate      increase in the rents." 4.   A Report  of Economic Administrative Reforms Commission on Rent  Control (commonly  known as L.K. Jha Committee) was presented to  the Government  of India in September 1982. In paragraph 51 of the said report, it stated as follows:      " We  now turn  to the  problem  of      existing tenancies.  Many of  these      are very  old and  the  rents  were      fixed a  few decades ago. These old      an   frozen   rents   bear   little      relation   to   the   present   day      maintenance  costs,   or   to   the      current  returns  from  alternative      investments, or  to the  prevailing      market  rents  in  respect  of  new      accommodation. In  the case  of new      construction we have suggested that      the periodical  revision  of  rents      should  be   based  on   a  partial      neutralisation of  the  effects  of      inflation.   Applying    the   same      principle  to   existing  tenancies      where rents  have  remained  frozen      for at least 5 years, what needs to      be done is to update those rents by      neutralising 50  per  cent  of  the      inflation  which  has  taken  place      from   the    time    of    initial      determination of  those  rent  upto      the present time."      The report further reads as under:      "Similarly in  the case of existing      tenancies, all  that  needs  to  be      done is  to provide  a formula  for      updating the  old frozen rents, and      thereafter  periodically   revising      them." 5.   On 21/22.5.1987  a conference  of the Housing Ministers of all  the States  was held  to discuss  various  problems. Decisions taken at that Conference were recorded in the form of resolutions.  With regard  to Rent  Control the unanimous resolution at  the conference  of Housing Ministers reads as under:      "RESOLUTION NO. IV RENT CONTROL      4.1. Realising  the  existing  Rent      Control Laws, have resulted in:      (i)   disincentive    to    further      investment   in   construction   of      houses for rental purposes;      (ii) neglect  of timely repairs and      maintenance  of   existing   rental      housing stock; and      (iii) debilitating the resources of      municipal   bodies   by   virtually      freezing their income from property      taxes which  are based  on rateable      values.      4.2  This conference urges upon the      Government of  India  to  formulate      and  communicate   to   the   State      Governments  for  necessary  action      suitable  guidelines   as  soon  as      possible during  the  current  year

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    for their  consideration so  as  to      provide   for    the    expeditious      amendment of  Rent control Laws wit      a view to providing for:      (a)   a    reasonable   return   on      investment in housing which will be      comparable   to,    if   no    more      favourable then,  the  return  from      and other avenues of investment,      (b)   periodical upward revision of      rents to  neutralise the crosion in      the real value of rents      (c)      enabling       expeditious      resumptions  of   possession  of  a      dwelling units  for self occupation      by a  landlord who  is the owner of      only one such dwelling unit;      (d) delinking of municipal property      taxation from  reteable  values  to      the extent  they are  regulated  by      the Rent Control Laws,      (e) Leave and licence system,      (f) period tenancy,      (g)  protection   to  tenants  from      arbitrary eviction,      (h) exemption  from the  provisions      of the Act of new construction less      than 5 years,      (i) obviating delays in ligation by      laying  down  suitable  expeditious      procedures, only  one appeal  to  a      higher authority  instead of multi-      level   appeals   constitution   of      tribunals  to  deal  with  disputes      arising under  the Act  and barring      the  jurisdiction  of  Civil  Court      Act. " 6.   In the Letter dated 24.7.1987 from the Ministry of Home Affairs Government  of India while communicating President’s assent to  1987 amendment  to the  Bombay Rent  Act  it  was stated as follows:      "It is  suggested  that  the  State      Government  may   make   subsequent      amendments  to  the  principal  Act      preferably within  next 6 months by      incorporating     the     following      recommendation   of    the    above      conference  (   Housing   Ministers      conference).      (a) Periodical  upward revision  of      rents to  neutralise the erosion in      the real value of rents." 7.   A conference  of Chief Ministers of all states was held at New  Delhi in 1992. One of the topics discussed pertained to static  rents  and  the  problems  arising  therefrom.  A unanimous recommendation of this conference made on 9.3.1992 in this regard was as under:      " 4.3  The frozen rents have led to      emergence  of  practices  like  key      money. this  apart from  creating a      block market in rental housing, the      Act has  reduced the  accessibility      of  low  income  groups  to  rental      housing, as  they cannot  afford to      pay  large   deposits  for   rented

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    premises."      4.4 The widening divergence between      the  interests   of  landlords  and      tenants  has   not  only   led   to      increased  litigation   under  Rent      Control Acts  (  the  rent  control      cases make  for a  majority of  the      cases  in   courts)  but   also  to      increased crimes.      A large  number of  criminal  cases      have their  origin in disputes over      rented properties."      The recommendation further reads:      " The important principle is that while the tenant will enjoy security  of tenure  is controlled premises, he should agree to  pay  a  rent  that  provides  adequate  return  on investment and provides for proper maintenance and taxes, so that  he  does  not  enjoy  an  unfair  advantage  over  the landlord."      A perusal  of the  aforesaid extracts  of  reports  and resolutions clearly  demonstrates that  since the  last  two decades the authorities themselves seem to be convinced that the pegging  down of the rents to the pre war stage and even thereafter, is  no longer  reasonable.  Unfortunately  apart from lip service little of note has been done. Even the Rent control Bill introduced in 1993 has not yet become law.      It was  submitted by  Mr. Nariman  that even  after the promulgation of  the Rent  Control act 1948 during the 1950s and 1960s there was not much escalation in the market rents. The rents  which were  determined  during  this  period  has become the  standard rent  by virtue  of the  definition  in Section 5  (10) of  the Bombay  Rent Act.  In the  last  few years, due to rapid inflation there has been step escalation of the  expenses which  the landlords  have to incur without there being  any corresponding  increase in  the rents. This has resulted,  it was  submitted, in the buildings not being repaired as  the expenses  involved made it uneconomical for the landlords to undertake this task.      As  already  noticed  it  had  been  contended  by  MR. Nargolkar that  realising the need being there for providing some relief to the landlords amendments amendments were made in the  Bombay Rent  Act in 1987. it was submitted that as a result of  these amendments  the landlords  will be  able to charge more  rents and  it cannot  now be said that the Rent Control Act is not valid.      It is true that some amendments were made in 1987 which clearly indicate that the State Legislature was conscious of the fact  that there  was a  need to  increase the  standard rent. The  question, however,  is whether the exercise which was undertaken was merely cosmetic or did it bring about any tangible increase  in the standard rent. section 4 (10)A was incorporated which  provides that the provisions relating to standard rent  would be  inapplicable for  a period  of five years in  respect of  premises constructed  or reconstructed after the  appointed date,  namely,.  1.10.1987.  Once  this ’holiday’ comes  to an  end the  tenant would be entitled to get the  standard rent fixed. The amendment of 1987 does not do away  with the principle of pegging down of the rent at a rate when  the premises  are first  let out. Increase in the cost of  maintenance or  fall in  the value  of money or the rise in the cost of index does not entitle a landlord to any increase. There has been no other material change in the act in this  behalf. What  the Amending  Act of 1987 has done is merely to  consolidate and  rearrange the  sections  of  the earlier act. Provisions contained in the present Sections 9,

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10 and  10A were  found earlier,  prior to  the amendment in 1987, in  Sections 10,  10A, 10AA, 10AAA, 10C, 10D, 10E, and 10G. The  only change  introduced in these sections was that the rate  of return  on the expenses incurred for additional amenities  for   heavy  repairs   has  been  increased.  The following tabulated  comparative statement  of the  relevant provisions before  and after  1.10.1987 will  bring out  the effect of the alteration, if any.               Tabulated Cooperative Statement ------------------------------------------------------------ After Amending                          Before Amending Act 1987                                Act of 1987 ------------------------------------------------------------ S.9 (1)  increase in  rent on         Identical provision in S.9 account of  structural                 which is there in the original alterations or improvement         Act since 1948. made with Tenants’ written consent. S.9 (2)  increase on  account of     Similar provision in S. 10D(1) special additions  or additional     which was introduced in 1953. amenities. S.9(3) increase  on account  of      Similar provision in S. 10D(4) additions, improvements  or          which was introduced in 1953. additional amenities. f S.9 (3)(a)-  Temporary increase      Similar provision in S. 10E is rent in account of special      introduced in 1964. or heavy repairs. S.10- Increase in or fresh         Similar provision in S.10 rate, cess, charge or tax           (since inception of Act) S.10A paid to  local authority.             ( introduced in 1949), S.10AA                                        ( introduced in 1953) S.10AAA                                    (introduced in 1962). S.10 increase in rent on           S. 10G introduced in 1973 account of increase in ground      permitted recovery of one rent paid to Govt. local           third of increase. authority or statutory authority. During the  course of  his arguments Mr. Mr. Nariman filed a statement  indicating  the  financial  impact  of  the  rent restriction provisions  on the  assumption that  the monthly rent on  1.9.1940 was  Rs. 100.  This statement  takes  into account the  permitted increases  incorporated  in  the  Act including that of 1987 from time to time. The submission was as follows:      Assumption: that  monthly  rent  on      1.9.1940 was  Rs. 100 (exclusive of      Municipal   taxes)   This   is   an      accurate  approximate   average  of      rents paid  in  September  1940  in      respect of  flats  of  large  areas      situated in good localities.      1(a)  From   September  1940   till      13.21948, when  the Rent  Act  came      into force,  the landlord continued

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    to  retain   Rs.  100/-  since  the      burden of tenantable repairs was on      the tenant under Section 108 (m) of      the T.P. Act.      (b) After 13.2.1948 this burden has      been transferred  to  the  landlord      (section 23):  From 1.10.1987  upto      date, the  tenant is  permitted  to      carry out " tenantable repairs" and      recover  the   entire   cost   with      interest  at   15%  per   annum  by      deducting an amount equivalent to 3      months rent in a year.      (c) Hence  invariably the  landlord      gets 25  per  cent  less  than  Rs.      100/- (Rs.  1200/- per year reduced      to   Rs.   900/-   per   year)   as      "tenantable      repairs"       are      necessarily   recurring    in   old      buildings,   and    the   cost   of      tenantable repairs keeps rising.      2.   From   1.1.1970   onward   the      landlord   has    had    to    bear      continuously  ten   per   cent   of      "rateable  value"   (equivalent  to      8.5% of the yearly rent) as "repair      cess" i.e.  one month’s  rent in  a      year.      3. Thus  in case  of all  buildings      constructed  prior   to   1.1.1970-      (date of  levy of compulsory repair      cess -  they constitute majority of      buildings in  all urban  areas  the      landlord retains only 8 months rent      in hand  every year  as against  12      months  rent   he  was  getting  in      September 1940:-      (a)) this  is without  taking  into      consideration further  inroads as a      result  of   ground  rent  paid  in      respect of  private leasehold lands      where increase  in ground  rent  is      not  permitted   to  be  passed  on      effect of Section 10)      (b) this  is  also  without  taking      into   ’account   ever   increasing      outgoings and  maintenance  charges      paid   to    co-operative   Housing      Societies by  landlord members: not      permitted  to   be  passed   on  to      tenants.      4. Meanwhile  all this  is  further      accentuated  by  the  fall  in  the      value of  the rupee and rise in the      wholesale  price  index  which  has      totally    eroded     the    amount      receivable as  rent in the hands of      the landlord.      (A) taking  base  in  1940  at  Rs.      100/- the  value of  the  rupee  in      1996 was only Rs. 1.5 in 1996      (B) in  1940  the  wholesale  price      index was  13.2. This  has risen to      876 by 1996 66 time      (C) Value  of one rupee silver coin

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    of 1940,  as on  the 5th  Dec. 1992      was Rs. 44/-      (D) Price  of silver  on 30.12.1939      was Rs.  52 per  kg. It rose to Rs.      6945 per  kg. On  31.12.1996,  that      is, by 130 times.      5. Thus if in 1940 the landlord was      getting Rs. 1200/- per year as rent      (exclusive of  Municipal  taxes  in      1996 or  1997 he is getting Rs. 800      per year  and in  terms of value of      rupee in  1940, this  amount of Rs.      800 works  out to  only  Rs.  12.12      (800/66)- against  Rs. 1200  he was      getting in 1940."      To put  simply in a tabulated from the following is the comparative position  of rent  between 1940 and 1997 and the amount retained by the landlord                            Per Month ------------------------------------------------------------                                    1940           1997 ------------------------------------------------------------ 1) Rent per month inclusive of Municipal Taxes (Rs.)                 100            170.09 2) Amount of Municipal Taxes to be paid by Owner (Rs.)             21.54          103.47 3) Amount of repair cess to be paid by Owner (Rs.) @ 10% of rateable value               Nil            7.62 4) Amount retained by owner after payment of Municipal taxes & repair cess (Rs.)                     78.46          64.00 N.B. No correction has been made for:- 1)   The inflation/fall  in purchasing  value of  the  rupee      which was  about 66  times between  1940 & 1996 and the      value of  Rs. 100  in 1940  has come down to Rs. 1.5 in      1996. 2)   Further in 1940 the tenants could not deduct any amount      towards repairs but under Section 23 of the Rent Act in      1997 they can deduct 3 months Rent per year.      The  aforesaid   illustration,  which   has  not   been seriously disputed,  clearly brings out the arbitrariness of the standard  rent provisions  contained in  the Bombay Rent Act.  It   is  true  that  the  aforesaid  illustration  has references to  the monthly  rent of  Rs. 100  as on 1.9.1940 and does  not relate to the premises which are let out after the Act  had come  in force.  As far  as Section  5 (10)  is concerned the  standard rent  of the  premises let out after 1.9.1940 is  that rent  at which the premises were fist let. Even so  with the  rapid increase in the expenses for repair and other  outgoings and  the decreasing  net amount of rent which remains  with the landlord, clearly shows that the non provision in  the Act  for reasonable  increase in the rent, with the  passage of  time, is leading to arbitrary results. This is  also demonstrated  from the  facts in  the case  of petitioner no.3  who owns  Unit No.  A-18 on the first floor admeasuring 808  sq. ft.  in the  property known as Shri Ram Industrial Estate situated at 13 J.D. Ambedkar Road, Mumbai. The said  building belongs to a cooperative society and unit no.A-18 was  given on lease and license basis b an agreement dated  23rd  August,  1964  by  the  appellant  to  Lokmitra Sahakari Printing  and Publishing  Society ltd. on a monthly compensation of Rs. 686.80 per month. Liabilities of repairs is on the appellant and according to it this amount received in respect of the said unit by the appellant is Rs. 563 . 65

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per month  inclusive of  all taxes.  Out  of  this  sum  the appellant no.  3 has  to pay  Rs. 216.33  as municipal taxes leaving a  balance of  Rs.  320.22.  From  this  amount  the society outgoings is Rs. 250 per month, leaving a balance of only Rs.  70.20 per  month with  the said appellant. Another instance which  has been given is that of appellant no.4 who owns a  property known  as Ram  Mahal situated at 8, Dinshaw Vachha Road,  Mumbai. The  said building  has 20 residential flats and  the building  was purchased by appellant no. 4 in the year  1955, although  it had  been constructed  prior to 1940, Flat  no. 15 on the 5th floor of the said building had been let  out by the previous owners to M/s Bennet Coleman & Co. Ltd.,  who were the sitting tenants at the time when the property was  purchased. The  flat measures 1710 sq. ft. and monthly rent  for the same is Rs. 460 per month inclusive of permitted increase  and repairs.  According to the appellant the income  by way  of rent  has remained constant while the expenditure has  been increased  and the total gross rent of the building  which he  receives is  Rs. 1,72,032  per annum while  it   incurs  an   annual  expenses  of  Rs.  1,93,245 consisting of  BMC taxes,  repairs, ground rent, maintenance charges  inclusive   of  small   electricity  bill  and  the insurance premium. He is, therefore, suffering a loss of Rs. 21,213 every  year. It  is  not  necessary  to  examine  the correctness of  these details  except to  note that what was reasonable on  1st September,  1940 or  in 1950s or in 1960s can no  longer be  regarded as  reasonable at  this point of time.      That the  tenants are,  by and  large, now  getting  an unwarranted benefit  or windfall  can also be illustrated by taking an example of hypothetical tenant, i.e., an Assistant in the  Government of  India posted  at Bombay  in the  year 1948. At  that time  the pay  scale of the Assistant was Rs. 160-10-300-15-450+20% H.R.A. + Rs. 15.50 C.C.A. On the basis that he  was drawing the maximum of scale, his total monthly emoluments would  be Rs.  485.50 and if he had in 1948 taken premises on  rent at Rs. 100/- per month, he would be paying approximately 20%  of his  total emoluments  by way of rent, without taking into consideration any deduction for repairs. That  Assistant  in  1997,  after  the  report  of  5th  pay Commission, would  get a  maximum basic  salary of Rs. 9000+ 30% H.R.A.+  Rs. 200 P.M. as CCA making the total emoluments of Rs. 11900/- P.M. After taking into consideration the 1987 increase in  rent, he  would be paying about Rs. 170 p.m. in respect of  the same  premises instead of Rs. 100/- which he was paying  in 1948.  This enhanced  rent,  would,  however, represent only 0.9% of his salary. With the passage of time, the  percentage   of  rent  which  would  be  paid  by  that hypothetical tenant  would have  gone down  from 20%  of his total salary  to only 0.9% and this wold be the case of most of the  tenants as  we can  take judicial notice of the fact that  from   1948   till   now,   incomes   have   increased considerably, whereas  the rent  has increased only from Rs. 100/- p.m. to Rs. 170/- p.m.      On the  other  hand,  in  the  aforesaid  example,  the hardship to the landlord is that it was only in 1940 that he had agreed  to accept rent of Rs. 100 p.m. That was the real income from  rent which  he had  agreed to receive. Now with the increase in taxes etc., he gots only Rs. 54 p.m. whereas n 1940, he got Rs. 100 minus Rs. 21.54 (municipal tax ) i.e. Rs. 78.46.  So not  only is he getting lesser amount in hand but in  terms of  real value,  after taking  inflation  into account, he  is getting only a pittance. For Rs. 100 p.m. of gross rent which he was getting in 1940, he now in 1997 gets a gross  rent of  about Rs.  170 which  in real money terms,

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after taking  the inflation into account, will be only about Rs. 2/- P.M. of the 1940 value. Had the Rent Control Act not been in  force the  landlord today may have been able to get todays equivalent  of Rs. 100 of 1940 as rent i.e. about Rs. 6650 p.m.      It is  true that  one of  the reasons  for enacting the rent control  legislation is  to prevent exploitation of the tenants by  the landlords.  One of the protections which has been  provided  to  the  tenants  in  the  rent  legislation throughout the country is the concept of standard rent. Each State has  definite laws  with regard thereto. In some case, like in Delhi, the rent control act is not applicable if the rent is  Rs. 3500/-  or more  while in the other states rent control act  is not  applicable  to  certain  categories  of persons.  In   the  Bombay  Rent  Act,  with  which  we  are concerned, the standard rent as on 1st September, 190 or the first rent  of the  premises which was let out thereafter is the standard rent. The paging down of rent, coupled with the inability of  the landlord  to evict  the tenants, has given rise to unlawful tendencies. In the statement of objects and reasons annexed  to the  L.A. Bill No. 79 of 1986 introduced in the  Maharashtra Legislature  providing for  amendment to the Bombay  Rent Control Act with regard to clause 3 it was, inter alia, stated as follows:      " The  freezing  of  standard  rent      prevailing on  the  1st  September,      1940 has  deprived the landlords of      getting  reasonable   and  adequate      return to undertake maintenance and      repairs  to   the  old   buildings.      Despite the penal provisions in the      Act for charging any premium from a      tenant,  such   freezing  of   rent      results  in  charging  ’pugree"  or      deposit or  similar illicit payment      which  are  widely  prevalent.  The      con-structio of  new  tenements  on      rental   basis   has   considerably      caused with the result that low and      middle  income   groups   are   not      getting         premises         on      rent............... "             (emphasis added)      Notwithstanding the fact that the State Legislature was conscious of  the illegal payments which are made because of the rent  restriction law no effective steps have been taken so far  to strike  a balance  between the  interests of  the landlords and the tenants.      It is  true that whenever a special provision, like the rent control  act, is  made for  a section of the Society it may be  at the  cost of  another section,  but the making of such a provision or enactment may be necessary in the larger interest of  the society as a whole but the benefit which is given initially if continued results in increasing injustice to one  section of the society and an unwarranted largess or windfall  to   another,  without  appropriate  corresponding relief,  then   the  continuation  of  such  a    law  which necessarily,  or   most  likely,   leads  to   increase   in lawlessness and  undermines the  authority of the law can no longer be  regarded as  being  reasonable.  Its  continuance becomes arbitrary.      The Legislature itself, as already noticed hereinabove, has taken  notice of the fact that puggrie system has become prevalent in  Mumbai because  of the  rent restriction  act. This Court  was also  asked to  take judicial  notice of the

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fact that  in view  of the  unreasonably low rents which are being received  by the landlords, recourse is being taken to other methods  to seek  redress. These  methods,  which  are adopted are  outside the  fore corners  of the  Law and  are slowly giving  rise to  a state  of lawlessness where, it is feared,  the   courts  may  become  irrelevant  in  deciding disputes between the landlords and tenants. This should be a cause of serious concern because if this extn judicial back- lash  gathers  momentum  the  main  sufferers  will  be  the tenants, for whose benefit the Rent Control Acts are framed.      In so  far as social legislation, like the rent control act is  concerned, the  law must  strike a  balance  between rival interests and it should try to be just to all. The law ought not  to be  unjust to  one and give a disproportionate benefit or  protection to  another section  of the  society. When there  is shortage  of accommodation  it is  desirable, nay, necessary  that some  protection should be given to the tenants in  order to  ensure that  they are no exploited. At the same  item such  a law has to be revised periodically so as to  ensure that  a disproportionately larger benefit them the one  which was  intended is not given to the tenants. It is not  as if the government does not take remedial measures to try  and offset  the effects  of inflation.  In order  to provide fair  wage to  the salaried employees the government provides for  payment of  dearness and other allowances from time to  time. Surprisingly  this principle is lost sight of while  providing  for  increase  in  the  standard  rent-the increase made  even in  1987 are  not adequate, fair or just and the  provisions  continue  to  be  arbitrary  in  todays context.      When enacting socially progressive legislation the need is  greater   to  approach   the  problem  from  a  holistic perspective and  not to  have  a  narrow  or  short  sighted parochial approach.  Giving a  grater than due emphasis to a vocal section  society results  not marly in the miscarriage of justice  but in  the abdication  of responsibility of the legislative authority.  Social Legislation  is treated  with deference by  the Courts  not merely because the Legislature represents the  people but also because in representing them the entire  spectrum of  views is  expected to be taken into account.  The  legislature  is  not  shackled  by  the  same constraints as  the courts of law. But it’s power is coupled with a  responsibility. It is also the responsibility of the Courts to  look at  legislation from the alter of Article 14 of the Constitution. This article is intended, as is obvious from  its  words,  to  check  this  tendency;  giving  under performance some over others.      Taking   all   the   facts   and   circumstances   into consideration we  have no doubt that the existing provisions of the  Bombay Rent  Act relating  to the  determination and fixation of the standard rent can no longer be considered to be reasonable.  The said  provisions would  have been struck down as  having now become unreasonable and arbitrary but we think it is not necessary to strike down the same in view of the fact that the present extended period of the Bombay Rent Act comes  to an  end on  31st march, 1998. The government’s thinking reflected  in various  documents itself  shows that the existing  provisions have  now become  unreasonable and, therefore, require  reconsideration. The  new bill  is under consideration and  we leave it to the legislature to frame a just and  fair law  keeping in  view the  interests  of  all concerned and  in particular  the resolution  of  the  State Ministers for  Housing of  1992 and  the National  Model law which has been circulated by the Central Government in 1992. We are  not expressing  any opinion on the provisions of the

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said Model  law  but  as  the  same  has  been  drafted  and circulated amongst all the States after due deliberation and thought, there  will, perhaps,  have to  be  very  good  end compelling reasons in departing from the said Model Law. Mr. Nargolkar assured  us that this Model law will be taken into consideration in  the  framing  of  the  proposed  new  Rent Control Act.      We,  accordingly,  dispose  of  these  appeals  without granting any  immediate relief but we hold that the decision of  the  High  Court  upholding  validity  of  the  impugned provisions relating  to standard  rent was  not correct.  We however refrain from striking down the said provision as the existing Act  elapses on  31.31998 and we hope that new Rent Control Act will be enacted with effect from 1st April, 1998 keeping in view the observations made in this judgment in so far as  fixation of  standard  rent  is  concerned.  It  is, however, made  clear  that  any  further  extension  of  the existing provisions  without bringing  them in line with the views expressed  in this judgment, would be invalid as being arbitrary and  violative of  Article 14  of the Constitution and therefore  of no  consequence. The  respondents will pay the Costs.      In  view  of  the  aforesaid  the  writ  petitions  are disposed of